[Execution Copy]
BROWN GROUP, INC.
$50,000,000
7.36% SENIOR NOTES DUE OCTOBER 15, 2003
NOTE AGREEMENT
Dated as of October 24, 1995
TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. AUTHORIZATION OF ISSUE OF NOTES.. . . . . . . . . . . . . . . . . . . - 1 -
2. PURCHASE AND SALE OF NOTES. . . . . . . . . . . . . . . . . . . . . . - 1 -
3. CONDITIONS OF CLOSING.. . . . . . . . . . . . . . . . . . . . . . . . - 2 -
3A. Certain Documents. . . . . . . . . . . . . . . . . . . . . . . . - 2 -
3B. Opinion of Purchaser's Special Counsel.. . . . . . . . . . . . . - 2 -
3C. Representations and Warranties; No Default.. . . . . . . . . . . - 3 -
3D. Purchase Permitted By Applicable Laws. . . . . . . . . . . . . . - 3 -
3E. Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
3F. Structuring Fee. . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
4. PREPAYMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
4A. Required Prepayments.. . . . . . . . . . . . . . . . . . . . . . - 3 -
4B. Optional Prepayment With Yield-Maintenance Amount. . . . . . . . - 3 -
4C. Notice of Optional Prepayment. . . . . . . . . . . . . . . . . . - 4 -
4D. Partial Payments Pro Rata. . . . . . . . . . . . . . . . . . . . - 4 -
4E. Retirement of Notes. . . . . . . . . . . . . . . . . . . . . . . - 4 -
5. AFFIRMATIVE COVENANTS.. . . . . . . . . . . . . . . . . . . . . . . . - 4 -
5A. Financial Statements; Notice of Defaults.. . . . . . . . . . . . - 4 -
5B. Information Required by Rule 144A. . . . . . . . . . . . . . . . - 6 -
5C. Inspection of Property.. . . . . . . . . . . . . . . . . . . . . - 6 -
5D. Covenant to Secure Note Equally. . . . . . . . . . . . . . . . . - 6 -
5E. Maintain Business and Insurance. . . . . . . . . . . . . . . . . - 6 -
5F. Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . - 7 -
6. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
6A. Debt Maintenance.. . . . . . . . . . . . . . . . . . . . . . . . - 7 -
6B. Fixed Charge Coverage. . . . . . . . . . . . . . . . . . . . . . - 7 -
6C. Working Capital Maintenance. . . . . . . . . . . . . . . . . . . - 8 -
6D. Tangible Net Worth Maintenance.. . . . . . . . . . . . . . . . . - 8 -
6E. Priority Debt Maintenance. . . . . . . . . . . . . . . . . . . . - 8 -
6F. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
6G. Loans, Advances, Investments and Contingent Liabilities. . . . . - 9 -
6H. Sale of Stock and Debt of Subsidiaries.. . . . . . . . . . . . .- 11 -
6I. Merger and Sale of Assets. . . . . . . . . . . . . . . . . . . .- 12 -
7. EVENTS OF DEFAULT.. . . . . . . . . . . . . . . . . . . . . . . . . .- 13 -
7A. Acceleration.. . . . . . . . . . . . . . . . . . . . . . . . . .- 13 -
7B. Rescission of Acceleration.. . . . . . . . . . . . . . . . . . .- 16 -
7C. Notice of Acceleration or Rescission.. . . . . . . . . . . . . .- 16 -
7D. Other Remedies.. . . . . . . . . . . . . . . . . . . . . . . . .- 16 -
8. REPRESENTATIONS, COVENANTS AND WARRANTIES.. . . . . . . . . . . . . .- 16 -
8A. Organization.. . . . . . . . . . . . . . . . . . . . . . . . . .- 16 -
8B. Financial Statements.. . . . . . . . . . . . . . . . . . . . . .- 16 -
8C. Actions Pending. . . . . . . . . . . . . . . . . . . . . . . . .- 17 -
8D. Outstanding Debt.. . . . . . . . . . . . . . . . . . . . . . . .- 17 -
8E. Title to Properties. . . . . . . . . . . . . . . . . . . . . . .- 17 -
8F. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 17 -
8G. Conflicting Agreements and Other Matters.. . . . . . . . . . . .- 17 -
8H. Offering of Notes. . . . . . . . . . . . . . . . . . . . . . . .- 18 -
8I. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . .- 18 -
8J. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 18 -
8K. Governmental Consent.. . . . . . . . . . . . . . . . . . . . . .- 19 -
8L. Environmental Compliance.. . . . . . . . . . . . . . . . . . . .- 19 -
8M. Disclosure.. . . . . . . . . . . . . . . . . . . . . . . . . . .- 19 -
9. REPRESENTATIONS OF THE PURCHASER. . . . . . . . . . . . . . . . . . .- 19 -
9A. Nature of Purchase.. . . . . . . . . . . . . . . . . . . . . . .- 19 -
9B. Source of Funds. . . . . . . . . . . . . . . . . . . . . . . . .- 20 -
10. DEFINITIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 20 -
10A. Yield-Maintenance Terms. . . . . . . . . . . . . . . . . . . . .- 20 -
10B. Other Terms. . . . . . . . . . . . . . . . . . . . . . . . . . .- 21 -
10C. Accounting Principles, Terms and Determinations. . . . . . . . .- 29 -
11. MISCELLANEOUS.. . . . . . . . . . . . . . . . . . . . . . . . . . . .- 29 -
11A. Note Payments. . . . . . . . . . . . . . . . . . . . . . . . . .- 29 -
11B. Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . . . .- 29 -
11C. Consent to Amendments. . . . . . . . . . . . . . . . . . . . . .- 30 -
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes. - 30 -
11E. Persons Deemed Owners; Participations. . . . . . . . . . . . . .- 31 -
11F. Survival of Representations and Warranties; Entire Agreement . .- 31 -
11G. Successors and Assigns; Transfer Restriction.. . . . . . . . . .- 31 -
11H. Disclosure to Other Persons. . . . . . . . . . . . . . . . . . .- 31 -
11I. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 32 -
11J. Payments Due on Non-Business Days. . . . . . . . . . . . . . . .- 32 -
11K. Satisfaction Requirement.. . . . . . . . . . . . . . . . . . . .- 32 -
11L. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . .- 33 -
11M. Severability.. . . . . . . . . . . . . . . . . . . . . . . . . .- 33 -
11N. Descriptive Headings.. . . . . . . . . . . . . . . . . . . . . .- 33 -
11O. Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . .- 33 -
11P. Conforming Debt Agreement Changes. . . . . . . . . . . . . . . .- 33 -
PURCHASER SCHEDULE
Exhibit A -- Form of Note
Exhibit B-1 -- Form of Opinion of Company's Counsel
Exhibit B-2 -- Form of Opinion of Company's Special Counsel
Schedule 6F -- Existing Liens
Schedule 8G -- List of Agreements Restricting Indebtedness
Schedule 11H -- Form of Confidentiality Agreement
Brown Group, Inc.
8300 Maryland Avenue
St. Louis, Missouri 63105
As of October 24, 1995
The Prudential Insurance Company of America
Pruco Life Insurance Company
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
7.36% Senior Notes due October 15, 2003
Ladies and Gentlemen:
The undersigned, Brown Group, Inc. (the "Company"), hereby
agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company will
authorize the issue of its Senior promissory notes in the aggregate
principal amount of $50,000,000, to be dated the date of issue
thereof, to mature October 15, 2003, to bear interest on the unpaid
balance thereof from the date thereof until the principal thereof
shall have become due and payable at the rate of 7.36% per annum
and on overdue payments at the rate specified therein, and to be
substantially in the form of Exhibit A attached hereto. The term
"Notes" as used herein shall include each such senior promissory
note delivered pursuant to any provision of this Agreement and each
such senior promissory note delivered in substitution or exchange
for any other Note pursuant to any such provision.
2. PURCHASE AND SALE OF NOTES. The Company hereby agrees to
sell to you and, subject to the terms and conditions herein set
forth, you agree to purchase from the Company Notes in the
aggregate principal amount of $50,000,000 at 100% of such aggregate
principal amount. The Company will deliver to you, at the offices
of Prudential Capital Group, 1201 Elm Street, Suite 4900, Dallas,
Texas 75270, one or more Notes registered in your name, evidencing
the aggregate principal amount of Notes to be purchased by you and
in the denomination or denominations specified in the Purchaser
Schedule attached hereto and payment of accrued interest on the
Existing Notes to the Date of Closing plus the yield-maintenance
amount payable with respect to the optional prepayment of the
Existing Notes in immediately payable funds to Account No. 050-54-526
at Morgan Guaranty Trust Company of New York (ABA No. 021-000-238),
against payment of the purchase price thereof by delivery to
the Company of $50,000,000 in principal amount of the Existing
Notes on the date of closing, which shall be October 24, 1995 or
any other date on or before October 25, 1995 upon which the
Company and you may mutually agree (herein called the "closing" or
the "date of closing").
3. CONDITIONS OF CLOSING. Your obligation to purchase and
pay for the Notes to be purchased by you hereunder is subject to
the satisfaction, on or before the date of closing, of the
following conditions:
3A. Certain Documents. You shall have received the
following, each dated the date of closing:
(i) The Note(s) to be purchased by you.
(ii) Certified copies of the resolutions of the Board of
Directors of the Company approving this Agreement and the
Notes, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with
respect to this Agreement and the Notes.
(iii) A certificate of the Secretary or an Assistant
Secretary of the Company certifying the names and true
signatures of the officers of the Company authorized to sign
this Agreement and the Notes and the other documents to be
delivered hereunder.
(iv) A certificate of the Secretary or Assistant
Secretary certifying that the copies of the Certificate of
Incorporation and By-laws of the Company provided to The
Prudential Insurance Company of America pursuant to a
Certificates of the Secretary of the Company dated January 28,
1993, remain the true and correct Certificate of Incorporation
and By-laws of the Company on the Date of Closing.
(v) Favorable opinions of Robert D. Pickle, General
Counsel of the Company, and Bryan Cave, LLP, special counsel
to the Company, satisfactory to you and your special counsel
and substantially in the form of Exhibits B-1 and B-2 attached
hereto, respectively, and as to such other matters as you may
reasonably request.
(vi) A good standing certificate for the Company from the
Secretaries of State of Missouri and New York dated of a
recent date and such other evidence of the status of the
Company as you may reasonably request.
3B. Opinion of Purchaser's Special Counsel. You shall have
received from Rex C. Mills, Assistant General Counsel of The
Prudential Insurance Company of America, who is acting as special
counsel for you in connection with this transaction, a favorable
opinion satisfactory to you as to such matters incident to the
matters herein contemplated as you may reasonably request.
3C. Representations and Warranties; No Default. The
representations and warranties contained in paragraph 8 shall be
true on and as of the date of closing, except to the extent of
changes caused by the transactions herein contemplated; there shall
exist on the date of closing no Event of Default or Default; and
the Company shall have delivered to you an Officer's Certificate,
dated the date of closing, to both such effects.
3D. Purchase Permitted By Applicable Laws. The purchase of
and payment for the Notes to be purchased by you on the date of
closing on the terms and conditions herein provided (including the
use of the proceeds of such Notes by the Company) shall not violate
any applicable law or governmental regulation (including, without
limitation, section 5 of the Securities Act or Regulation G, T or
X of the Board of Governors of the Federal Reserve System) and
shall not subject you to any tax, penalty, liability or other
onerous condition under or pursuant to any applicable law or
governmental regulation, and you shall have received such
certificates or other evidence as you may request to establish
compliance with this condition.
3E. Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated
hereby and all documents incident thereto shall be satisfactory in
substance and form to you, and you shall have received all such
counterpart originals or certified or other copies of such
documents as you may reasonably request.
3F. Structuring Fee. You shall have received a structuring
fee of $35,000 from the Company.
4. PREPAYMENTS. The Notes shall be subject to prepayment
only with respect to prepayments required pursuant to paragraph 4A
and optional prepayments permitted by paragraph 4B.
4A. Required Prepayments. Until the Notes shall be paid in
full, the Company shall apply to the prepayment of the Notes,
without Yield-Maintenance Amount, the sum of $10,000,000 on October
15 in each of the years 1999 to 2002, inclusive, and such principal
amounts of the Notes, together with interest thereon to the
prepayment dates, shall be due on such prepayment dates. The
remaining principal amount of the Notes, together with interest
accrued thereon, shall become due on the maturity date of the
Notes.
4B. Optional Prepayment With Yield-Maintenance Amount. The
Notes shall be subject to prepayment, in whole at any time or from
time to time in part (in minimum amounts of $5,000,000, and
multiples of $1,000,000), at the option of the Company, at 100% of
the principal amount so prepaid plus interest thereon to the
prepayment date and the Yield-Maintenance Amount, if any, with
respect to each Note.
4C. Notice of Optional Prepayment. The Company shall give
the holder of each Note irrevocable written notice of any
prepayment pursuant to paragraph 4B not less than 10 Business Days
prior to the prepayment date, specifying such prepayment date and
the principal amount of the Notes, and of the Notes held by such
holder, to be prepaid on such date and stating that such prepayment
is to be made pursuant to paragraph 4B. Notice of prepayment
having been given as aforesaid, the principal amount of the Notes
specified in such notice, together with interest thereon to the
prepayment date and together with the Yield-Maintenance Amount, if
any, with respect thereto, shall become due and payable on such
prepayment date. The Company shall, on or before the day on which
it gives written notice of any prepayment pursuant to paragraph 4B,
give telephonic notice of the principal amount of the Notes to be
prepaid and the prepayment date to each Significant Holder which
shall have designated a recipient of such notices in the Purchaser
Schedule attached hereto or by notice in writing to the Company.
4D. Partial Payments Pro Rata. Upon any partial prepayment
of the Notes pursuant to paragraph 4B, the principal amount so
prepaid shall be allocated to all Notes at the time outstanding
(including, for the purpose of this paragraph 4D only, all Notes
prepaid or otherwise retired or purchased or otherwise acquired by
the Company or any of its Subsidiaries or Affiliates other than by
prepayment pursuant to paragraph 4B) in proportion to the
respective outstanding principal amounts thereof.
4E. Retirement of Notes. The Company shall not, and shall
not permit any of its Subsidiaries or Affiliates to, prepay or
otherwise retire in whole or in part prior to their stated final
maturity (other than by prepayment pursuant to paragraph 4A or 4B
or upon acceleration of such final maturity pursuant to paragraph
7A), or purchase or otherwise acquire, directly or indirectly,
Notes held by any holder unless the Company or such Subsidiary or
Affiliate shall have offered to prepay or otherwise retire or
purchase or otherwise acquire, as the case may be, the same
proportion of the aggregate principal amount of Notes held by each
other holder of Notes at the time outstanding upon the same terms
and conditions. Any Notes so prepaid or otherwise retired or
purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates shall not be deemed to be outstanding
for any purpose under this Agreement, except as provided in
paragraph 4D.
5. AFFIRMATIVE COVENANTS. So long as any Note shall remain
unpaid, the Company covenants that:
5A. Financial Statements; Notice of Defaults. The Company
will deliver to each Significant Holder in triplicate:
(i) as soon as practicable and in any event within 50
days after the end of each quarterly period (other than the
last quarterly period) in each fiscal year, consolidated
statements of income, stockholders' equity and cash flows of
the Company and its Subsidiaries for the period from the
beginning of the current fiscal year to the end of such
quarterly period, and a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such quarterly
period, setting forth in each case in comparative form figures
for the corresponding period in the preceding fiscal year, all
in reasonable detail and satisfactory in form to the Required
Holder(s) and certified by an authorized financial officer of
the Company, subject to changes resulting from year-end
adjustments; provided, however, that delivery pursuant to
clause (iii) below of copies of the Quarterly Report on Form
10-Q of the Company for such quarterly period filed with the
Securities and Exchange Commission shall be deemed to satisfy
the requirements of this clause (i);
(ii) as soon as practicable and in any event within 95
days after the end of each fiscal year, consolidating
statements of income and changes in financial position and
consolidated statements of income and cash flows and a
consolidated statement of stockholders' equity of the Company
and its Subsidiaries for such year, and consolidating and
consolidated balance sheets of the Company and its
Subsidiaries as at the end of such year, setting forth in each
case in comparative form corresponding consolidated figures
from the preceding annual audit, all in reasonable detail and
satisfactory in form to the Required Holder(s) and, as to the
consolidated statements, reported on by independent public
accountants of recognized national standing selected by the
Company whose report shall be without limitation as to the
scope of the audit and satisfactory in substance to the
Required Holder(s) and, as to the consolidating statements,
certified by an authorized financial officer of the Company;
provided, however, that delivery pursuant to clause (iii)
below of copies of the Annual Report on Form 10-K of the
Company for such fiscal year filed with the Securities and
Exchange Commission shall be deemed to satisfy the
requirements of this clause (ii) with respect to the
consolidated financial statements;
(iii) promptly upon transmission thereof, copies of all
such financial statements, proxy statements, notices and
reports as it shall send to its public stockholders and copies
of all registration statements (without exhibits) and all
reports which it files with the Securities and Exchange
Commission (or any governmental body or agency succeeding to
the functions of the Securities and Exchange Commission);
(iv) promptly upon receipt of each other report submitted
to the Company or any Subsidiary by independent accountants in
connection with any interim or special audit made by them of
the books of the Company or any Subsidiary, an auditor's
certificate which describes the nature, purpose, scope and
findings of such audit; and
(v) with reasonable promptness, such other financial
data as such Significant Holder may reasonably request.
Together with each delivery of financial statements required by
clauses (i) and (ii) above, the Company will deliver to each
Significant Holder an Officer's Certificate demonstrating (with
computations in reasonable detail) compliance by the Company and
its Subsidiaries with the provisions of paragraphs 6A through 6I,
inclusive, and stating that there exists no Event of Default or
Default, or, if any Event of Default or Default exists, specifying
the nature and period of existence thereof and what action the
Company proposes to take with respect thereto. Together with each
delivery of financial statements required by clause (ii) above, the
Company will deliver to each Significant Holder a certificate of
such accountants stating that, in making the audit necessary for
their report on such financial statements, they have obtained no
knowledge of any Event of Default or Default, or, if they have
obtained knowledge of any Event of Default or Default, specifying
the nature and period of existence thereof. Such accountants,
however, shall not be liable to anyone by reason of their failure
to obtain knowledge of any Event of Default or Default which would
not be disclosed in the course of an audit conducted in accordance
with generally accepted auditing standards.
The Company also covenants that immediately after any
Responsible Officer obtains knowledge of an Event of Default or
Default, it will deliver to each Significant Holder an Officer's
Certificate specifying the nature and period of existence thereof
and what action the Company proposes to take with respect thereto.
5B. Information Required by Rule 144A. The Company covenants
that it will, upon the request of the holder of any Note, provide
such holder, and any qualified institutional buyer designated by
such holder, such financial and other information as such holder
may reasonably determine to be necessary in order to permit
compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Notes, except at
such times as the Company is subject to the reporting requirements
of section 13 or 15(d) of the Exchange Act. For the purpose of
this paragraph 5B, the term "qualified institutional buyer" shall
have the meaning specified in Rule 144A under the Securities Act.
5C. Inspection of Property. The Company covenants that upon
reasonable notice it will permit any Person designated by any
Significant Holder in writing, at such Significant Holder's
expense, to visit and inspect any of the properties of the Company
and its Subsidiaries, to examine the corporate books and financial
records of the Company and its Subsidiaries and make copies thereof
or extracts therefrom and to discuss the affairs, finances and
accounts of any of such corporations with the principal officers of
the Company and its independent public accountants, all at such
reasonable times and as often as such Significant Holder may
reasonably request.
5D. Covenant to Secure Note Equally. The Company covenants
that, if it or any Subsidiary shall create or assume any Lien upon
any of its property or assets, whether now owned or hereafter
acquired, other than Liens permitted by the provisions of paragraph
6F (unless prior written consent to the creation or assumption
thereof shall have been obtained pursuant to paragraph 11C), it
will make or cause to be made effective provision whereby the Notes
will be secured by such Lien equally and ratably with any and all
other Indebtedness thereby secured so long as any such other
Indebtedness shall be so secured.
5E. Maintain Business and Insurance. (i) The Company will,
and will cause each of its Subsidiaries and Brown Group Dublin to,
carry on and conduct its respective business in substantially the
same manner and in substantially the same general lines of business
as it is presently conducting, including without limitation, with
respect to the Company and its Subsidiaries, footwear importing and
retailing and, with respect to Brown Group Dublin, finance and cash
management activities, and will, and will cause each Subsidiary and
Brown Group Dublin to, do all things necessary to remain duly
incorporated or organized, validly existing and in good standing as
a domestic corporation or partnership, as the case may be, in its
jurisdiction of incorporation or organization and maintain all
requisite authority to conduct its business in each jurisdiction in
which its business is conducted except that the corporate or
partnership existence of any Subsidiary or Brown Group Dublin may
be terminated if in the good faith judgment of the Board of
Directors or a Responsible Officer of the Company such termination
is in the best interest of the Company and is not materially
disadvantageous to the holders of the Notes.
(ii) The Company will maintain or cause to be maintained,
with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and
business of its Subsidiaries against loss or damage of the kinds
customarily insured against by corporations of established
reputation engaged in the same or similar business and similarly
situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations.
Such insurance may be subject to co-insurance, deductibility or
similar causes which, in effect, result in self-insurance of
certain losses, provided that such self-insurance is in accord with
the approved practices of corporations similarly situated and
adequate insurance reserves are maintained in connection with such
self-insurance, and, notwithstanding the foregoing provisions of
this paragraph 5E(ii), the Company or any Subsidiary may effect
workers' compensation or similar insurance in respect of operations
in any state or other jurisdiction either through an insurance fund
operated by such state or other jurisdiction or by causing to be
maintained a system or systems of self-insurance in accord with
applicable laws.
5F. Compliance with Laws, Etc. The Company will comply, and
cause each of its Subsidiaries and Brown Group Dublin to comply, in
all material respects with all applicable laws, rules, regulations
and orders the noncompliance with which could result in a material
adverse effect on the Company or any of its Subsidiaries, such
compliance to include, without limitation, compliance with
Environmental Laws and paying before the same become delinquent all
taxes, assessments and governmental charges imposed upon it or upon
its property except to the extent contested in good faith.
6. NEGATIVE COVENANTS. So long as any Note shall remain
unpaid, the Company covenants that:
6A. Debt Maintenance. The Company will not permit at any
time the aggregate amount of Long-Term Debt of the Company, its
Subsidiaries and Long-Term Debt of Brown Group Dublin owed to
non-Affiliates to exceed an amount equal to 50% of Consolidated
Capitalization.
6B. Fixed Charge Coverage. As of the end of each fiscal
quarter of the Company, the Company will not permit Cash Flow
Available for Fixed Charges to be less than the percentage of Fixed
Charges set forth below opposite the period in which such quarter
ends:
Period Percentage
------ ----------
On and prior to February 3, 1996 110%
February 4, 1996 through and including August 3, 1996 115%
August 4, 1996 through and including February 1, 1997 120%
Thereafter 125%
6C. Working Capital Maintenance. The Company will not permit
at any time the sum of (I) the Current Assets of the Company, its
Subsidiaries and Brown Group Dublin and (II) Foreign Working
Capital to be less than the sum of (i) Current Liabilities of the
Company, its Subsidiaries and Brown Group Dublin and (ii)
$140,000,000.
6D. Tangible Net Worth Maintenance. The Company will not
permit at any time the Consolidated Tangible Net Worth of the
Company to be less than the sum of (i) $150,000,000 and (ii) an
amount determined by taking the sum of, for each fiscal quarter
beginning after January 30, 1993, an amount equal to 50% of
Consolidated Net Earnings of the Company for each such quarter.
6E. Priority Debt Maintenance. The Company will not, and
will not permit any of its Subsidiaries to, create, assume or
suffer to exist any Lien pursuant to clause (vii) of paragraph 6F,
permit any Subsidiary to create, incur assume or suffer to exist
any Indebtedness for borrowed money nor permit Brown Group Dublin
to create, incur, assume or suffer to exist any Indebtedness for
borrowed money to any non-Affiliate, unless the sum of (i) the
aggregate principal amount of Indebtedness secured by Liens created
pursuant to clause (vii) of paragraph 6F, (ii) the aggregate
principal amount of Indebtedness for borrowed money of all of the
Company's Subsidiaries and (iii) the aggregate principal amount of
Indebtedness for borrowed money of Brown Group Dublin to non-Affiliates
will not exceed an amount equal to 10% of the
Consolidated Tangible Net Worth of the Company.
6F. Liens. The Company will not and will not permit any
Subsidiary or Brown Group Dublin to create, assume or suffer to
exist any Lien upon or with respect to any of its properties or
assets, whether now owned or hereafter acquired, or any income or
profits therefrom (whether or not provision is made for the equal
and ratable securing of the Notes in accordance with the provisions
of Paragraph 5D), except
(i) Liens for taxes not yet due or which are being
actively contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and for which
reserves or other appropriate provision, if any, as shall be
required by generally accepted accounting principles shall
have been made therefor;
(ii) other statutory Liens or Liens created by operation
of law incidental to the conduct of its business or the
ownership of its property and assets which are not incurred in
connection with the borrowing of money or the obtaining of
advances or credit or guaranteeing the obligations of a Person
(including landlord liens) and contractual landlord liens in
jurisdictions that do not provide for statutory landlord
liens, and which do not in the aggregate materially detract
from the value of its property or assets or materially impair
the use thereof in the operation of its business;
(iii) Liens on property or assets of a Subsidiary to
secure obligations of such Subsidiary to the Company or a
Subsidiary;
(iv) existing material Liens on property of the Company
described in Schedule 6F attached hereto;
(v) any Lien created to secure all or any part of the
purchase price, or to secure Indebtedness incurred or assumed
to pay all or any part of the purchase price, of property
acquired by the Company or a Subsidiary after the date hereof,
provided that (a) any such Lien shall be confined solely to
the item or items of property so acquired, (b) the principal
amount of Indebtedness secured by any such Lien shall at no
time exceed an amount equal to 75% of the cost to the Company
or such Subsidiary of the property so acquired, and (c) any
such Lien shall be created within three months after its
acquisition;
(vi) Liens on receivables of the Company or a Subsidiary
created in connection with any receivable securitization
program; provided that the principal amount of the
Indebtedness secured by any such Liens shall not at any time
exceed $20,000,000; and
(vii) other Liens on the property of the Company or
a Subsidiary;
provided that the no Lien shall be created, incurred or
assumed pursuant to clause (vii) unless, immediately after
giving effect thereto, the Company would be in compliance with
the provisions of paragraph 6E. For the purposes of this
paragraph 6F, any Person becoming a Subsidiary after the date
of this Agreement shall be deemed to have incurred all of its
then outstanding Liens at the time it becomes a Subsidiary,
and any Person extending, renewing or refunding any
Indebtedness secured by any Lien shall be deemed to have
incurred such Lien at the time of such extension, renewal or
refunding.
6G. Loans, Advances, Investments and Contingent Liabilities.
The Company will not and will not permit any Subsidiary or Brown
Group Dublin to make or permit to remain outstanding any loan or
advance to, or extend credit (other than, in the case of the
Company or any Subsidiary, credit extended in the normal course of
business to any Person who is not an Affiliate of the Company) to,
or guarantee, endorse or otherwise be or become contingently
liable, directly or indirectly, in connection with the obligations,
stock or dividends of, or own, purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any
capital contribution to, any Person, except that
(i) the Company or any Subsidiary may make or permit to
remain outstanding loans or advances to any Subsidiary;
(ii) the Company or any Subsidiary may own, purchase or
acquire stock, obligations or securities of a corporation
which immediately after such purchase or acquisition will be
a Subsidiary;
(iii) the Company or any Subsidiary may acquire and
own stock, obligations or securities received in settlement of
debts (created in the ordinary course of business) owing to
the Company or such Subsidiary;
(iv) the Company or any Subsidiary or Brown Group Dublin
may own, purchase or acquire (a) certificates of deposit of,
or bankers acceptances for which the accepting banks are, (1)
(a) Line Banks the senior debt of which bank or the holding
company thereof carries at least an investment grade rating
from both Moody's Investors Services, Inc. ("Moody's") and
Standard and Poor's Corporation ("S&P") or (b) Shanghai
Commercial Bank Ltd. (provided that the maximum aggregate
amount certificates of deposit of and bankers acceptances for
such bank held by the Company and its Subsidiaries shall not
exceed $10,000,000 at any time) or (2) commercial banks
organized under the laws of the United States or foreign
commercial banks the senior debt of which bank or the holding
company thereof carries an a rating of A- or better by S&P and
A3 or better by Moody's (collectively clauses (1) and (2),
"Qualified Banks"), (b) commercial paper rated A-1 or better
by S&P and P-1 or better by Moody's, (c) obligations of the
United States Government or any agency thereof, and
obligations guaranteed by the United States Government, and
(d) repurchase agreements of Qualified Banks related to
obligations described in (c) above; for each of the foregoing,
such obligation or agreement must be due within one year from
the date of purchase and payable in United States dollars;
(v) the Company or any Subsidiary may own, purchase or
acquire (a) obligations of any State of the United States or
political subdivision thereof which are rated A or better by
S&P and Mig 1 or better by Moody's due within one year from
the date of purchase and payable in the United States in
United States dollars or (b) obligations described in (a) with
a maturity greater than one year from the date of purchase
that are subject to repurchase obligations of the issuer
thereof, which repurchase obligations have a maturity of not
more than 10 days from the date of purchase;
(vi) investments in stocks of investment companies
registered under the Investment Company Act of 1940 which are
no-load funds and which invest primarily in obligations of the
type described in clauses (iv) and (v) above, provided that
any such investment company shall have an aggregate net asset
value of not less than $500,000,000;
(vii) the Company or any Subsidiary may maintain
demand deposit accounts with federally insured financial
institutions up to the amount of federal deposit insurance
coverage or with Qualified Banks and endorse negotiable
instruments for collection in the ordinary course of business;
(viii) the Company may make or permit to remain
outstanding loans or advances to independent retailers of the
products of Company or any Subsidiary not in excess of an
aggregate of $15,000,000 principal amount at any time
outstanding with no more than an aggregate of $5,000,000
principal amount at any time outstanding with any one such
retailer;
(ix) contingent liabilities of the Company and its
Subsidiaries for operating leases (other than the Assumed
Cloth World Leases) up to an aggregate amount of $32,000,000
and the Assumed Cloth World Leases;
(x) Brown Group Dublin may make or permit to remain
outstanding any loan or advance to any Affiliate; and
(xi) excluding those items covered by clauses (i) through
(x) above, the Company or any Subsidiary may make or permit to
remain outstanding loans or advances to, or guarantee, endorse
or otherwise be or become contingently liable in connection
with the obligations, stock or dividends of, or own, purchase
or acquire stock, obligations or securities of, any other
Person; provided that the aggregate principal amount of such
loans and advances, plus net liabilities in respect of Rate
Hedging Obligations having a tenor in excess of one year from
the date of creation thereof, to the extent that the aggregate
amount of all such net liabilities exceeds $5,000,000, plus
the aggregate amount of such contingent liabilities, plus the
aggregate amount of the investment (at original cost) in such
stock, obligations and securities shall not at any time exceed
an amount equal to 45% of Consolidated Tangible Net Worth of
the Company and its Subsidiaries; provided, further that the
aggregate amount of the investment (at original cost) in the
stock, obligations and securities of corporations or other
Persons organized under the laws of a jurisdiction other than
the United States, a state thereof, Canada, a province thereof
or the United Kingdom engaged in the same general lines of
business as the Company and its Subsidiaries shall not exceed
an amount equal to 40% of Consolidated Tangible Net Worth of
the Company and its Subsidiaries; and provided that the
aggregate amount of the investment (at original cost) in the
stock, obligations and securities of any Person not engaged in
the same general lines of business as the Company and its
Subsidiaries shall not exceed an amount equal to 5% of
Consolidated Tangible Net Worth of the Company and its
Subsidiaries.
6H. Sale of Stock and Debt of Subsidiaries. The Company will
not and will not permit any Subsidiary or Brown Group Dublin to
sell or otherwise dispose of, or part with control of, any shares
of stock or Indebtedness of any Subsidiary, except (i) to the
Company or another Subsidiary, (ii) with respect to Indebtedness of
a Subsidiary, in compliance with paragraph 6E and (iii) all shares
of stock and Indebtedness of any Subsidiary at the time owned by or
owed to the Company and all Subsidiaries may be sold as an entirety
for a cash consideration which represents the fair value (as
determined in good faith by the Board of Directors or a Responsible
Officer of the Company) at the time of sale of the shares of stock
and Indebtedness so sold, provided that (a) the assets of such
Subsidiary together with (b) the assets of any other Subsidiary the
stock or Indebtedness of which was sold in the preceding 12-month
period and (c) the assets of the Company and its Subsidiaries sold,
leased, transferred or otherwise disposed of pursuant to clause
(viii) of paragraph 6I in the preceding 12-month period (in each
transaction measured by the greater of book value and fair market
value) do not represent more than $25,000,000 on a book value basis
as reflected on the most recent annual or quarterly consolidated
balance sheet and provided further that, at the time of such sale,
such Subsidiary shall not own, directly or indirectly, any shares
of stock or Indebtedness of any other Subsidiary (unless all of the
shares of stock and Indebtedness of such other Subsidiary owned,
directly or indirectly, by the Company and all Subsidiaries are
simultaneously being sold as permitted by this Paragraph 6H) or any
Indebtedness of the Company.
6I. Merger and Sale of Assets. The Company will not and will
not permit any Subsidiary to merge or consolidate with or into any
other Person or convey, lease, transfer or otherwise dispose of all
or any part of its assets to any Person or acquire all or
substantially all of the assets of any Person except that
(i) any Subsidiary may merge with the Company (provided
that the Company shall be the continuing or surviving
corporation) or with any one or more other Subsidiaries;
(ii) any Subsidiary may sell, lease, transfer or
otherwise dispose of any of its assets to the Company or
another Subsidiary;
(iii) the Company may merge with any other
corporation, provided that (a) the Company shall be the
continuing or surviving corporation, and (b) immediately after
giving effect to such merger no Event of Default or Default
shall exist,
(iv) a Subsidiary may merge with any other corporation,
provided that (a) the continuing or surviving corporation is
a Subsidiary and (b) immediately after giving effect to such
merger no Event of Default or Default shall exist;
(v) the Company may consolidate with or merge into any
other solvent corporation if (x) the surviving corporation is
a corporation organized and existing under the laws of the
United States of America or a state thereof or the District of
Columbia with substantially all of its assets located and a
majority of its business conducted within the continental
United States or Canada, (y) such corporation expressly
assumes, by an agreement satisfactory in substance and form to
the Required Holders (which agreement may required the
delivery in connection with such assumption of such opinions
of counsel as the Required Holders may reasonably require),
the obligations of the Company under this Agreement and under
the Notes, and (z) immediately after giving effect to such
transaction (and such assumption), no Default or Event of
Default shall exist;
(vi) the Company or any Subsidiary may acquire all or
substantially all of the assets of any Person engaged in the
same general lines of business as the Company and its
Subsidiaries provided that prior to and immediately after
giving effect to such acquisition no Event of Default or
Default shall exist;
(vii) the Company or any Subsidiary may sell, lease,
transfer or otherwise dispose of any of its assets to any
Person, provided that (a) such assets together with (b) all
other assets of the Company and its Subsidiaries sold, leased,
transferred or otherwise disposed of during the preceding 12-
month period and (c) the assets of all Subsidiaries the stock
or Indebtedness of which has been sold or otherwise disposed
of during the preceding 12-month period pursuant to the first
proviso of paragraph 6H (in each transaction measured by the
greater of book value or fair market value), do not represent
more than $25,000,000; and
(viii) the Company and any Subsidiary may sell or
otherwise dispose of inventory in the ordinary course of
business.
7. EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events shall occur
and be continuing for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or otherwise):
(i) the Company defaults in the payment of any principal
of or Yield-Maintenance Amount payable with respect to any
Note when the same shall become due, either by the terms
thereof or otherwise as herein provided; or
(ii) the Company defaults in the payment of any interest
on any Note for more than 5 Business Days after the date due;
or
(iii) the Company or any Subsidiary defaults (whether
as primary obligor or as guarantor or other surety) in any
payment of principal of or interest on any other obligation
for money borrowed (or any Capitalized Lease Obligation, any
obligation under a conditional sale or other title retention
agreement, any obligation issued or assumed as full or partial
payment for property whether or not secured by a purchase
money mortgage or any obligation under notes payable or drafts
accepted representing extensions of credit) beyond any period
of grace provided with respect thereto, or the Company or any
Subsidiary fails to perform or observe any other agreement,
term or condition contained in any agreement under which any
such obligation is created (or if any other event thereunder
or under any such agreement shall occur and be continuing) and
the effect of such failure or other event is to cause, or to
permit the holder or holders of such obligation (or a trustee
on behalf of such holder or holders) to cause, such obligation
to become due (or to be repurchased by the Company or any
Subsidiary) prior to any stated maturity, provided that the
aggregate amount of all obligations as to which such a payment
default shall occur and be continuing or such a failure or
other event causing or permitting acceleration (or resale to
the Company or any Subsidiary) shall occur and be continuing
exceeds $10,000,000; or
(iv) any representation or warranty made by the Company
herein or by the Company or any of its officers in any writing
furnished in connection with or pursuant to this Agreement
shall be false in any material respect on the date as of which
made; or
(v) the Company fails to perform or observe any
agreement contained in paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure
shall not be remedied within 30 days after any Responsible
Officer obtains knowledge thereof; or
(vii) the Company or any Subsidiary makes an
assignment for the benefit of creditors or is generally not
paying its debts as such debts become due (as such phrase is
used in Sec. 303(h)(1) of the United States Bankruptcy Code of
1978 as amended (11 U.S.C. Sec. 303(h)(1)); or
(viii) any decree or order for relief in respect of
the Company or any Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar
law, whether now or hereafter in effect (herein called the
"Bankruptcy Law"), of any jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies
to any tribunal for, or consents to, the appointment of, or
taking possession by, a trustee, receiver, custodian,
liquidator or similar official of the Company or any
Subsidiary, or of any substantial part of the assets of the
Company or any Subsidiary, or commences a voluntary case under
the Bankruptcy Law of the United States or any proceedings
(other than proceedings for the voluntary liquidation and
dissolution of a Subsidiary) relating to the Company or any
Subsidiary under the Bankruptcy Law of any other jurisdiction;
or
(x) any such petition or application is filed, or any
such proceedings are commenced, against the Company or any
Subsidiary and the Company or such Subsidiary by any act
indicates its approval thereof, consent thereto or acquies-
cence therein, or an order, judgment or decree is entered
appointing any such trustee, receiver, custodian, liquidator
or similar official, or approving the petition in any such
proceedings, and such order, judgment or decree remains
unstayed and in effect for more than 30 days; or
(xi) any order, judgment or decree is entered in any pro-
ceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed
and in effect for more than 30 days; or
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary decreeing a
split-up of the Company or such Subsidiary which requires the
divestiture of assets representing a Substantial Part, or the
divestiture of the stock of a Subsidiary whose assets
represent a Substantial Part, of the consolidated assets of
the Company and its Subsidiaries (determined in accordance
with generally accepted accounting principles) or which
requires the divestiture of assets, or stock of a Subsidiary,
which shall have contributed a Substantial Part of the consol-
idated net income of the Company and its Subsidiaries
(determined in accordance with generally accepted accounting
principles) for any of the three fiscal years then most
recently ended, and such order, judgment or decree remains
unstayed and in effect for more than 30 days; or
(xiii) final judgments in an aggregate amount in
excess of $10,000,000 are rendered against the Company or any
Subsidiary and, within 60 days after entry thereof, such
judgment is not discharged or execution thereof stayed pending
appeal, or within 60 days after the expiration of any such
stay, such judgment is not discharged; or
(xiv) the Company or any ERISA Affiliate, in its
capacity as an employer under a Multiemployer Plan, makes a
complete or partial withdrawal from such Multiemployer Plan
resulting in the incurrence by such withdrawing employer of a
withdrawal liability in an amount exceeding $1,000,000;
then (a) if such event is an Event of Default specified in clause
(i) or (ii) of this paragraph 7A, the holder of any Note (other
than the Company or any of its Subsidiaries or Affiliates) may at
its option, by notice in writing to the Company, declare such Note
to be, and such Note shall thereupon be and become, immediately due
and payable at par together with interest accrued thereon, without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Company, (b) if such event is an
Event of Default specified in clause (viii), (ix) or (x) of this
paragraph 7A with respect to the Company, all of the Notes at the
time outstanding shall automatically become immediately due and
payable at par together with interest accrued thereon, without
presentment, demand, protest or notice of any kind, all of which
are hereby waived by the Company, and (c) if such event is not an
Event of Default specified in clause (viii), (ix) or (x) of this
paragraph 7A with respect to the Company, the holder(s) of at least
33-1/3% of the outstanding principal amount of the Notes may at its
or their option, by notice in writing to the Company, declare all
of the Notes to be, and all of the Notes shall thereupon be and
become, immediately due and payable together with interest accrued
thereon and together with the Yield-Maintenance Amount, if any,
with respect to each Note, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Company, provided that the Yield-Maintenance Amount, if any, with
respect to each Note shall be due and payable upon such declaration
only if (x) such event is an Event of Default specified in any of
clauses (i) to (vi), inclusive, of this paragraph 7A, (y) the
holder(s) of at least 33-1/3% of the outstanding principal amount
of the Notes shall have given to the Company, at least 10 Business
Days before such declaration, written notice stating its or their
intention so to declare the Notes to be immediately due and payable
and identifying one or more such Events of Default whose occurrence
on or before the date of such notice permits such declaration and
(z) one or more of the Events of Default so identified shall be
continuing at the time of such declaration.
7B. Rescission of Acceleration. At any time after any or all
of the Notes shall have been declared immediately due and payable
pursuant to paragraph 7A, the holders of at least a majority of the
outstanding principal amount of the Notes may, by notice in writing
to the Company, rescind and annul such declaration and its
consequences if (i) the Company shall have paid all overdue
interest on the Notes, the principal of and Yield-Maintenance
Amount, if any, payable with respect to any Notes which have become
due otherwise than by reason of such declaration, and interest on
such overdue interest and overdue principal and Yield-Maintenance
Amount at the rate specified in the Notes, (ii) the Company shall
not have paid any amounts which have become due solely by reason of
such declaration, (iii) all Events of Default and Defaults, other
than non-payment of amounts which have become due solely by reason
of such declaration, shall have been cured or waived pursuant to
paragraph 11C, and (iv) no judgment or decree shall have been
entered for the payment of any amounts due pursuant to the Notes or
this Agreement. No such rescission or annulment shall extend to or
affect any subsequent Event of Default or Default or impair any
right arising therefrom.
7C. Notice of Acceleration or Rescission. Whenever any Note
shall be declared immediately due and payable pursuant to paragraph
7A or any such declaration shall be rescinded and annulled pursuant
to paragraph 7B, the Company shall forthwith give written notice
thereof to the holder of each Note at the time outstanding.
7D. Other Remedies. If any Event of Default or Default shall
occur and be continuing, the holder of any Note may proceed to
protect and enforce its rights under this Agreement and such Note
by exercising such remedies as are available to such holder in
respect thereof under applicable law, either by suit in equity or
by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid
of the exercise of any power granted in this Agreement. No remedy
conferred in this Agreement upon the holder of any Note is intended
to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy
conferred herein or now or hereafter existing at law or in equity
or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company
represents, covenants and warrants as follows:
8A. Organization. The Company is a corporation duly
organized and existing in good standing under the laws of the State
of New York and each Subsidiary is duly organized and existing in
good standing under the laws of the jurisdiction in which it is
incorporated.
8B. Financial Statements. The Company has furnished you with
the following financial statements, identified by a principal
financial officer of the Company: (i) a consolidated balance sheet
of the Company and its Subsidiaries as at January 28, 1995 and
January 29, 1994, and consolidated statements of income, stock-holders'
equity and cash flows of the Company and its Subsidiaries
for the fiscal years ended on such dates, all reported on by Ernst
& Young; and (ii) a consolidated balance sheet of the Company and
its Subsidiaries as at July 29 in each of the years 1995 and 1994
and consolidated statements of income, stockholders' equity and
cash flows for the six-month period ended on each such date,
prepared by the Company. Such financial statements (including any
related schedules and/or notes) are true and correct in all
material respects (subject, as to interim statements, to changes
resulting from audits and year-end adjustments), have been prepared
in accordance with generally accepted accounting principles
consistently followed throughout the periods involved and show all
liabilities, direct and contingent, of the Company and its Subsidi-
aries required to be shown in accordance with such principles. The
balance sheets fairly present the condition of the Company and its
Subsidiaries as at the dates thereof, and the statements of income,
stockholders' equity and cash flows fairly present the results of
the operations of the Company and its Subsidiaries and their cash
flows for the periods indicated. There has been no material
adverse change in the business, condition (financial or otherwise)
or operations of the Company and its Subsidiaries taken as a whole
since July 29, 1995.
8C. Actions Pending. There is no action, suit, investigation
or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, or any
properties or rights of the Company or any of its Subsidiaries, by
or before any court, arbitrator or administrative or governmental
body which might result in any material adverse change in the
business, condition (financial or otherwise) or operations of the
Company and its Subsidiaries taken as a whole.
8D. Outstanding Debt. Neither the Company nor any of its
Subsidiaries has outstanding any Long-Term Debt or Indebtedness
except as permitted by paragraphs 6A and 6E, respectively. There
exists no default under the provisions of any instrument evidencing
such Long-Term Debt or Indebtedness (in a principal amount of
$50,000 or more) or of any agreement relating thereto.
8E. Title to Properties. The Company has and each of its
Subsidiaries has good and indefeasible title to its respective real
properties (other than properties which it leases) and good title
to all of its other respective properties and assets, including the
properties and assets reflected in the balance sheet as at January
28, 1995 referred to in paragraph 8B (other than properties and
assets disposed of in the ordinary course of business), subject to
no Lien of any kind except Liens permitted by paragraph 6F. All
leases necessary in any material respect for the conduct of the
respective businesses of the Company and its Subsidiaries are valid
and subsisting and are in full force and effect.
8F. Taxes. The Company has and each of its Subsidiaries has
filed all federal, state and other income tax returns which, to the
knowledge of the officers of the Company, are required to be filed,
and each has paid all taxes as shown on such returns and on all
assessments received by it to the extent that such taxes have
become due, except such taxes as are being contested in good faith
by appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting
principles.
8G. Conflicting Agreements and Other Matters. Neither the
Company nor any of its Subsidiaries is a party to any contract or
agreement or subject to any charter or other corporate restriction
which materially and adversely affects its business, property or
assets, or financial condition. Neither the execution nor delivery
of this Agreement or the Notes, nor the offering, issuance and sale
of the Notes, nor fulfillment of nor compliance with the terms and
provisions hereof and of the Notes will conflict with, or result in
a breach of the terms, conditions or provisions of, or constitute
a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the
Company or any of its Subsidiaries pursuant to, the charter or
by-laws of the Company or any of its Subsidiaries, any award of any
arbitrator or any agreement (including any agreement with
stockholders), instrument, order, judgment, decree, statute, law,
rule or regulation to which the Company or any of its Subsidiaries
is subject. Neither the Company nor any of its Subsidiaries is a
party to, or otherwise subject to any provision contained in, any
instrument evidencing Indebtedness of the Company or such
Subsidiary, any agreement relating thereto or any other contract or
agreement (including its charter) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Indebtedness of
the Company of the type to be evidenced by the Notes except as set
forth in the agreements listed in Schedule 8G attached hereto.
8H. Offering of Notes. Neither the Company nor any agent
acting on its behalf has, directly or indirectly, offered the Notes
or any similar security of the Company for sale to, or solicited
any offers to buy the Notes or any similar security of the Company
from, or otherwise approached or negotiated with respect thereto
with, any Person other than institutional investors, and neither
the Company nor any agent acting on its behalf has taken or will
take any action which would subject the issuance or sale of the
Notes to the provisions of section 5 of the Securities Act or to
the provisions of any securities or Blue Sky law of any applicable
jurisdiction.
8I. Use of Proceeds. Neither the Company nor any Subsidiary
owns or has any present intention of acquiring any "margin stock"
as defined in Regulation G (12 CFR Part 207) of the Board of
Governors of the Federal Reserve System (herein called "margin
stock"). The proceeds of sale of the Notes will be used to repay
existing Indebtedness of the Company. None of such proceeds will
be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any
margin stock or for the purpose of maintaining, reducing or retir-
ing any Indebtedness which was originally incurred to purchase or
carry any stock that is currently a margin stock or for any other
purpose which might constitute this transaction a "purpose credit"
within the meaning of such Regulation G. Neither the Company nor
any agent acting on its behalf has taken or will take any action
which might cause this Agreement or the Notes to violate Regulation
G, Regulation T or any other regulation of the Board of Governors
of the Federal Reserve System or to violate the Exchange Act, in
each case as in effect now or as the same may hereafter be in
effect.
8J. ERISA. No accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not
waived, exists with respect to any Plan (other than a Multiemployer
Plan). No liability to the Pension Benefit Guaranty Corporation
has been or is expected by the Company or any ERISA Affiliate to be
incurred with respect to any Plan (other than a Multiemployer Plan)
by the Company , any Subsidiary or any ERISA Affiliate which is or
would be materially adverse to the business, condition (financial
or otherwise) or operations of the Company and its Subsidiaries
taken as a whole. Neither the Company, any Subsidiary nor any
ERISA Affiliate has incurred or presently expects to incur any
withdrawal liability under Title IV of ERISA with respect to any
Multiemployer Plan which is or would be materially adverse to the
business, condition (financial or otherwise) or operations of the
Company and its Subsidiaries taken as a whole. The execution and
delivery of this Agreement and the issuance and sale of the Notes
will be exempt from, or will not involve any transaction which is
subject to, the prohibitions of section 406 of ERISA and will not
involve any transaction in connection with which a penalty could be
imposed under section 502(i) of ERISA or a tax could be imposed
pursuant to section 4975 of the Code. The representation by the
Company in the next preceding sentence is made in reliance upon and
subject to the accuracy of your representation in paragraph 9B.
8K. Governmental Consent. Neither the nature of the Company
or of any Subsidiary, nor any of their respective businesses or
properties, nor any relationship between the Company or any
Subsidiary and any other Person, nor any circumstance in connection
with the offering, issuance, sale or delivery of the Notes is such
as to require any authorization, consent, approval, exemption or
other action by or notice to or filing with any court or
administrative or governmental body (other than routine filings
after the date of closing with the Securities and Exchange
Commission and/or state Blue Sky authorities) in connection with
the execution and delivery of this Agreement, the offering,
issuance, sale or delivery of the Notes or fulfillment of or
compliance with the terms and provisions hereof or of the Notes.
8L. Environmental Compliance. The Company and its
Subsidiaries and all of their respective properties and facilities
have complied at all times and in all respects with all
Environmental Laws in effect on the date hereof except, in any such
case, where failure to comply would not result in a material
adverse effect on the business, condition (financial or otherwise)
or operations of the Company and its Subsidiaries taken as a whole.
8M. Disclosure. Neither this Agreement nor any other
document, certificate or statement furnished to you by or on behalf
of the Company in connection herewith contains any untrue statement
of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not
misleading. There is no fact peculiar to the Company or any of its
Subsidiaries which materially adversely affects or in the future
may (so far as the Company can now foresee) materially adversely
affect the business, property or assets, or financial condition of
the Company or any of its Subsidiaries and which has not been set
forth in this Agreement or in the other documents, certificates and
statements furnished to you by or on behalf of the Company prior to
the date hereof in connection with the transactions contemplated
hereby. The financial projections contained in the Brown Group,
Inc. Presentation to Banks dated September 27, 1995 are reasonable
based on the assumptions stated therein and the best information
available to the officers of the Company.
9. REPRESENTATIONS OF THE PURCHASER. You represent as
follows:
9A. Nature of Purchase. You are not acquiring the Notes to
be purchased by you hereunder with a view to or for sale in
connection with any distribution thereof within the meaning of the
Securities Act, provided that the disposition of your property
shall at all times be and remain within your control.
9B. Source of Funds. The sources of funds to be used by you
to purchase the Notes constitute assets allocated to: (i) your
"insurance company general account" (as such term is defined under
Section V of the United States Department of Labor's Prohibited
Transaction Class Exemption ("PTCE") 95-60) and, as of the date of
the purchase of the Notes, you satisfy all of the applicable
requirements for relief under Sections I and V of PTCE 95-60 and/or
(ii) a separate account maintained by you in which no employee
benefit plan, other than employee benefit plans identified on a
list that has been furnished by you to the Company, participates to
the extent of 10% or more.
10. DEFINITIONS. For the purpose of this Agreement, the
terms defined in the introductory sentence and in paragraphs 1 and
2 shall have the respective meanings specified therein, and the
following terms shall have the meanings specified with respect
thereto below:
10A. Yield-Maintenance Terms.
"Business Day" shall mean any day other than a Saturday,
a Sunday or a day on which commercial banks in New York City are
required or authorized to be closed.
"Called Principal" shall mean, with respect to any Note,
the principal of such Note that is to be prepaid pursuant to
paragraph 4B or is declared to be immediately due and payable
pursuant to paragraph 7A, as the context requires.
"Discounted Value" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called Principal
from their respective scheduled due dates to the Settlement Date
with respect to such Called Principal, in accordance with accepted
financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable)
equal to the Reinvestment Yield with respect to such Called
Principal.
"Reinvestment Yield" shall mean, with respect to the
Called Principal of any Note, 0.50% over the yield to maturity
implied by (i) the yields based on the ask price reported, as of
10:00 a.m. (New York City time) on the Business Day next preceding
the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such
other display as may replace Page 678 on the Telerate Service) for
actively traded U.S. Treasury securities having a maturity equal to
the Remaining Average Life of such Called Principal as of such
Settlement Date, or if such yields shall not be reported as of such
time or the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series yields
reported, for the latest day for which such yields shall have been
so reported as of the Business Day next preceding the Settlement
Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date. Such implied yield
shall be determined, if necessary, by (a) converting U.S. Treasury
bill quotations to bond-equivalent yields in accordance with
accepted financial practice and (b) interpolating linearly between
yields reported for various maturities.
"Remaining Average Life" shall mean, with respect to the
Called Principal of any Note, the number of years (calculated to
the nearest one-twelfth year) obtained by dividing (i) such Called
Principal into (ii) the sum of the products obtained by multiplying
(a) each Remaining Scheduled Payment of such Called Principal (but
not of interest thereon) by (b) the number of years (calculated to
the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect
to the Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due on or after the
Settlement Date with respect to such Called Principal if no payment
of such Called Principal were made prior to its scheduled due date.
"Settlement Date" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is
to be prepaid pursuant to paragraph 4B or is declared to be
immediately due and payable pursuant to paragraph 7A, as the
context requires.
"Yield-Maintenance Amount" shall mean, with respect to
any Note, an amount equal to the excess, if any, of the Discounted
Value of the Called Principal of such Note over the sum of (i) such
Calle d Principal plus (ii) interest accrued thereon as of
(including interest due on) the Settlement Date with respect to
such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero.
10B. Other Terms.
"Affiliate" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common
control with, the Company, except a Subsidiary. A Person shall be
deemed to control a corporation if such Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of such corporation, whether through the
owner ship of voting securities, by contract or otherwise.
"Assumed Cloth World Leases" shall mean all leases
entered into by Cloth World that have been assumed by a Person
(other than a Subsidiary or Affiliate of the Company) in connection
with the purchase by such Person of all or substantially all of the
assets of Cloth World; provided, however, that if the Person that
has assumed any such lease defaults in the payment of any rent due
thereunder, and such default is not cured within the time provided
for cure in such lease, if any, or if demand is made against the
Company or any of its Subsidiaries for the performance of any
obligation, including the payment of any rent due, under any such
lease, then such lease shall thereafter be excluded from the
definition of Assumed Cloth World Leases.
"Bankruptcy Law" shall have the meaning specified in
clause (viii) of paragraph 7A.
"Brown Group Dublin" shall mean a corporation to be
organized under the laws of The Republic of Ireland, which will be
indirectly wholly-owned by the Company, to engage in finance and
cash management activities, including receipt of non-equity
investments from Subsidiaries and Foreign Subsidiaries, intragroup
lending, treasury activities including dealing in financial
instruments, temporary deposits and cash netting and pooling.
"Capital Expenditures" shall mean, with respect to any
Person, all capital expenditures made during period determined in
accordance with generally accepted accounting principles, including
without limitation all Capitalized Lease Obligations incurred
during such period; provided, however, that if, within 180 days of
the date of this Agreement, the Company provides a certificate that
certifies that the Company's principal revolving credit facility
provides that such expenditures are net of cash proceeds from the
sale of fixed assets to the extent such proceeds are not included
in Pre-Tax Income, then this definition shall be automatically
amended to be net of such cash proceeds to the extent such proceeds
are not included in Pre-Tax Income.
"Capitalized Lease Obligation" shall mean any rental
obligation which, under generally accepted accounting principles,
would be required to be capitalized on the books of any Person,
taken at the amount thereof accounted for as indebtedness (net of
interest expense) in accordance with such principles.
"Cash Flow Available for Fixed Charges" shall mean with
respect to the prior four fiscal quarters, (i) the sum of (a)
Pre-Tax Income, minus extraordinary gains other than Extraordinary Cash
Gains of up to $8,000,000 in the aggregate for any period of
determination, plus (b) Extraordinary Non-Cash Losses, plus (c)
allowance for depreciation and amortization, plus (d) Fixed
Charges, minus (ii) Capital Expenditures, provided, however, that
the net amount of Cash Flow Available for Fixed Charges contributed
by all Persons which are not Subsidiaries or Brown Group Dublin may
not exceed 40% of total Cash Flow Available for Fixed Charges.
"Cloth World" shall mean any one or more of the
following: Brown Missouri, Inc. (formerly known as Cloth World,
Inc.), any of its direct or indirect subsidiaries, CW Wholesale One
L.P., a Texas Limited Partnership, and those assets of Brown Group
Retail, Inc. which were previously comprised of CLOTH WORLD retail
fabric stores and their operations.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Consolidated Capitalization" shall mean, as of any date
of determination, the sum of (a) Consolidated Tangible Net Worth,
and (b) Long-Term Debt.
"Consolidated Net Earnings" shall mean, for any period,
consolidated net earnings of the Company and its consolidated
subsidiaries for such period, determined in accordance with
generally accepted accounting principles. If the preceding is a
number greater than or equal to zero, such amount shall be
considered Consolidated Net Earnings; if it is a number less than
zero, Consolidated Net Earnings shall be considered to be zero.
"Consolidated Tangible Net Worth" shall mean the sum of
the capital stock (but excluding treasury stock and capital stock
subscribed and unissued) and surplus (including earned surplus,
capital surplus and the balance of the current profits and loss
account not transferred to surplus) accounts of the Company and its
consolidated subsidiaries appearing on a consolidated balance sheet
of the Company and its consolidated subsidiaries prepared in
accordance with generally accepted accounting principles as of the
date of determination, after eliminating all intercompany
transactions and all amount properly attributable to minority
interests, if any, in the stock and surplus of consolidated
subsidiaries, after deducting therefrom (without duplication of
deductions):
(a) the net book amount of all assets, after deducting
any reserves applicable thereto, which would be treated as
intangible under generally accepted accounting principles,
including, without limitation, such items as goodwill,
trademarks, trade names, service marks, brand names,
copyrights, patents and licenses, and rights with respect to
the foregoing, unamortized debt discount and expense (to the
extent shown as an asset) and organizational expenses;
(b) any write-up in the book value of any asset on the
books of the Company or any Subsidiary resulting from a
revaluation thereof subsequent to February 1, 1992;
(c) the amounts, if any at which any shares of stock of
the Company or any Subsidiary appear on the asset side of such
balance sheet;
(d) all deferred charges (other than prepaid expenses
and net pension asset recognized on the balance sheet);
(e) the amounts at which any Investment in any Person
(other than Investments which are permitted by paragraph
6G(iv), (v), (vi), (vii) and (viii)) appear on the asset side
of such balance sheet; and
(f) the amount, if any, by which the book value of
assets constituting collateral for Non-Recourse Obligations
exceeds the amount of such Non-Recourse Obligations;
provided that the net amount of Consolidated Tangible Net Worth
contributed by Persons which are not Subsidiaries or Brown Group
Dublin may not exceed 40% of total Consolidated Tangible Net Worth.
"Current Assets" shall mean, as at any date of
determination, total assets of such Person which may properly be
classified as current assets in accordance with generally accepted
accounting principles on a consolidated basis, after eliminating
all intercompany transactions (including transactions with Brown
Group Dublin), provided that in determining such current assets (a)
notes and accounts receivable shall be included only if good and
collectible and payable on demand or within one year from such date
(and if not by their terms or by the terms of any instrument or
agreement relating thereto directly or indirectly renewable or
extendible at the option of the debtor beyond such year) and shall
be taken at their face value less reserves determined to be
sufficient in accordance with generally accepted accounting
principles, (b) life insurance policies (other than the cash
surrender value of unencumbered policies) shall be excluded, and
(c) Investments, other than Investments which are permitted by
paragraph 6G(iv), (v), (vi), (vii) and (viii) and are properly
classified as current assets, shall be excluded.
"Current Liabilities" shall mean, as at any date of
determination, total liabilities of such Person which may properly
be classified as current liabilities in accordance with generally
accepted accounting principles on a consolidated basis, after
eliminating all intercompany transactions (including transactions
with Brown Group Dublin), but in any event including as current
liabilities, without limitation, any portion of Long-Term Debt
outstanding on such date of determination which by its terms or the
terms of any instrument or agreement relating thereto matures on
demand or within one year from such date (whether by way of any
sinking fund, other required prepayment or final payment at
maturity) and is not directly or indirectly renewable, extendible
or refundable, at the option of the debtor under an agreement or
firm commitment in effect on such date, to a date more than one
year from such date.
"Environmental Laws" shall mean any federal, state, or
local statute, regulation, ordinance or duties under the common law
designed to protect human health and welfare or the environment
(including, without limitation, the Federal Water Pollution Control
Act, 33 U.S.C. Sec. 1251 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Sec. 6901 et seq., the Clean Air Act, 42
U.S.C. Sec. 7401 et seq., the Emergency Planning and Community
Right-To-Know-Act, 42 U.S.C. Sec. 2601 et seq., the Federal Insecticide,
Fungicide, and Rodenticide Act, 7 U.S.C. Sec. 136 et seq.; the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. 49601 et seq., the Endangered Species Act, 16 U.S.C.
Sec. 1531-1544, the Toxic Substances Control Act, 15 U.S.C. 42601 et
seq., as each may be amended from time to time.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" shall mean any corporation which is a
member of the same controlled group of corporations as the Company
within the meaning of section 414(b) of the Code, or any trade or
business which is under common control with the Company within the
meaning of section 414(c) of the Code.
"Event of Default" shall mean any of the events specified
in paragraph 7A, provided that there has been satisfied any
requirement in connection with such event for the giving of notice,
or the lapse of time, or the happening of any further condition,
event or act, and "Default" shall mean any of such events, whether
or not any such requirement has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Existing Notes" shall mean the 6.47% Senior Notes due
February 8, 1996 issued pursuant to the Note Agreement dated as of
January 28, 1993, between the Company and The Prudential Insurance
Company of America.
"Extraordinary Cash Gains" shall mean the positive cash
effect included in Pre-Tax Income of non-recurring and/or non-operating
credits, including, without limitation, gains on sales of
assets, but excluding the effect of the elimination of any portion
of a Subsidiary's LIFO reserve.
"Extraordinary Non-Cash Losses" shall mean the negative
effect included in Pre-Tax Income of non-recurring and/or non-
operating charges that do not require the outlay of cash,
including, without limitation, the cumulative effect of accounting
changes, fixed asset write-offs and inventory mark-downs included
as part of restructuring charges.
"Fixed Charges" shall mean for any period of
determination, the sum of (i) Interest Expense plus (ii) minimum
rents paid by the Company or any of its consolidated subsidiaries
on all non-cancelable leases of property plus all contingent lease
payments paid by the Company or any of its consolidated
subsidiaries net of the estimated portions thereof applicable to
utilities and other services received from lessors under such
leases, as disclosed in the notes to the consolidated financial
state ments of the Company.
"Foreign Working Capital" shall mean, as at any date of
determination, the amount, if any, by which the Current Assets of
the Foreign Subsidiaries of the Company (as defined below) exceeds
the Current Liabilities of the Foreign Subsidiaries of the Company;
provided that for the purposes of paragraph 6C as at any date of
determination, the aggregate amount of Foreign Working Capital may
not exceed 40% of the amount, if any, by which Current Assets of
the Company, its Subsidiaries and Brown Group Dublin exceeds
Current Liabilities of the Company, its Subsidiaries and Brown
Group Dublin, each as of such date. "Foreign Subsidiaries of the
Company" shall mean any corporation or partnership (other than
Brown Group Dublin) organized under the laws of any jurisdiction
other than those set forth in the definition of Subsidiaries of
which all of the shares of Voting Stock thereof or all of the
partnership interests therein shall, at the time as of which any
determination is being made, be owned by the Company, either
directly or through Subsidiaries or other Foreign Subsidiaries of
the Company.
"Guarantee" shall mean, with respect to any Person, any
direct or indirect liability, contingent or otherwise, of such
Person with respect to any indebtedness, lease, dividend or other
obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed (otherwise
than for collection or deposit in the ordinary course of business)
or discounted or sold with recourse by such Person, or in respect
of which such Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation in effect
guaranteed by such Person through any agreement (contingent or
otherwise) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of
loans, advances, stock purchases, capital contributions or
otherwise), or to maintain the solvency or any balance sheet or
other financial condition of the obligor of such obligation, or to
make payment for any products, materials or supplies or for any
transportation or services regardless of the non-delivery or
non-furnishing thereof, in any such case if the purpose or intent of
such agreement is to provide assurance that such obligation will be
paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such obligation will be
protected against loss in respect thereof. The amount of any
Guarantee shall be equal to the outstanding principal amount of the
obligation guaranteed or such lesser amount to which the maximum
exposure of the guarantor shall have been specifically limited.
"Indebtedness" shall mean, with respect to any Person,
without duplication, (i) all items (excluding Rate Hedging
Obligations and items of contingency reserves or of reserves for
deferred income taxes) which in accordance with generally accepted
accounting principles would be included in determining total
liabilities as shown on the liability side of a balance sheet of
such Person as of the date on which Indebtedness is to be
determined, (ii) all indebtedness secured by any Lien on any
property or asset owned or held by such Person subject thereto,
whether or not the indebtedness secured thereby shall have been
assumed, (iii) all indebtedness of others with respect to which
such Person has become liable by way of a Guarantee, and (iv) net
liabilities in respect of Rate Hedging Obligations having a tenor
in excess of one year from the date of creation thereof, to the
extent that the aggregate amount of all such net liabilities
exceeds $5,000,000.
"Interest Expense" shall mean, with reference to the
prior four fiscal quarters, the sum of the following for the
Company and its consolidated subsidiaries on a consolidated basis,
after eliminating all intercompany transactions (including
transactions with Brown Group Dublin): all interest charges
(including amortization of debt discount and expense and imputed
interest on Capital Lease Obligations) properly charged or
chargeable to income during such period in accordance with
generally accepted accounting principles, provided that any
interest charges paid or accrued by any Person acquired by the
Company or any consolidated subsidiary through purchase, merger or
consolidation or otherwise, or paid or accrued by any Person which
is a successor to the Company by consolidation or merger or as a
transferee of its assets, shall be included in Interest Expenses
only to the extent taken into account in determining the net cash
provided by operating activities of such Person included in Cash
Flow Available for Fixed Charges for such period.
"Lien" shall mean any mortgage, pledge, security
interest, encumbrance, lien (statutory or otherwise) or charge of
any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in
the nature of a conditional sale, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of
any jurisdiction (excluding "notice" filings under Section 9-408 of
the Uniform Commercial Code in connection with a lease of goods))
or any other type of preferential arrangement relating to security
on collateral for the purpose, or having the effect, of protecting
a creditor against loss or securing the payment or performance of
an obligation.
"Line Bank" shall mean commercial banks which hold
Indebtedness of the Company or its Subsidiaries or which have
agreed to purchase Indebtedness of the Company or its Subsidiaries
pursuant to a revolving credit arrangement.
"Long-Term Debt" shall mean, with respect to the Company
and i ts Subsidiaries as at any date of determination, all
Indebtedness for borrowed money and Capitalized Lease Obligations
with a final maturity in excess of one year from the date of
creation thereto (including current maturities thereof) plus the
aggregate amount of contingent liabilities of the Company and its
Subsidiaries less the aggregate amount of outstanding contingent
liabilities for operating leases (other than Assumed Cloth World
Leases) up to an aggregate amount of $32,000,000 and less the
aggregate amount of contingent liabilities for Assumed Cloth World
Leases.
"Multiemployer Plan" shall mean any Plan which is a
"multiemployer plan" (as such term is defined in section 4001(a)(3)
of ERISA).
"Non-Recourse Obligations" shall mean obligations of the
Company and its Subsidiaries with respect to which recourse shall
be expressly limited to specified collateral therefor and neither
the Company or any Subsidiary, nor any of the property or assets of
the Company or any Subsidiary, other than the collateral, shall be
liable for the payment thereof.
"Officer's Certificate" shall mean a certificate signed
in the name of the Company by its President, one of its Vice
Presidents or its Treasurer.
"Participant" shall mean a Person with an indirect,
beneficial interest in the Notes pursuant to a participation
grant ed under paragraph 11E other than a holder of a Note
registered in such holder's name.
"Person" shall mean and include an individual, a partner-
ship, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
"Plan" shall mean any "employee pension benefit plan" (as
such term is defined in section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have
been made, by the Company or any ERISA Affiliate.
"Pre-Tax Income" shall mean pre-tax earnings or loss,
including, without limitation, the pre-tax effect of extraordinary
gains and losses, the pre-tax effect of gains and losses related to
discontinued operations, and the pre-tax effect of the cumulative
effect of accounting changes, all as determined in accordance with
generally accepted accounting principles.
"Rate Hedging Obligations" of a Person means any and all
obligations of such Person, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all agreements, devices
or arrangements designed to protect at least one of the parties
thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or
exchange transactions, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap
or collar protection agreements, forward rate currency or interest
rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of
any of the foregoing.
"Responsible Officer" shall mean the chief executive
officer, chief operating officer, chief financial officer, chief
accounting officer, treasurer of the Company or any other officer
of the Company involved principally in its financial administration
or its controllership function.
"Required Holder(s)" shall mean the holder or holders of
at least 66-2/3% of the aggregate principal amount of the Notes
from time to time outstanding.
"Securities Act" shall mean the Securities Act of 1933,
as am ended.
"Senior" shall mean with respect to the Notes that the
Notes are not contractually or structurally subordinated to any
other unsecured Indebtedness of the Company, but it shall not imply
that they are senior to any other unsecured Indebtedness that is
not expressly subordinated to the Notes.
"Significant Holder" shall mean (i) you, so long as you
shall hold (or be committed under this Agreement to purchase) any
Note, or (ii) any other holder of at least 10% of the aggregate
principal amount of the Notes from time to time outstanding.
"Subsidiary" shall mean any corporation organized under
the laws of any state of the United States, Canada, any province of
Canada or the United Kingdom, which conducts substantially all of
its business in and has substantially all of its assets located
therein, at least a majority of the total combined voting power of
all classes of Voting Stock of which shall, at the time as of which
any determination is being made, be owned by the Company either
directly or through Subsidiaries.
"Substantial Part" shall mean 10% or more.
"Transferee" shall mean any direct or indirect transferee
who is a registered holder of a Note other than you.
"Voting Stock" shall mean, with respect to any
corporation, any shares of stock of such corporation whose holders
are entitled under ordinary circumstances to vote for the election
of directors of such corporation (irrespective of whether at the
time stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).
10C. Accounting Principles, Terms and Determinations. All
references in this Agreement to "generally accepted accounting
principles" shall be deemed to refer to generally accepted
accounting principles in effect in the United States at the time of
application thereof. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall
be made, and all unaudited, consolidated financial statements and
certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with generally
accepted accounting principles, applied on a basis consistent with
the most recent audited consolidated financial statements of the
Company and its Subsidiaries delivered pursuant to clause (ii) of
paragraph 5A or, if no such statements have been so delivered, the
most recent audited financial statements referred to in clause (i)
of paragraph 8B.
11. MISCELLANEOUS.
11A. Note Payments. The Company agrees that, so long as you
shall hold any Note, it will make payments of principal of,
interest on and any Yield-Maintenance Amount payable with respect
to such Note, which comply with the terms of this Agreement, by (i)
wire transfer of immediately available funds for credit (not later
than 12:00 noon, New York City time, on the date due) to or (ii)
transfer of next day funds by an automated clearinghouse on the day
prior to the date due to your account or accounts as specified in
the Purchaser Schedule attached hereto, or such other account or
accounts in the United States as you may designate in writing,
notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. You agree that, before disposing
of any Note, you will make a notation thereon (or on a schedule
attached thereto) of all principal payments previously made thereon
and of the date to which interest thereon has been paid. The
Company agrees to afford the benefits of this paragraph 11A to any
Transferee which shall have made the same agreement as you have
made in this paragraph 11A.
11B. Expenses. The Company agrees to pay, and save you and
any Transferee harmless against liability for the payment of, all
out-of-pocket expenses reasonably incurred arising in connection
with (i) all document production and duplication charges and the
fees and expenses of any special counsel engaged by you or such
Transferee in connection with any subsequent proposed modification
of, or proposed consent under, this Agreement, whether or not such
proposed modification shall be effected or proposed consent
granted, excluding any expenses which consist of fees of in-house
counsel of such holder, and (ii) the costs and expenses, including
attorneys' fees, incurred by you or such Transferee in enforcing
(or determining whether or how to enforce) any rights under this
Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection
with this Agreement or the transactions contemplated hereby or by
reason of your or such Transferee's having acquired any Note,
including without limitation costs and expenses incurred in any
bankruptcy case, but excluding any expenses which consist of fees
of in-house counsel of such holder. The obligations of the Company
under this paragraph 11B shall survive the transfer of any Note or
portion thereof or interest therein by you or any Transferee and
the payment of any Note.
11C. Consent to Amendments. This Agreement may be amended,
and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, if the
Company shall obtain the written consent to such amendment, action
or omission to act, of the Required Holder(s) except that, without
the written consent of the holder or holders of all Notes at the
time outstanding, no amendment to this Agreement shall change the
maturity of any Note, or change the principal of, or the rate or
time of payment of interest on or any Yield-Maintenance Amount
payable with respect to any Note, or affect the time, amount or
allocation of any prepayments, or change the proportion of the
principal amount of the Notes required with respect to any consent,
amendment, waiver or declaration. Each holder of any Note at the
time or thereafter outstanding shall be bound by any consent
authorized by this paragraph 11C, whether or not such Note shall
have been marked to indicate such consent, but any Notes issued
thereafter may bear a notation referring to any such consent. No
course of dealing between the Company and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note
shall operate as a waiver of any rights of any holder of such Note.
As used herein and in the Notes, the term "this Agreement" and
references thereto shall mean this Agreement as it may from time to
time be amended or supplemented.
11D. Form, Registration, Transfer and Exchange of Notes; Lost
Notes. The Notes are issuable as registered notes without coupons
in denominations of at least $100,000, except as may be necessary
to reflect any principal amount not evenly divisible by $100,000.
The Company shall keep at its principal office a register in which
the Company shall provide for the registration of Notes and of
transfers of Notes. Upon surrender for registration of transfer of
any Note at the principal office of the Company, the Company shall,
at its expense, execute and deliver one or more new Notes of like
tenor and of a like aggregate principal amount, registered in the
name of such transferee or transferees. At the option of the
holder of any Note, such Note may be exchanged for other Notes of
like tenor and of any authorized denominations, of a like aggregate
principal amount, upon surrender of the Note to be exchanged at the
principal office of the Company. Whenever any Notes are so
surrendered for exchange, the Company shall, at its expense,
execute and deliver the Notes which the holder making the exchange
is entitled to receive. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by
a written instrument of transfer duly executed, by the holder of
such Note or such holder's attorney duly authorized in writing.
Any Note or Notes issued in exchange for any Note or upon transfer
thereof shall carry the rights to unpaid interest and interest to
accrue which were carried by the Note so exchanged or transferred,
so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the
holder of any Note of the loss, theft, destruction or mutilation of
such Note and, in the case of any such loss, theft or destruction,
upon receipt of such holder's security reasonably acceptable to the
Company (which in the case of you and your Affiliates shall mean an
unsecured indemnity agreement), or in the case of any such
mutilation upon surrender and cancellation of such Note, the
Company will make and deliver a new Note, of like tenor, in lieu of
the lost, stolen, destroyed or mutilated Note.
11E. Persons Deemed Owners; Participations. Prior to due
presentment for registration of transfer, the Company may treat the
Person in whose name any Note is registered as the owner and holder
of such Note for the purpose of receiving payment of principal of,
interest on and any Yield-Maintenance Amount payable with respect
to such Note and for all other purposes whatsoever, whether or not
such Note shall be overdue, and the Company shall not be affected
by notice to the contrary. Subject to the preceding sentence, the
holder of any Note may from time to time grant participations in
such Note to any Person who is a "qualified institutional buyer"
(as defined in paragraph 11G below) on such terms and conditions as
may be determined by such holder in its sole and absolute
discretion, provided that any such participation shall be in a
principal amount of at least $100,000.
11F. Survival of Representations and Warranties; Entire
Agreement. All representations and warranties contained herein or
made in writing by or on behalf of the Company in connection
herewith shall survive the execution and delivery of this Agreement
and the Notes, the transfer by you of any Note or portion thereof
or interest therein and the payment of any Note, and may be relied
upon by any Transferee, regardless of any investigation made at any
time by or on behalf of you or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire
agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the
subject matter hereof.
11G. Successors and Assigns; Transfer Restriction. All
covenants and other agreements in this Agreement contained by or on
behalf of either any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so
expressed or not.
Each holder of a Note hereby agrees that it will transfer the
Notes only to Persons which are believed by such holder to be a
qualified institutional buyer (or a trustee representing qualified
institutional buyers). For the purposes of this Agreement, the
term "qualified institutional buyer" shall have the meaning set
forth in Rule 144A under the Securities Act.
11H. Disclosure to Other Persons. (i) The Company
acknowledges that the holder of any Note may deliver copies of any
financial statements and other documents delivered to such holder,
and disclose any other information disclosed to such holder, by or
on behalf of the Company or any Subsidiary in connection with or
pursuant to this Agreement to (i) such holder's directors,
officers, employees, agents and professional consultants, (ii) any
other holder of any Note, (iii) any Person to which such holder
offers to sell such Note or any part thereof, provided that such
Person shall agree in writing to keep such information confidential
pursuant to an agreement in the form of Schedule 11H (a copy of
which will be forwarded to the Company promptly after receipt),
(iv) any Person to which such holder sells or offers to sell a
participation in all or any part of such Note, provided that such
Person shall agree in writing to keep such information confidential
pursuant to an agreement in the form of Schedule 11H (a copy of
which will be forwarded to the Company promptly after receipt), (v)
any Person from which such holder offers to purchase any security
of the Company, provided that such Person shall agree in writing to
keep such information confidential pursuant to an agreement in the
form of Schedule 11H (a copy of which will be forwarded to the
Company promptly after receipt), (vi) any federal or state
regulatory authority having jurisdiction over such holder, (vii)
the National Association of Insurance Commissioners or any similar
organization or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (a) in compliance with
any law, rule, regulation or order applicable to such holder, (b)
in response to any subpoena or other legal process or informal
investigative demand of a governmental entity or (c) in connection
with any litigation to which such holder is a party.
(ii) Subject to the foregoing, each holder of a Note and each
Participant shall use reasonable efforts to hold in confidence and
not disclose any Confidential Information; provided that such
holder will be free, after notice to the Company, to correct any
false or misleading information which may become public concerning
its relationship to the Company. For purposes of this paragraph,
the term "Confidential Information" shall mean information about
the Company or any Subsidiary furnished by the Company or any
Subsidiary to such holder, but shall not include any information
(i) which is publicly known, or otherwise known to such holder, at
the time of disclosure, (ii) which subsequently becomes publicly
known through no act or omission of such holder, or (iii) which
otherwise becomes known to such holder other than through
disclosure by the Company or any Subsidiary.
11I. Notices. All written communications provided for
hereunder shall be sent by first class mail or nationwide overnight
delivery service (with charges prepaid) and (i) if to you,
addressed to you at the address specified for such communications
in the Purchaser Schedule attached hereto, or at such other address
as you shall have specified to the Company in writing, (ii) if to
any other holder of any Note, addressed to such other holder at
such address as such other holder shall have specified to the
Company in writing or, if any such other holder shall not have so
specified an address to the Company, then addressed to such other
holder in care of the last holder of such Note which shall have so
specified an address to the Company, and (iii) if to the Company,
addressed to it at 8300 Maryland Avenue, St. Louis, Missouri 63105,
Attention: Treasurer, or at such other address as the Company
shall have specified to the holder of each Note in writing;
provided, however, that any such communication to the Company may
also, at the option of the holder of any Note, be delivered by any
other means either to the Company at its address specified above or
to any officer of the Company.
11J. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment
of principal of or interest on any Note that is due on a date other
than a Business Day shall be made on the next succeeding Business
Day. If the date for any payment is extended to the next
succeeding Business Day by reason of the preceding sentence, the
period of such extension shall be included in the computation of
the interest payable on such Business Day.
11K. Satisfaction Requirement. If any agreement, certificate
or other writing, or any action taken or to be taken, is by the
terms of this Agreement required to be satisfactory to you or to
the Required Holder(s), the determination of such satisfaction
shall be made by you or the Required Holder(s), as the case may be,
in the sole and exclusive judgment (exercised in good faith) of the
Person or Persons making such determination.
11L. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be
governed by, the law of the State of New York.
11M. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
11N. Descriptive Headings. The descriptive headings of the
several paragraphs of this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
11O. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all
of which together shall constitute one instrument.
11P. Conforming Debt Agreement Changes. The Company will not
become or be a party to any agreement relating to any Indebtedness
greater than $5,000,000 entered into after the date of this
Agreement, or to any amendment of or supplement to any agreement
relating to any Indebtedness greater than $5,000,000 (which
amendment or supplement is entered into after the date of this
Agreement), if, in any such case, the Corporation is agreeing
therein to any financial covenants of a type specified in paragraph
6, which are more restrictive than the covenants set forth herein,
or to other financial covenants expressly requiring the Corporation
to comply with similar computable standards of financial condition
or performance, unless the Corporation shall offer to amend this
Agreement so as to provide the benefit of similar covenants for the
benefit of the holders of the Notes for so long as such covenants
are in full force under such agreement, amendment or supplement.
Any such offer shall be made in writing to the holders of the Notes
prior to being effected in any such agreement, amendment or
supplement and, absent such offer, shall be deemed to be
incorporated herein mutatis mutandis for the benefit of the holders
of the Notes for so long as such covenants are in full force under
such agreement, amendment or supplement unless and until the
Required Holder(s) of the Notes shall otherwise consent thereto.
If you are in agreement with the foregoing, please sign the
form of acceptance on the enclosed counterparts of this letter and
return the same to the Company, whereupon this letter shall become
a binding agreement between the Company and you.
Very truly yours,
Brown Group, Inc.
By: Andrew M. Rosen
---------------------------------
Title: Vice President & Treasurer
The foregoing Agreement is
hereby accepted as of the
date first above written.
The Prudential Insurance Company
of America
By: Paul L. Meiring
-----------------
Vice President
PURCHASER SCHEDULE
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- ------------
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA $48,774,700 $48,774,700
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No. 050-54-526
Morgan Guaranty Trust Company of New York
23 Wall Street
New York, New York 10015
(ABA No.: 021-000-238)
Each such wire transfer shall set forth the name
of the Company, a reference to "7.36% Senior Notes
due October 15, 2003, Security No. !INV5229!" and
the due date and application (as among principal,
interest and Yield-Maintenance Amount) of the
payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
Attention: Investment Administration Unit
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
1201 Elm Street, Suite 4900
Dallas, Texas 75270
Attention: Managing Director
(4) Recipient of telephonic prepayment notices:
Manager, Asset Management Unit
(201) 802-6429
(5) Tax Identification No.: 22-1211670
PURCHASER SCHEDULE
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
PRUCO LIFE INSURANCE COMPANY $1,225,300 $1,225,300
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No. 000-55-455
Morgan Guaranty Trust Company of New York
23 Wall Street
New York, New York 10015
(ABA No.: 021-000-238)
Each such wire transfer shall set forth the name
of the Company, a reference to "7.36% Senior Notes
due October 15, 2003, Security No. !INV5230!" and
the due date and application (as among principal,
interest and Yield-Maintenance Amount) of the
payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
Attention: Investment Administration Unit
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
1201 Elm Street, Suite 4900
Dallas, Texas 75270
Attention: Managing Director
(4) Recipient of telephonic prepayment notices:
Manager, Asset Management Unit
(201) 802-6429
(5) Tax Identification No.: 22-1944557
EXHIBIT A
[FORM OF NOTE]
Brown Group, Inc.
7.36% SENIOR NOTE DUE OCTOBER 15, 2003
No. _____ [Date]
$________
FOR VALUE RECEIVED, the undersigned, Brown Group, Inc.
(herein called the "Company"), a corporation organized and existing
under the laws of the State of New York, hereby promises to pay to
____________________________ ___________________________, or
registered assigns, the principal sum of _________________________
DOLLARS on October 15, 2003, with interest (computed on the basis
of a 360-day year--30-day month) (a) on the unpaid balance thereof
at the rate of 7.36% per annum from the date hereof, payable
quarterly on the 15th day of January, April, July and October in
each year, commencing with the next such date succeeding the date
hereof, and upon the date at which the principal hereof shall have
become due and payable, and (b) on any overdue payment (including
any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Yield-Maintenance Amount
(as defined in the Note Agreement referred to below), payable
quarterly as aforesaid (or, at the option of the registered holder
hereof, on demand), at a rate per annum for the period overdue from
time to time equal to the greater of (i) 9.36% or (ii) 2.0% over
the rate of interest publicly announced by Morgan Guaranty Trust
Company of New York from time to time in New York City as its Prime
Rate.
Payments of principal of, interest on and any Yield-Maintenance
Amount payable with respect to this Note are to be made
at the main office of Morgan Guaranty Trust Company of New York in
New York City or at such other place as the holder hereof shall
designate to the Company in writing, in lawful money of the United
States of America.
This Note is one of a series of Senior Notes (herein called
the "Notes") issued pursuant to a Note Agreement, dated as of
October 24, 1995 (herein called the "Agreement"), between the
Company, The Prudential Insurance Company of America and Pruco Life
Insurance Company and is entitled to the benefits thereof.
This Note is a registered Note and, as provided in the Agree-
ment, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer
duly executed, by the registered holder hereof or such holder's
attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of trans-
fer, the Company may treat the person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment
and for all other purposes, and the Company shall not be affected
by any notice to the contrary.
The Company agrees to make required prepayments of principal
on the dates and in the amounts specified in the Agreement. This
Note is also subject to optional prepayment, in whole or from time
to time in part, on the terms specified in the Agreement.
In case an Event of Default, as defined in the Agreement,
shall occur and be continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner and with
the effect provided in the Agreement.
This Note is intended to be performed in the State of New York
and shall be construed and enforced in accordance with the law of
such State.
Brown Group, Inc.
By: _________________________
Title:
EXHIBIT B-1
[FORM OF OPINION OF COMPANY'S COUNSEL]
[Letterhead of Robert D. Pickle]
Date of Closing
The Prudential Insurance Company of America
Pruco Life Insurance Company
c/o Prudential Capital Group
Three Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Ladies and Gentlemen:
I am the General Counsel of Brown Group, Inc. (the "Company")
and am familiar with the Note Agreement, dated as of October 24,
1995, between the Company and you (the "Note Agreement"), pursuant
to which the Company has issued to you today 7.36% Senior Notes due
October 15, 2003 of the Company in the aggregate principal amount
of $50,000,000. All terms used herein that are defined in the Note
Agreement have the respective meanings specified in the Note
Agreement. This letter is being delivered to you in satisfaction
of the condition set forth in paragraph 3A of the Note Agreement
and with the understanding that you are purchasing the Notes in
reliance on the opinions expressed herein.
In this connection, I have examined such certificates of
public officials, certificates of officers of the Company and
copies certified to my satisfaction of corporate documents and
records of the Company and of other papers, and have made such
other investigations, as I have deemed relevant and necessary as a
basis for my opinion hereinafter set forth. I have relied upon
such certificates of public officials and of officers of the
Company with respect to the accuracy of material factual matters
contained therein which were not independently established. With
respect to the opinion expressed in paragraph 3 below, I have also
relied upon the representation made by you in paragraph 9A of the
Note Agreement.
Based on the foregoing, it is my opinion that:
1. The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of
New York.
2. The Note Agreement and the Notes have been duly
authorized by all requisite corporate action and duly executed and
delivered by authorized officers of the Company, and are valid
obligations of the Company, legally binding upon and enforceable
against the Company in accordance with their respective terms,
except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3. It is not necessary in connection with the offering,
issuance, sale and delivery of the Notes under the circumstances
contemplated by the Note Agreement to register the Notes under the
Securities Act or to qualify an indenture in respect of the Notes
under the Trust Indenture Act of 1939, as amended.
4. The extension, arranging and obtaining of the credit
represented by the Notes do not result in any violation of
Regulation G, T or X of the Board of Governors of the Federal
Reserve System.
5. The execution and delivery of the Note Agreement and
the Notes, the offering, issuance and sale of the Notes and
fulfillment of and compliance with the respective provisions of the
Note Agreement and the Notes do not conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the
Company or any of its Subsidiaries pursuant to, or require any
authorization, consent, approval, exemption or other action by or
notice to or filing with any court, administrative or governmental
body or other Person (other than routine filings after the date
hereof with the Securities and Exchange Commission and/or state
Blue Sky authorities) pursuant to, the charter or by-laws of the
Company or any of its Subsidiaries, any applicable law (including
any securities or Blue Sky law), statute, rule or regulation or
(insofar as is known to us me after having made due inquiry with
respect thereto) any agreement (including, without limitation, any
agreement listed in Schedule 8G to the Note Agreement), instrument,
order, judgment or decree to which the Company or any of its
Subsidiaries is a party or otherwise subject.
A copy of this letter may be delivered by you or any
Transferee to any Person to which you or such Transferee sells or
offers to sell any Note or a participation in any Note, and such
Person may rely upon this letter as if it were addressed and had
been delivered to such Person on the date hereof. Subject to the
foregoing, this letter may be relied upon by you only in connection
with the transactions contemplated by the Agreement and may not be
used or relied upon by you or any other Person for any other
purpose whatsoever, without my prior written consent.
Very truly yours,
EXHIBIT B-2
[FORM OF OPINION OF COMPANY'S SPECIAL COUNSEL]
[Letterhead of Bryan Cave, LLP]
Date of Closing
The Prudential Insurance Company of America
Pruco Life Insurance Company
c/o Prudential Capital Group
Three Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Ladies and Gentlemen:
We have acted as special counsel for Brown Group, Inc. (the
"Company") in connection with the Note Agreement, dated as of
October 24, 1995, between the Company and you (the "Note
Agreement"), pursuant to which the Company has issued to you today
7.36% Senior Notes due October 15, 2003 of the Company in the
aggregate principal amount of $50,000,000. All terms used herein
that are defined in the Note Agreement have the respective meanings
specified in the Note Agreement. This letter is being delivered to
you in satisfaction of the condition set forth in paragraph 3A of
the Note Agreement and with the understanding that you are
purchasing the Notes in reliance on the opinions expressed herein.
In this connection, we have examined such certificates of
public officials, certificates of officers of the Company and
copies certified to our satisfaction of corporate documents and
records of the Company and of other papers, and have made such
other investigations, as we have deemed relevant and necessary as
a basis for our opinion hereinafter set forth. We have relied upon
such certificates of public officials and of officers of the
Company with respect to the accuracy of material factual matters
contained therein which were not independently established. With
respect to the opinion expressed in paragraph 3 below, we have also
relied upon the representation made by you in paragraph 9A of the
Note Agreement.
Based on the foregoing, it is our opinion that:
1. A court applying the conflicts of laws principles of
the State of New York would give effect to the choice of law
provisions of the Note Agreement and the Notes and would not apply
the substantive law of the State of Missouri to the Note Agreement
or the Notes.
A copy of this letter may be delivered by you or any
Transferee to any Person to which you or such Transferee sells or
offers to sell any Note or a participation in any Note, and such
Person may rely upon this letter as if it were addressed and had
been delivered to such Person on the date hereof. Subject to the
foregoing, this letter may be relied upon by you only in connection
with the transactions contemplated by the Agreement and may not be
used or relied upon by you or any other Person for any other
purpose whatsoever, without our prior written consent.
Very truly yours,
Schedule 6F
BROWN GROUP, INC.
EXISTING LIENS
* The Industrial Development Authority of the City of
Fredericktown, Missouri Industrial Revenue Bonds (Brown
Group) Series 1979.
Fredericktown Warehouse $3,500,000 Outstanding
10/01/09 Maturity Date
Schedule 8G
BROWN GROUP, INC.
AGREEMENTS RESTRICTING INDEBTEDNESS
* $200 Million Revolving Credit Agreement (expiring 12/31/99)
Credit Agreement dated as of December 22, 1993
(amended February 15, 1995 and September 27, 1995)
among the Borrower, the Lenders listed on the
signature pages thereof, The First National Bank of
Chicago, as Agent, and the Boatmen's National Bank of
St. Louis and Citibank, N.A., as co-Agents.
Schedule 11H
[date]
Brown Group, Inc.
8300 Maryland Avenue
St. Louis, Missouri 63105
[Name of selling Note holder]
[address]
[city, state zip]
Ladies and Gentlemen:
In connection with our possible interest in purchasing 7.36% Senior
Notes due October 15, 2003 (the "Notes") of Brown Group, Inc. (the "Company"),
[name of selling Note holder] or the Company may furnish us with certain
information that is non-public, confidential or proprietary in nature. The
possible purchase of the Notes is referred to herein as the "Transaction".
As used herein, "Confidential Information" means information about
the Company or the Transaction furnished by [name of selling Note holder] or
the Company to us and the fact that we are considering the Transaction, but
does not include information (i) which was publicly known or otherwise known
to us, at the time of disclosure, (ii) which subsequently becomes publicly
known through no act or omission by us, or (iii) which otherwise becomes
known to us, other than through disclosure by [name of selling Note holder]
or the Company.
We agree that we will use our reasonable efforts to hold in confidence
and not to disclose the Confidential Information, except (a) as may be
required by law, and (b) to our and our subsidiaries' officers, directors,
employees, agents and professional consultants in connection with the
Transaction; provided that we will be free, after notice to [name of selling
Note holder] and the Company, to correct any false or misleading information
which may become public concerning our relationship to the Company or to the
Transaction.
Upon termination of our consideration of the Transaction, we will if
requested by the Company, return to the Company all documents furnished by
[name of selling Note holder] or the Company to us containing Confidential
Information which have not theretofore been destroyed or returned to the
Company.
Please confirm your agreement with the foregoing by signing and
returning to us the enclosed copy of this letter.
Very truly yours,
[name of proposed buyer]
By:__________________________
Title
Accepted and Agreed to:
BROWN GROUP, INC.
By:__________________________
Title
[name of selling Note holder]
By:__________________________
Title