EXHIBIT 10.30
NOTE AGREEMENT
NOTE AGREEMENT (this "Agreement"), dated as of May 1, 1996, among
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF LAWRENCEBURG,
a Tennessee public nonprofit corporation (the "Board"), NATIONSBANK OF
TENNESSEE, NATIONAL ASSOCIATION, a national banking association with its
principal office in Nashville, Tennessee (the "Purchaser"), and JONES APPAREL
GROUP, INC., a Pennsylvania corporation (the "Lessee").
PRELIMINARY STATEMENTS:
WHEREAS, the Board is a public nonprofit corporation and a public
instrumentality of the City of Lawrenceburg, Tennessee, and is authorized under
Sections 7-53-101 to 7-53-311, inclusive, Tennessee Code Annotated, as amended
(hereinafter called the "Act"), to acquire, whether by purchase, exchange, gift,
lease, or otherwise, and to own, lease and dispose of properties for the public
purpose of promoting industry and developing trade by inducing manufacturing,
industrial, governmental educational and commercial enterprises to locate in or
remain in the State of Tennessee; and
WHEREAS, the Lessee heretofore proposed to lease from the Board pursuant
to the Lease (as defined herein) certain distribution facilities located on land
owned by the Board and located in the City of Lawrenceburg, Tennessee, and
requested the Board to reimburse it for expenses incurred by Lessee in
connection with the Board's acquisition of such facilities by issuing its note
to the Purchaser and by using the proceeds from the issuance of such note for
the purpose of reimbursing the Lessee for the cost of acquiring such facilities;
and
WHEREAS, the Board proposes to issue and sell its note to the Purchaser
pursuant to this Agreement and further proposes to use the proceeds from the
sale thereof to perform its obligations under such Lease; and
WHEREAS, the note proposed to be issued under this Agreement will be
secured by an assignment of the rental payments under the Lease and a deed of
trust from the Board with respect to the property acquired with the proceeds of
the Note;
NOW, THEREFORE, in consideration of the premises, the Board, the
Purchaser and the Lessee hereby agree as follows:
ARTICLE I
DEFINITIONS
In addition to the terms defined in the preamble hereto, and elsewhere
herein, the following terms have the following respective meanings as used in
this Agreement unless the context otherwise requires:
"Act" means Sections 7-53-101 to 7-53-311, inclusive, of Tennessee Code
Annotated, as amended.
"Agreement" means this Note Agreement as it now exists and as it may
hereafter be amended.
"All Unpaid Installments" shall have the same meaning as in the Lease.
"Assignment" means the Assignment Agreement of even date herewith from
the Board to the Purchaser.
"Authorized Lessee Representative" means the President or any Vice
President of the Lessee, except that the Lessee may, by written notice to the
Noteholder, designate additional Authorized Lessee Representatives or delete
Authorized Lessee Representatives.
"Basic Rent" means the Basic Rent payable pursuant to Section 4.01 of
the Lease.
"Building" shall have the same meaning as in the Lease.
"Business Day" means any day other than a Saturday, Sunday, or a public
holiday or the equivalent for banks generally under the laws of State of
Tennessee.
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"Closing Date' means May 1, 1996 or such later date as shall be agreed to
by the Board, the Lessee and the Purchaser.
"Deed of Trust" means the Deed of Trust and Security Agreement with respect
to the Project dated as of May 1, 1996 from the Board for the benefit of the
Purchaser.
"Default Rate" shall have the same meaning as in the Note.
"Documents" means the Lessee Documents and the Note Documents.
"Environmental Indemnity" means the Environmental Law Compliance and
Indemnity Agreement dated as of May 1, 1996 among the Lessee and the Purchaser.
"Escrow and Security Agreement" means the Escrow and Security Agreement
dated as of May 1, 1996 by and among the Board, Lessee and NationsBank of
Tennessee, National Association, as Escrow Agent and Trustee.
"Event of Default" means an Event of Default as defined in Article VI
hereof.
"Guaranty" means that certain Guaranty Agreement dated as of May
1, 1996 from Lessee.
"Holder," whether or not capitalized, means the registered owner
from time to time of the Note.
"Land" means the real property described in Schedule A to the Lease.
"Lease" means the Lease dated as of May 1, 1996 between the
Board, as lessor, and the Lessee, as lessee.
"Leased Property" means the Land, the Building and all other
improvements now or hereafter located on the Land.
"Lessee" means Jones Apparel Group, Inc., a Pennsylvania corporation.
"Lessee Documents" means this Agreement, the Lease, the Guaranty,
the Escrow and Security Agreement and the Environmental Indemnity.
"Note" means the Taxable Revenue Note, Series 1996 (Jones Apparel
Group, Inc. Project) dated the Closing Date in the principal amount of
$5,000,000 issued by the Board.
"Note Documents" means this Agreement, the Lease, the Note, the
Deed of Trust, the Guaranty, the Escrow and Security Agreement and the
Assignment.
"Noteholder" or 'Purchaser" means NationsBank of Tennessee,
National Association, a national banking association with its principal
office in Nashville, Tennessee, as the original purchaser and registered
owner of the Note, and any subsequent registered owner of the Note.
"Prior Note Agreements" means collectively the Note Agreement, dated
November 23, 1993 and the Series 1995 Note Agreement dated as of June
30, 1995, both by and among the Board, the Lessee and the Purchaser.
"Project" means the Land, the Building and any personal property
located therein including any and all equipment used at or in connection with
the Project, but excluding any inventory owned by Lessee.
"Tangible Net Worth" means the excess of Lessee's Total Assets (excluding
receivables from Lessee's officers and intangible assets determined in
accordance with generally accepted accounting principles) over Total Liabilities
(exclusive of capital stock and surplus), all determined in accordance with
generally accepted accounting principles consistently applied.
"Total Assets" shall mean total assets determined in according
with generally accepted accounting principles consistently applied.
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"Total Liabilities" shall mean total liabilities determined in
accordance with generally accepted accounting principles consistently applied.
ARTICLE II
AMOUNT AND TERMS OF THE NOTE
SECTION 2.01. The Note. The Purchaser agrees to purchase and the
Board agrees to sell, at par, on the terms and conditions hereinafter set forth,
the Taxable Revenue Note, Series 1996 (Jones Apparel Group, Inc. Project) of the
Board in the principal amount of Five Million Dollars ($5,000,000) (the "Note").
The Note shall contain the terms and conditions and shall be substantially in
the form of Exhibit A hereto.
SECTION 2.02. Purchasing the Note. The Note shall be purchased on
the date hereof. Not later than 4:00 P.M. (Nashville time) on the Closing Date,
and upon fulfillment of the applicable conditions set forth in Article K the
Purchaser will purchase the Note by application of immediately available funds
on behalf of the Board in the manner set forth in Section 2.03 of the Lease.
SECTION 2.03. Application of Payments. Any payment or prepayment
of Basic Rent under the Lease shall be applied as a payment or prepayment on
the Note, and any payment or prepayment on the Note shall be applied as a
payment or prepayment of Basic Rent under the Lease.
SECTION 2.04. Payments. Each payment on the Note shall be made not
later than 12:00 Noon (Nashville time) on the day when due at the place
designated in the Note in immediately available funds. Whenever any payment to
be made hereunder or under the Note shall be stated to be due on a day other
than a Business Day, such payment shall be extended to the next succeeding
Business Day and such extension of time shall in such case be included in
computing such interest.
SECTION 2.05. Use of Proceeds. All of the proceeds from the sale of the
Note will be used as provided in Section 2.03 of the Lease.
ARTICLE III
CONDITIONS OF PURCHASE
SECTION 3.01. Conditions Precedent to the Purchase of the Note. The
obligation of the Purchaser to purchase the Note is subject to the conditions
precedent that the Purchaser shall have received on or before the Closing Date
the following, each in form and substance satisfactory to the Purchaser:
(a) The Note duly executed by the Board.
(b) The Assignment duly executed by the Board.
(c) The Lease and the Escrow and Security Agreement duly
executed by the Board and the Lessee.
(d) The Deed of Trust duly executed by the Board.
(e) The Guaranty duly executed by the Lessee.
(f) The Environmental Indemnity duly executed by the Lessee.
(g) Evidence of the completion of all recordings and filings as may
be necessary or, in the opinion of the Purchaser, desirable to
perfect the liens, assignments and security interests created by
the Documents, and evidence that all other actions necessary or,
in the opinion of the Purchaser, desirable to perfect and protect
the liens, assignments and security interests created by
the Documents have been taken.
(h) Certified copies of the resolutions of the Board of Directors of
the Board approving each Note Document and of all documents
evidencing other necessary corporate action and governmental
approvals, if any, with respect to each Note Document.
(i) A Certificate of the Secretary, or similar officer, of the Board
certifying the names and true signatures of the officers of the
Board authorized to sign each Note Document and the other
documents to be delivered by it hereunder.
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(j) Certified copies of the Resolutions of the Board of Directors of
the Lessee approving each Lessee Document and of all documents
evidencing other necessary corporate action and governmental
approval, if any, with respect to each Lessee Document.
(k) A Certificate of the Secretary, or similar officer, of the Lessee
certifying the names and true signatures of the officers of the
Lessee authorized to sign each Lessee Document and the other
documents to be delivered by it hereunder.
(l) The opinion of Boston, Bates & Holt, counsel for the Lessee,
dated the date hereof, and in form acceptable to Purchaser.
(m) The opinion of White and Betz, counsel for the Board, dated
the date hereof, and in form acceptable to Purchaser.
(n) A paid title insurance policy, prepared upon an opinion of
counsel approved by the Purchaser, in form and content, and with a
company, acceptable to the Purchaser, in the amount of $5,000,000
insuring that the Deed of Trust creates a valid first lien in and
upon the Project, free and clear of all defects and encumbrances
except as set forth on Schedule B to the Lease and containing full
coverage against liens of mechanics, materialmen, laborers and any
other party who might claim statutory or common law liens.
(o) Evidence satisfactory to the Purchaser as to:
(i) Methods of access to and egress from the Project, and
nearby or adjoining public ways, meeting the reasonable requirements
of similar projects;
(ii) The availability of storm and sanitary sewer facilities
meeting the reasonable requirements of the Project;
(iii) The availability of other required utilities, such as
electricity, water, etc., reasonably required to serve the Project;
and
(iv) The securing of all requisite governmental approvals of
sanitary facilities, and other matters that are subject to the
jurisdiction of any governmental authority.
(p) Suitable policies or evidence of insurance in accordance with the
terms of the Lease and this Agreement.
(q) A survey, certified by a surveyor registered as such in Tennessee,
to which is attached a certificate satisfactory to the Purchaser,
which survey shall disclose all improvements, easements and
rights-of-way, and the Building.
(r) An environmental report, prepared by an environmental engineering
firm acceptable to the Purchaser, if requested by Purchaser, with
respect to the premises, in form substance and detail satisfactory
to the Purchaser.
(s) Such other items as the Purchaser may reasonably request.
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ARTICLE IV
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF THE BOARD
SECTION 4.01. Representations and Warranties of the Board. The Board
represents and warrants as follows:
(a) The Board is a duly established, organized and existing public
corporation under the laws of the State of Tennessee. Each of the directors
of the Board is a duly qualified elector of and taxpayer in the City of
Lawrenceburg, Tennessee, and no director is an officer or employee of the
City of Lawrenceburg, Tennessee. The composition of the Board of Directors
of the Board is in conformity with the requirements of Section 7-53-301 of the
Act.
(b) The Board has all requisite power, authority and legal right to
execute and deliver the Note Documents and all other instruments and
documents to be executed and delivered by the Board pursuant hereto, to
perform and observe the provisions thereof and to carry out the transactions
contemplated thereby. All corporate action on the part of the Board which
is required for the execution, delivery, performance and observance by the
Board of the Note Documents has been duly authorized and effectively taken,
and such execution, delivery, performance and observation by the Board do
not contravene applicable law or any contractual restriction binding on or
affecting the Board.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
the due execution and delivery by the Board of, and performance by the
Board of its obligations under, any Note Document except for the filing of a
Report on Debt Obligation with the Division of Local Finance, Comptroller's
Office, as required by Chapter 402, Public Acts of 1989.
(d) This Agreement is, and each other Note Document when
delivered hereunder will be, legal valid and binding special
obligations of the
(e) There is no default of the Board in the payment of the principal
of or interest on any of its indebtedness for borrowed money or under any
instrument or instruments or agreements under and subject to which any
indebtedness for borrowed money has been incurred which does or could
affect the validity and enforceability of the Note Documents or the ability of
the Board to perform its obligations thereunder, and no event has occurred
and is continuing under the provisions of any such instrument or agreement
which constitutes or, with the lapse of time or the giving of notice, or both,
would constitute such a default.
(f) There is not pending or, to the knowledge of the undersigned
officers of the Board, threatened any action or proceeding before any court,
governmental agency or arbitrator (i) to restrain or enjoin the issuance or
delivery of the Note or the collection of any revenues pledged under the
Assignment, (ii) in any way contesting or affecting the authority for the
issuance of the Note or the validity of any of the Note Documents, or (iii) in
any way contesting the existence or powers of the Board.
(g) In connection with the authorization, issuance and sale of the
Note, the Board has complied with all provisions of the Constitution and laws
of the State of Tennessee, including the Act and Sections 8-44-104, et seq., of
Tennessee Code Annotated (the "Public Meetings Act").
(h) The Board has not assigned or pledged and will not assign or
pledge its interest in the Lease for any purpose other than to secure the Note
under the Assignment. The Note constitutes the only note or other obligation
of the Board in any manner payable from the revenues to be derived from the
Lease, and except for the Note no bonds or other obligations have been or
will be issued on the basis of the Lease.
(i) The Board is not in default under any provision of its Certificate
of Incorporation or By-Laws, and is not in default under any of the provisions
of the laws of the State of Tennessee which default would affect its existence
or its powers referred to in subsection (b) of this Section.
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(j) No member, officer or other official of the Board has any interest
whatsoever in the Lessee or in the transactions contemplated by the Lease.
(k) The Board will not enter into any agreement or instrument
which might in any way prevent or materially impair its ability to perform its
obligations under the Note Documents.
(l) The Board will not consent or agree to any modification of the
Lease or waive compliance with any of the terms thereof, unless any such
modification or waiver shall have been agreed to in writing by the Noteholder.
(m) The Board will execute, acknowledge where appropriate, and
deliver from time to time promptly at the request of the Noteholder all such
instruments and documents as in the opinion of the Noteholder are necessary
or desirable to carry out the intent and purpose of any of the Documents.
SECTION 4.02. Affirmative Covenants. So long as the Note shall remain
unpaid, the Board will, upon request of the Noteholder and provided it shall be
furnished with sufficient funds to pay all costs and expenses (including
attorney's fees) reasonably incurred by it as such costs and expenses accrue:
(a) Take all action and do all things which it is authorized by law
to take and do in order to perform and observe all covenants and agreements
on its part to be performed and observed under the Note Documents.
(b) Execute, acknowledge where appropriate, and deliver from time
to time promptly at the request of the Noteholder all such instruments and
documents as in the opinion of the Noteholder are necessary or desirable to
carry out the intent and purpose of the Note Documents or Lessee
Documents (or any of them).
ARTICLE V
OTHER REPRESENTATIONS, COVENANTS AND WARRANTIES OF LESSEE
SECTION 5.01. Representations and Warranties. In order to induce the
Board to enter into the Lease and the Purchaser to purchase the Note, Lessee
hereby represents and warrants to, and agrees with, the Board, the Purchaser
and any subsequent Noteholder as follows:
(a) Organization. The Lessee is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Pennsylvania and has all requisite power and authority to own and operate its
properties and to carry on its business as now being conducted. Lessee shall
remain a corporation duly organized and existing and in good standing under
the laws of the State of Pennsylvania, and is and shall remain duly qualified
to do business in Tennessee and each state other than Tennessee in which
qualification is necessary. Neither the execution, the delivery, nor the
performance of this Agreement and all related documents by Lessee will
constitute a default under or conflict with Lessee's charter or bylaws or any
agreement, contract, document, or instrument to which Lessee now is a party.
The execution of all necessary resolutions and other prerequisites of corporate
actions have been duly performed so that the individual executing this
Agreement and related documents on behalf of Lessee is duly authorized to
bind Lessee by his signature.
(b) Requisite Power and Authorization. This Agreement
constitutes, and upon execution and delivery thereof, the other Lessee
Documents will constitute, legal, valid and binding obligations of the Lessee
enforceable against the Lessee in accordance with their respective terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors' rights
generally. The Lessee has full power and authority, corporate and otherwise,
to execute and deliver, and to perform all of its obligations under, each of the
Lessee Documents. All corporate action which is required for such execution,
delivery and performance has been validly taken.
(c) Approvals. No approval, consent or other authorization
(corporate, governmental or otherwise) of, or filing with, any court, agency,
commission or other authority or entity is required for the due execution,
delivery, performance or observance by the Lessee of this Agreement or for
the payment of any sums thereunder.
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(d) Litigation. There is no litigation or proceeding pending against
Lessee or, to the knowledge of Lessee, threatened that, if decided adversely
to Lessee, would have a material effect upon its financial condition. Lessee
is not subject to any outstanding court or administrative order.
(e) Financial Statements. The financial statements of Lessee
heretofore delivered to the Purchaser fairly and accurately reflect the
financial condition and capital structure of Lessee as of the dates thereof.
Since said date, no material adverse change in either has occurred or, to the
knowledge of Lessee, is threatened. All financial statements delivered to
Purchaser have been prepared in accordance with generally accepted accounting
principles, consistently applied, and are true, accurate and complete in every
material respect. Without limiting the foregoing, Lessee warrants that such
financial statements disclose all known contingent liabilities as well as direct
liabilities. Lessee acknowledges that Purchaser agreed to purchase the Note in
reliance upon such financial statements, and Lessee warrants that no material
adverse change has occurred in the financial condition of any person or entity
as set forth in such financial statements. Lessee warrants that Lessee has
good and marketable title to the assets disclosed on Lessee's balance sheet
disclosed to Purchaser, subject only to liens, security interests and other
encumbrances noted thereon.
(f) Taxes. Lessee is not presently delinquent in the payment of any
taxes imposed by any governmental authority or in the filing of any tax return
and Lessee is not involved in a dispute with any taxing authority over tax
amounts due. Lessee covenants that all future taxes assessed against Lessee
shall be timely paid and that all tax returns required of Lessee shall be timely
filed.
SECTION 5.02. Lease. The Lessee shall punctually pay all Basic Rent and
other amounts due under the Lease and shall promptly perform all of its other
obligations under the Lease.
SECTION 5.03. Inspection. The Lessee and the Board shall permit the
Noteholder and any representative of the Noteholder to visit and inspect the
Leased Property at such time as either the Board or the Lessee has title to any
part thereof, to examine the books of account of the Lessee and to discuss
Lessee's affairs, finances and accounts with Lessee and independent certified
public accountants, all during business hours and as often as the Noteholder
or any such representatives may reasonably request. Any inspection or
examination pursuant to this paragraph shall be for the sole purpose of
protecting the security of the Noteholder and shall not be construed as a
representation by the Noteholder that there has been compliance with the plans
and specifications for the Project or that the Project will be or is free of
faulty materials or workmanship, or a waiver of any right the Noteholder may
have against Lessee or any other party.
SECTION 5.04. Expenses Paid by Lessee: Indemnification.
(a) The Lessee will pay in full all reasonable out-of-pocket expenses
of the Board and the Purchaser incurred in connection with the preparation,
execution and delivery of this Agreement and the Lease and the consummation of
the transactions contemplated by such documents, including but not limited to
(i) the fees and disbursements of the Board's counsel and Purchaser's counsel
(ii) all taxes (other than income taxes) applicable to such transactions, (iii)
all present and future recording and filing fees and recording and filing taxes,
(iv) all expenses incident to the preparation of the Documents and any other
documents relating to the Lease or the Note, and (v) all survey and title
insurance premiums, fees and expenses.
(b) The Lessee shall pay to or reimburse in full the Board and
Noteholder for all costs and expenses incurred in the collection or enforcement
of (or in respect of any action taken to collector enforce) the Documents
upon any default thereunder, or in any investigation of any such default,
including reasonable attorneys' fees.
(c) The Lessee shall indemnify and hold harmless both the Board,
the Purchaser and any subsequent Noteholder (and all officers and directors of
both the Board, the Purchaser and any subsequent Noteholder) against all
liabilities, claims, costs and expenses imposed or asserted against either
the Board or the Purchaser for (i) any loss or damage to property or injury
or death of any person that may be occasioned by any cause whatsoever pertaining
to the renovation, maintenance, operation or use of the Leased Property, (ii)
any breach or default on the part of the Lessee in the performance of any
covenant or agreement under the Lessee Documents or arising from any act or
failure to act by the Lessee or any of his agents, contractors, servants,
employees or licensees or arising from any accident, injury or damage whatsoever
caused to any person, firm or corporation occurring in or about the Leased
Property, or (iii) any such claim or action or proceeding brought thereon.
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(d) The obligations of the Lessee under this Section 5.04 shall
survive the payment in full of all amounts payable under the Note to the extent
set forth above.
SECTION 5.05. Performance of Lessee or Board Obligations by Noteholder.
Without having any obligation to do so and only if an Event of Default has
occurred and is continuing, the Noteholder may perform or pay any obligation
which the Lessee is obligated to pay or perform under any of the Lessee
Documents or which the Board is obligated to pay or perform under any of the
Note Documents. All of the following shall bear interest at the Default Rate
and, together with such interest, be repaid by the Lessee to the Noteholder on
demand: (1) all sums advanced or paid by the Noteholder under this Section, and
(2) all costs reasonably incurred or paid by the Noteholder in the exercise of
its rights under this Section.
SECTION 5.06. Further Assurances. Lessee will execute such other
assignments, security agreements, financing statements, and other documents that
Purchaser may deem necessary to further evidence the obligations provided for in
the Lease or to perfect extend, or clarify Purchaser's rights in any property
securing or intended to secure the Note. Any Vice President of Purchaser is
hereby appointed as Lessee's attorney-in-fact with full power of substitution
for the signing of financing statements and other similar filings with
government offices for perfecting security interests granted hereby.
Purchaser acknowledges that this power of attorney is coupled with an interest
and is irrevocable.
SECTION 5.07. Financial Statements. The Lessee will provide to the
Purchaser (i) within forty-five days in the case of the Lessee, after the end
of the Lessee's fiscal quarter, financial statements of the Lessee, in form and
content satisfactory to Purchaser, but including a complete balance sheet and
profit and loss statement for each quarter; (ii) within one hundred fifty days
after the close of Lessee's fiscal year, complete certified audited financial
statements of Lessee, prepared in accordance with generally accepted accounting
principles, consistently applied, prepared by a certified public accountant
acceptable to Purchaser; and (iii) a quarterly compliance certificate from an
officer of the Lessee acknowledging that the Lessee is not in default in the
performance of any provisions of the Lessee Documents and that the Lessee is in
compliance with all fiscal covenants contained in the Lessee Documents.
SECTION 5.08. Cash Flow to Debt Service Ratio. Lessee shall at all times
maintain a ratio of Cash Flow to Debt Service of not less than 7.0 to 1.0. For
the purposes of this covenant, "cash flow' shall mean earnings of Lessee before
interest, taxes, depreciation and amortization and "debt service" shall mean
the sum of the current portion of long term debt and capitalized leases, It
dividends, and treasury stock repurchases.
SECTION 5.09. --RESERVED--
SECTION 5.10. Dividends and Loans or Advances. The Lessee will not pay
or make, directly or indirectly, to any related company, (i) dividends; (ii)
royalty fees or related company management or consulting fees; and (iii) any
loans or advances for the duration of this Agreement unless immediately before
and immediately after paying or making such dividend, royalty fee or related
company management or consulting fee or any loan or advance, the Lessee was
and remains in compliance with the other covenants contained herein.
SECTION 5.11. Liabilities to Tangible Net Worth. Lessee will not permit
its Total liabilities divided by its Tangible Net Worth to be greater than .75
at any time during the term of the Lease.
SECTION 5.12. Insurance. The Lessee will maintain public liability
insurance insuring against bodily injury and property damage with liability
limits of $500,000 for each occurrence and $5,000,000 aggregate liability and
fire and extended coverage insurance on the Project in such form and in such
amounts as are consistent with industry practices and with insurers satisfactory
to the Purchaser. The Lessee shall provide evidence of insurance (together
with written agreement by the insurer or insurers to give Purchaser 30 days'
prior written notice of cancellation) to the Purchaser and the Lessee shall
name the Purchaser as the loss payee on any and all such insurance policies
relating to the Leased Property.
SECTION 5.13. Use of Project. Lessee will keep the Project free from any
lien, security interest, or encumbrance other than that granted to Purchaser by
the Board pursuant to the Deed of Trust and in good order and repair and will
not waste or destroy the Project or any part thereof Lessee will not use the
Project in violation of any statute or ordinance. Lessee's business activities
are conducted in accordance with all applicable laws and regulations, and Lessee
covenants that such activities shall continue to be so conducted. Purchaser may
examine and inspect the Project at any time.
SECTION 5.14. No Conflicting Agreements. Lessee is not a party to any
contract or agreement and is not subject to any contingent liability that does
or may impair Lessee's ability to perform under the terms of this Agreement. The
execution and performance of this Agreement will not cause a default under any
other contract or agreement to which Lessee or any property of Lessee is
subject, and will not result in the imposition of any charge, penalty, lien or
other encumbrance against any of Lessee's property except in favor of Purchaser.
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SECTION 5.15. Notice to Purchaser of Certain Events. Lessee covenants to
give Purchaser prompt written notice of any litigation, arbitration,
administrative proceeding or investigation that may hereafter be instituted or
threatened against Lessee in which the potential liability of Lessee exceeds
$100,000. Lessee covenants to give Purchaser written notice within ten days
of (i) the creation or discovery of any material additional contingent
liability or the occurrence of any other material adverse change in the
financial condition of Lessee, (ii) the occurrence of any event, or presence
of any condition, which constitutes an Event of Default or which with the giving
of notice, the passage of time, or both, would constitute a default, and (iii)
the change of the name of Lessee.
SECTION 5.16. Further Assurances. Lessee covenants that it will execute,
acknowledge where appropriate, and deliver from time to time promptly at the
request of the Purchaser all such instruments and documents as in the opinion of
the Purchaser are necessary or desirable to carry out the intent and purpose of
the Note Documents or Lessee Documents (or any of them).
SECTION 5.17. Merger, Sale of Assets, Certificates and Loans. Lessee will
not, without the prior written consent of the Purchaser:
(a) enter into any merger or consolidation; provided, however, that
Lessee may, without the consent of Purchaser, merge or consolidate
with any other company as long as the Lessee shall be the continuing
or surviving corporation;
(b) sell, lease, convey or otherwise dispose of any of its property or
assets, except that Lessee may (i) grant liens or encumber any of
its property (other than its interest in the Lease) (ii) dispose
of property in the ordinary course of business and (iii) otherwise
dispose of its properties as long as the aggregate fair market value
of the property so disposed of in any fiscal year of the Lessee also
does not exceed $1,000,000; and
(c) submit to the Purchaser any certificate or other document that
contains any untrue statement of a material fact or omits to
state a material fact necessary to make it not misleading.
ARTICLE VI
EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall constitute
an Event of Default hereunder:
(a) non-payment when due of any installment of interest on the Note; or
(b) non-payment when due of any installment of principal on the Note
whether at maturity, by acceleration or mandatory prepayment; or
(c) non-payment when due of any other amount required to be paid
by the Lessee or the Board hereunder or under any other Document
(other than a default under subsections (a) or (b) above) continued
for ten (10) days after written notice thereof to the Lessee; or
(d) the occurrence of an "Event of Default" as defined in Article
14.01 of the Lease which continues beyond the applicable cure
period provided therein, if any; or
(e) indebtedness of the Lessee in excess of $50,000 shall be declared
to be due and payable, or required to be prepaid other than by
regularly scheduled or other mandatory required prepayment,
prior to the stated maturity thereof; or
(f) any representation or warranty made by Lessee herein or in the
Lease is untrue in any material respect when made; or
(g) default by the Lessee in the due observance or performance of
any term, covenant, condition or agreement on its part to be
performed under any of the Documents (other than a default under
subsections (a), (b), (c), (d), (e) or (f) above) continued for
thirty (30) days after written notice specifying such default has
been given to the Lessee; or
(h) default by the Lessee in the due observance or performance of
any term covenant, condition or agreement on its part to be
performed under the Prior Note Agreements, or either of them,
except that no default shall be deemed to exist under the Prior
Note Agreements by reason of a breach of the financial covenants
contained in Sections 5.07, 5.08 and 5.11 of the Prior Note
Agreements unless there is a breach of the financial covenants
contained in Section 5.07, 5.08 and 5.11 hereof, which the
parties agree shall supersede and replace Sections 5.07, 5.08 and
5.11 of the Prior Note Agreements. The parties further agree that
the provisions of Section 5.09 contained in the Prior Note
Agreements are deleted and are of no further force and effect.
Except as modified hereby, the terms of the Prior Note
Agreements remain in full force and effect.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telecopy, or telex
communication) and mailed. telecopied, telexed, telegraphed or delivered, if to
the Board, at its address, c/o White & Betz, 22 Public Square, Lawrenceburg,
Tennessee 38464-0488, Attention: Alan C. Betz, Esq.; if to the Purchaser, at
its address at NationsBank of Tennessee, National Association, 255 N. Military
Avenue, Lawrenceburg, Tennessee 38464, Attention: Mr. Timothy E. Pettus; if to
any Noteholder other than the Purchaser, at the address indicated on the note
register maintained pursuant to Section 7.02 hereof; if to the Lessee, at its
address at Jones Apparel Group, Inc., 250 Rittenhouse Circle, Bristol,
Pennsylvania 19007, Attention: Chief Financial Officer; or, as to each party,
at such other address as shall be designated by such party in a written notice
to the other party. All such notices and communications shall when mailed or
telegraphed, be effective three days after deposit in the mails or delivery to
the telegraph company, respectively, addressed as aforesaid. All such notices
and communications otherwise transmitted shall be effective upon receipt by
the addressee.
SECTION 7.02. Note Registration. The Note shall be registered (as
hereinafter provided) in the name of the owner on a note register to be provided
for that purpose by the Board in the office of the Lessee, as note registrar.
The note registrar and the note register shall be subject to change upon written
notice thereof from the Noteholder. No transfer thereof shall be valid unless
made at the written request of the registered owner or his legal representative,
on said note register and evidence of transfer of the Note furnished to the note
registrar. Principal of, premium, if any, and interest on the Note will be paid
by check to the registered owner by mail at the address shown on the note
register or at such other place as may be directed by the Noteholder, which
directions shall be noted in the note register.
The person in whose name the Note shall be registered shall be deemed and
regarded as the absolute owner thereof for all purposes, and payment of or on
account of the interest on or the principal of the Note shall be made only to
or upon the order of the registered owner thereof or his legal representative,
but such registration may be changed as hereinabove provided. All such payments
shall be valid and effectual to satisfy and discharge the liability upon the
Note to the extent of the sum or sums paid.
SECTION 7.03. No Waiver: Remedies. No failure on the part of the
Noteholder to exercise, and no delay in exercising, any right under any
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any Document preclude any other or further exercise
thereof or the exercise of any other right. The remedies provided in the
Documents are cumulative and not exclusive of any remedies provided by law.
SECTION 7.04. Binding Effect; Governing Law. This Agreement shall be
binding upon and inure to the benefit of the Board, the Purchaser and the
Lessee and their respective successors and assigns, except that the Board shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Purchaser. This Agreement and the Note shall
be governed by, and construed in accordance with, the laws of the State of
Tennessee except to the extent that applicable federal law may
permit any higher rate of interest.
SECTION 7.05. Acquisition of Note For Account of the Purchaser. The
Purchaser represents and warrants that it will acquire the Note and the other
Note Documents to be acquired by it for its own account and, except that
the Purchaser may grant participation interests therein to other financial
institutions, not with a view to the distribution or any disposition thereof,
and that it has no present intention of making any such distribution or
disposition provided that the disposition of the Purchaser's property shall at
all times be and remain within its control. In the event that the Purchaser
or any subsequent Noteholder should transfer the Note, the Purchaser or any
subsequent Noteholder shall give prompt written notice to the Board and the
Lessee of the name and address of the transferee. Until such time as the
Board and the Lessee receive such notice from the Purchaser and the name and
address of the transferee have been entered on the note register and noted on
the Note, the Board and the Lessee shall be entitled to assume that the
Purchaser is the Noteholder and that the Noteholder is as reflected in the
most recent entry on the note register and the most recent notation on the
Note.
SECTION 7.06. Severability. In the event that any clause or provision of
any Note Document shall be held to be invalid by any court of competent
jurisdiction, the invalidity of such clause or provision shall not affect any
of the remaining provisions of such Note Document.
SECTION 7.07. Payment on Non-Business Days. Whenever any payment to
be made hereunder or under the Note shall be stated to be due on a day which
is not a Business Day, such payment may be made on the next succeeding
Business Day.
SECTION 7.08. No Liability of Board's Officers, Etc. No recourse under or
upon any obligation, covenant or agreement contained in this Agreement or the
Assignment, or in the Note, or under any judgment obtained against the Board, or
by the enforcement of any assessment or by any legal or equitable proceeding by
virtue of any constitution or statute or otherwise or under any circumstances,
under or independent of this Agreement or the Assignment, shall be had against
any incorporator, member, director or officer, as such, past present or future,
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11
of the Board, either directly or through the Board, or otherwise, for the
payment for or to the Board or any receiver thereof, or for or to the holder
of the Note or otherwise, of any sum that may be due and unpaid by the Board
upon the Note. Any and all personal liability of every nature, whether at
common law or in equity, or by statute or by constitution or otherwise, of any
such incorporator, member, director or officer, as such, to respond by reason of
any act or omission on his part or otherwise, for the payment for or to the
Board or any receiver thereof, or for or to the holder of the Note or otherwise,
of any sum that may remain due and unpaid upon the Note, is hereby expressly
waived and released as a condition of and consideration for the execution of
this Agreement and the issue of the Note.
SECTION 7.09. No Liability of the City of Lawrenceburg, Tennessee. The
City of Lawrenceburg, Tennessee shall not in any event be liable for the
payment of the principal of, premium, if any, or interest on the Note, or for
the performance of any pledge, mortgage, obligation or agreement of any kind
whatsoever herein or indebtedness by the Board, and neither the Note nor any
of the agreements or obligations of the Board contained in this Agreement or
the Assignment or otherwise shall be construed to constitute an indebtedness
of the City of Lawrenceburg, Tennessee, within the meaning of any
constitutional or statutory provision whatsoever.
SECTION 7.10. Term of Agreement. This Agreement and all terms and
provisions hereof shall survive the closing of the purchase and delivery of
the Note and shall not be merged into the Note or any other documents
evidencing the Note or the purchase thereof. The term of this Agreement
shall be from the date hereof until the date of payment in full of the Note
and all other obligations of the Board or the Lessee hereunder and under the
other Documents.
SECTION 7.11. Arbitration. Any controversy or claim between or among
the parties hereto including but not limited to those arising out of or
relating to this Agreement or any related instruments, agreements or documents
including any claim based on or arising from an alleged tort shall be determined
by binding arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), and the rules of practice and procedure
for the arbitration of commercial disputes of J.A.M.S./Endispute, or any
successor thereto, as supplemented by any special rules set forth in any of
the Loan Documents. Judgment upon any arbitration award may be entered in any
court having jurisdiction. Any party to this Agreement may bring an action,
including a summary of expedited proceeding, to compel arbitration of any
controversy or claim to which this Agreement applies in any court having
jurisdiction over such action.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF
LAWRENCEBURG
By: /s/ Jerry Putman
Chairman
ATTEST:
/s/ Carolyn Thompson
Secretary
NATIONSBANK OF TENNESSEE,
NATIONAL ASSOCIATION
By: /s/ Tim Pettus
Title: V. P.
JONES APPAREL GROUP, INC.
By /s/ Gary R. Klocek
Title: Corp. Controller
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FIRST AMENDMENT TO NOTE AGREEMENT
THIS FIRST AMENDMENT TO NOTE AGREEMENT ("First Amendment") dated as of
October 1, 1996, among THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF
LAWRENCEBURG ("Board"), NATIONSBANK OF TENNESSEE, NATIONAL ASSOCIATION
("Purchaser") and JONES APPAREL GROUP, INC. ("Lessee").
WHEREAS, the parties hereto entered into a certain Note Agreement (the
"Note Agreement") dated as of May 1, 1996; and
WHEREAS, the parties wish to amend Section 5.08 of said Note Agreement;
NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good and
valuable consideration, the parties agree that the second sentence to Section
5.08 is deleted and the following is substituted in its stead:
"For the purposes of this covenant, "cash flow" shall mean earnings of
Lessee before interest, taxes, depreciation and amortization and "debt
service" shall mean the sum of the current portion of long term debt,
interest and capitalized leases, dividends, and treasury stock repurchases."
EXCEPT AS PROVIDED ABOVE, the Note Agreement remains in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto dully authorized as of the day
first above written.
THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF
LAWRENCEBURG
By: /s/ Jerry Putman
Chairman
ATTEST:
/s/ Carolyn Thompson
Secretary
NATIONSBANK OF TENNESSEE,
NATIONAL ASSOCIATION
By: /s/ Tim Pettus
Title: V. P.
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