PHILLIPS-VAN HEUSEN CORPORATION
___________________________________
THIRD AMENDMENT AGREEMENT
Dated as of February 1, 1998
to
NOTE AGREEMENTS
Dated as of October 1, 1992
Re: $55,000,000 7.85% Series A Senior Notes
Due November 1, 2002
and
$8,000,000 7.02% Series B Senior Notes
Due November 1, 1999
and
$6,000,000 7.75% Series C Senior Notes
Due November 1, 2002
PHILLIPS-VAN HEUSEN CORPORATION
1290 Avenue of the Americas-11th Floor
New York, New York 10104
THIRD AMENDMENT AGREEMENT
TO
NOTE AGREEMENTS
DATED AS OF OCTOBER 1, 1992
Re: $55,000,000 7.85% Series A Senior Notes
Due November 1, 2002
and
$8,000,000 7.02% Series B Senior Notes
Due November 1, 1999
and
$6,000,000 7.75% Series C Senior Notes
Due November 1, 2002
Dated as of
February 1, 1998
To the Holders as
defined hereinbelow
Ladies and Gentlemen:
Reference is made to the separate Note Agreements each dated as of October
1, 1992 (the "Outstanding Note Agreements") between PHILLIPS-VAN HEUSEN
CORPORATION, a Delaware corporation (the "Company"), and each of the Purchasers
named on Schedule I thereto (the "Purchasers") as amended pursuant to that
certain First Amendment Agreement dated as of June 24, 1996 and that certain
Second Amendment Agreement dated as of July 15, 1997, pursuant to which the
Company issued and sold (i) $55,000,000 original aggregate principal amount of
its 7.85% Series A Senior Notes due November 1, 2002 (the "Series A Notes"),
(ii) $8,000,000 original aggregate principal amount of its 7.02% Series B
Senior Notes due November 1, 1999 (the "Series B Notes") and (iii) $6,000,000
original aggregate principal amount of its 7.75% Series C Senior Notes due
November 1, 2002 (the "Series C Notes"). The Purchasers or transferees of
such Purchasers are hereinafter collectively referred to as the "Holders."
The Series A Notes, Series B Notes and Series C Notes are hereinafter
collectively referred to as the "Outstanding Notes."
The Company and the Holders now desire to amend the Outstanding Note
Agreements in the respects, but only in the respects, hereinafter set forth.
Phillips-Van Heusen Corporation Third Amendment to Note Agreements
Now, therefore, the Company and the Holders, in consideration of good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, do hereby agree as follows:
SECTION 1. AMENDMENTS TO THE OUTSTANDING NOTE AGREEMENTS.
Section 1.1. Sections 2.2 and 2.3 of the Existing Note Agreements are
hereby amended to read in their entirety as follows:
Section 2.2. Prepayment with Premium. (a) Subject to Sec. 2.2(b),
in addition to the payments required by Sec. 2.1, upon compliance with Sec.
2.3 the Company shall have the privilege, at any time and from time to
time, of prepaying the outstanding Notes, either in whole or in part (but
if in part then in a minimum aggregate principal amount of $1,000,000) by
payment of the principal amount of the Notes, or portion thereof to be
prepaid, and accrued interest thereon to the date of such prepayment,
together with a premium equal to the Make-Whole Amount, determined for the
date of prepayment as of the date three Business Days prior to the date of
such prepayment pursuant to this Sec. 2.2(a). Any prepayment of less than
all of the outstanding Notes pursuant to this Sec. 2.2(a) shall be applied
in accordance with Sec. 2.1(e).
(b) In addition to the payments required by Sec. 2.1, the Company
agrees that within five (5) days of completion of any public or Rule 144A
debt offering by the Company, the Company shall prepay and apply and there
shall become due and payable on the principal indebtedness evidenced by the
Notes an amount equal to 100% of the aggregate outstanding principal amount
thereof together with accrued and unpaid interest thereon to the date of
such prepayment, and in the case of any such prepayment on or prior to July
31, 1998, together with a premium equal to the Modified Make-Whole Amount
and in the case of any such prepayment thereafter, together with a premium
equal to the Make-Whole Amount, in each case, determined for the date of
such prepayment as of the date two Business Days prior to the date of such
prepayment pursuant to this Sec. 2.2(b).
Section 2.3. Notice of Prepayments. The Company will give notice
of any prepayment of the Notes pursuant to Sec. 2.2 to each holder thereof
not less than 30 days nor more than 60 days in the case of Sec. 2.2(a), and
not less than 2 Business Days or more than 30 days in the case of Sec.
2.2(b), before the date fixed for such prepayment specifying (i) such date,
(ii) the principal amount of the holder's Notes to be prepaid on such date,
(iii) that a premium may be payable, (iv) the date when such premium will
be calculated, (v) the estimated premium, and (vi) the accrued interest
applicable to the prepayment. Such notice of prepayment shall also certify
all facts, if any, which are conditions precedent to any such prepayment.
Notice of prepayment having been so given, the aggregate principal amount
of the Notes specified in such notice, together with accrued interest
thereon and the premium, if any, payable with respect thereto shall become
due and payable on the prepayment date specified in said notice. Not later
than two Business Days prior to the prepayment date specified in such
notice, the Company shall provide each holder of a Note written notice of
the premium, if any, payable in connection with such prepayment and,
whether or not any premium is payable, a reasonably detailed computation of
the Make-Whole Amount or the Modified Make-Whole Amount, as the case may
be.
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Phillips-Van Heusen Corporation Third Amendment to Note Agreements
Section 1.2. Section 5.5 of the Existing Note Agreements is hereby amended
to read in its entirety as follows:
Section 5.5. Consolidated Net Worth. The Company will at all times
keep and maintain Consolidated Net Worth at an amount not less than the sum
of:
(i) $150,000,000;
plus
(ii) 50% of the amount of any positive Consolidated Net Income
for each fiscal year of the Company beginning with the fiscal year ending
January 31, 1993 (except that in the case of the fiscal year ending January
31, 1993, the period of calculation shall begin May 3, 1992) computed on a
cumulative basis for the entire period beginning May 3, 1992 to and
including the last day of the fiscal year immediately preceding the date of
any determination hereunder (it being agreed that for the purposes of this
clause (ii) of this Sec. 5.5, (a) Consolidated Net Income shall be deemed
to be zero for any fiscal year (or the three fiscal-quarter period in the
case of the fiscal year ending January 31, 1993) in which Consolidated Net
Income was a deficit figure, and (b) the after tax restructuring charge in
the amount of $48,000,000 taken by the Company in the fourth quarter of the
fiscal year ended February 1, 1998 shall be added back to Consolidated Net
Income to the extent deducted therefrom).
Section 1.3. Section 5.6 of the Existing Note Agreements is hereby amended
to read in its entirety as follows:
Section 5.6. Limitations on Debt; Interest Charges Coverage Ratio.
(a) The Company will not, and will not permit any Restricted Subsidiary to,
create, assume or incur or in any manner be or become liable in respect of
any Current Debt or Funded Debt, except:
(1) Funded Debt evidenced by the Notes;
(2) Funded Debt of the Company and its Restricted Subsidiaries
outstanding as of October 1, 1992 and reflected on Annex B to Exhibit B
hereto;
(3) additional Funded Debt of the Company and its Restricted
Subsidiaries incurred subsequent to the First Amendment Agreement Closing
Date;
(4) Current Debt of the Company or any Restricted Subsidiary;
provided, however, that during the twelve-month period immediately
preceding the date of any determination hereunder, there shall have been a
period of thirty consecutive days during which the average daily amount of
Current Debt of the Company and all Restricted Subsidiaries shall not
exceed an amount equal to $25,000,000 plus the amount of Funded Debt which
could have been incurred (in addition to any Funded Debt then outstanding)
on each such day by the Company and all Restricted Subsidiaries pursuant to
Sec. 5.6(a)(3) and Sec. 5.6(b)(3); and
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Phillips-Van Heusen Corporation Third Amendment to Note Agreements
(5) Current Debt or Funded Debt of a Restricted Subsidiary to the
Company or to a Wholly-owned Restricted Subsidiary.
(b) In addition to the restrictions contained in Sec. 5.6(a), the Company
shall not:
(1) permit Basket Obligations to exceed 15% of Consolidated Net
Worth;
(2) create, assume or incur or in any manner become liable in
respect of any Debt secured by a Lien described in Sec. 5.7(viii), if,
after giving effect thereto, the sum of (i) Basket Obligations plus (ii)
all Debt secured by Liens incurred pursuant to Sec. 5.7(a)(vii), would
exceed 15% of Consolidated Net Worth; and
(3) permit the ratio of Funded Debt to Consolidated Total
Capitalization for the respective periods set forth below to exceed the
ratio set forth opposite such period:
PERIOD RATIO
From the date hereof through and including .55 to 1
the fiscal year ending February 1, 1998
From February 1, 1998 to and including .60 to 1
August 1, 1998
and at all times thereafter: .45 to 1
(c) Any corporation which becomes a Restricted Subsidiary after the
date hereof shall for all purposes of this Sec. 5.6 be deemed to have
created, assumed or incurred at the time it becomes a Restricted Subsidiary
all Debt of such corporation existing immediately after it becomes a
Restricted Subsidiary.
(d) The Company will not permit the ratio of Net Income Available
for Interest Charges to Interest Charges for the period of four consecutive
fiscal quarters ending on or about the end of each month specified below to
be less than the ratio set forth opposite such month:
PERIOD RATIO
April 1996 1.25x
July 1996 1.25x
October 1996 1.30x
February 1997 1.40x
April 1997 1.70x
July 1997 1.70x
October 1997 2.00x
January 1998 2.00x
April 1998 1.50x
July 1998 1.50x
October 1998 and each
April, July, October and
January thereafter 2.50x
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Phillips-Van Heusen Corporation Third Amendment to Note Agreements
Section 1.4. Section 8.1 of the Outstanding Note Agreements shall be and
is hereby amended as follows:
a. The definition of "Reinvestment Rate" included in the definition
of "Make-Whole Amount" is hereby amended to read in its entirety as
follows:
"Reinvestment Rate" shall mean .50%, plus the yield
to maturity of the United States Treasury obligations
with a maturity (as reported on the applicable
Government PX Screen on the Bloomberg Financial Markets
Services Screens (or such other display as may replace
the Government PX Screen on Bloomberg Financial Markets
Services Screens) not more than three Business Days
immediately preceding the payment date) most nearly
equal to the remaining Weighted Average Life to Maturity
of the principal being prepaid (taking into account the
application of such prepayment required by Sec. 2.1).
If such rate shall not have been so reported on the
applicable Government PX Screen on the Bloomberg
Financial Markets Services Screens (or its replacement),
the Reinvestment Rate in respect of such payment date
shall mean the mean of the yields to maturity of United
States Treasury obligations (as compiled by and
published in the statistical release designated
"H.15(519)" or its successor publication for each of the
two weeks immediately preceding the payment date) with
a constant maturity most nearly equal to the Weighted
Average Life to Maturity of the principal being prepaid
(taking into account the application of such prepayment
required by Sec. 2.1). If no maturity exactly
corresponding to the Weighted Average Life to Maturity
shall appear therein, yields for the next longer and the
next shorter published maturities shall be calculated
pursuant to the foregoing sentence and the Reinvestment
Rate shall be interpolated from such yields on a
straight-line basis (rounding to the nearest month). If
such rates shall not have been so published in
statistical release H.15(519) (or its successor
publication), the Reinvestment Rate in respect of such
determination date shall be calculated pursuant to the
next preceding sentence on the basis of the average of
the respective averages of the secondary market ask
rates, as of approximately 3:30 P.M., New York City
time, on the last Business Days of each of the two weeks
preceding the payment date, for the actively traded U.S.
Treasury security or securities with a maturity or
maturities most closely corresponding to the remaining
Weighted Average Life to Maturity, as reported by three
primary United States Government securities dealers in
New York City of national standing selected in good
faith by the Company.
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Phillips-Van Heusen Corporation Third Amendment to Note Agreements
b. The following definition of "Modified Make-Whole Amount" is
hereby inserted in alphabetical order in Section 8.1:
"Modified Make-Whole Amount" shall mean the
"Make-Whole Amount" determined by (a) substituting
"1.00%" for ".50%" in the definition of "Reinvestment
Rate", (b) using the expressed maturity dates of the
Notes and prepayments required pursuant to Sec. 2.1,
notwithstanding the mandatory prepayment pursuant to
Sec. 2.2(b) and (c) using the respective rates of
interest applicable to each series of Notes as set forth
in subparagraphs (a), (b) and (c) of Sec. 1.1, without
regard to any Adjusted Coupon Rates.
c. The definition of "Net Income Available for Interest Charges" is
hereby amended to read in its entirety as follows:
"Net Income Available for Interest Charges" for any
period shall mean the sum of (i) Consolidated Net Income
during such period plus (to the extent deducted in
determining Consolidated Net Income for such period),
(ii) all provisions for any Federal, state or other
income taxes made by the Company and its Restricted
Subsidiaries during such period, (iii) the one-time
restructuring charges of $55,000,000 taken in the second
quarter of the fiscal year ended February 1, 1998 and
$75,000,000 taken in the fourth quarter of the fiscal
year ended February 1, 1998, (iv) Interest Charges of
the Company and its Restricted Subsidiaries during such
period and (v) all expenses incurred by the Company and
its Restricted Subsidiaries in connection with
addressing year 2000 computer compliance in an amount
not to exceed $15,000,000 in the aggregate.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Section 2.1. To induce the Holders to execute and deliver this Third
Amendment Agreement, the Company represents and warrants (which representations
and warranties shall survive the execution and delivery of this Third Amendment
Agreement) to the Holders, as true and correct as of the date of execution and
delivery of this Third Amendment Agreement, that
(a) the Company and each Restricted Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation;
(b) this Third Amendment Agreement has been duly authorized,
executed and delivered by it and this Third Amendment Agreement constitutes
the legal, valid and binding obligation, contract and agreement of the
Company enforceable against it in accordance with its terms;
(c) each of the Outstanding Note Agreements and the Outstanding
Notes, as amended by this Third Amendment Agreement, constitute the legal,
valid and binding obligations, contracts and agreements of the Company
enforceable against it in accordance with their respective terms;
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Phillips-Van Heusen Corporation Third Amendment to Note Agreements
(d) the execution, delivery and performance by the Company of this
Third Amendment Agreement (i) has been duly authorized by all requisite
corporate action and, if required, shareholder action, (ii) does not
require the consent or approval of any governmental or regulatory body or
agency, and (iii) will not (A) violate or cause a default under (1) any
provision of law, statute, rule or regulation or its certificate of
incorporation or bylaws, (2) any order of any court or any rule, regulation
or order of any other agency or government binding upon it, or (3) any
provision of any material indenture, agreement or other instrument to which
it is a party or by which its properties or assets are or may be bound, or
(B) result in a breach or constitute (alone or with due notice or lapse of
time or both) a default under any indenture, agreement or other instrument
referred to in clause (iii)(A)(3) of this Sec. 2.1(d);
(e) as of the date hereof after giving effect to this Third
Amendment Agreement, no Default or Event of Default has occurred which is
continuing; and
(f) no consents or approvals are necessary from any other holder of
any Indebtedness of the Company to give effect to this Third Amendment
Agreement.
SECTION 3. CONDITIONS PRECEDENT.
Section 3.1. This Third Amendment Agreement shall not become effective
until, and shall become effective when, each and every one of the following
conditions shall have been satisfied:
(a) executed counterparts of this Third Amendment Agreement, duly
executed by the Company and the holders of at least 100% of the outstanding
principal amount of the Outstanding Notes, shall have been delivered to the
Holders;
(b) the representations and warranties of the Company set forth in
Sec. 2 hereof are true and correct as of the date of execution and delivery
of this Third Amendment Agreement; and
(c) the Company shall have paid the reasonable fees and expenses of
Chapman and Cutler, counsel to the Holders, in connection with the
negotiation, preparation, approval, execution and delivery of this Third
Amendment Agreement as required by Sec. 9.4 of the Outstanding Note
Agreements.
Upon receipt of all of the foregoing, this Third Amendment Agreement shall
become effective.
SECTION 4. MISCELLANEOUS.
Section 4.1. This Third Amendment Agreement shall be construed in
connection with and as part of each of the Outstanding Note Agreements, and all
terms, conditions and covenants contained in each of the Outstanding Note
Agreements shall be and remain in full force and effect.
Section 4.2. Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
Third Amendment Agreement may refer to the Outstanding Note Agreements
without making specific reference to this Third Amendment Agreement but
nevertheless all such references shall include this Third Amendment
Agreement unless the context otherwise requires.
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Phillips-Van Heusen Corporation Third Amendment to Note Agreements
Section 4.3. The descriptive headings of the various Sections or parts of
this Third Amendment Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
Section 4.4. This Third Amendment Agreement shall be governed by and
construed in accordance with New York law.
Section 4.5. This Third Amendment Agreement shall be binding upon the
Company, the Holders and their respective successors and assigns.
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Phillips-Van Heusen Corporation Third Amendment to Note Agreements
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Third Amendment Agreement to
each of the Outstanding Note Agreements may be executed in any number of
counterparts, each executed counterpart constituting an original, but all
together only one agreement.
PHILLIPS-VAN HEUSEN CORPORATION
By
Its
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Phillips-Van Heusen Corporation Third Amendment to Note Agreements
The execution by each of the following Holders shall constitute its
acceptance of the Third Amendment Agreement and its confirmation that it holds
the Outstanding Notes set opposite its name as of the date of its execution and
delivery hereof.
Accepted as of February 1, 1998:
OUTSTANDING NOTES
THE EQUITABLE LIFE ASSURANCE SOCIETY $8,571,429.81 Series A Notes
OF THE UNITED STATES $4,285,714.91 Series A Notes
$4,000,000 Series B Notes
$6,000,000 Series C Notes
By________________________________
Its
UNUM LIFE INSURANCE COMPANY OF $14,285,716.36 Series A Notes
AMERICA
By________________________________
Its
NATIONWIDE LIFE INSURANCE $5,714,285.71 Series A Notes
COMPANY
By________________________________
Its
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Phillips-Van Heusen Corporation Third Amendment to Note Agreements
EMPLOYERS LIFE INSURANCE COMPANY $1,428,571.43 Series A Notes
OF WAUSAU
By________________________________
Its
LUTHERAN BROTHERHOOD $5,000,000.73 Series A Notes
By________________________________
Its
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