<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 1994
--------------------------
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number 1-9548
--------------
The Timberland Company
- - ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 02-0312554
- - ----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
11 Merrill Industrial Drive, Hampton, New Hampshire 03843
- - ----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (603) 926-1600
----------------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No ____
-----
On July 29, 1994, 7,653,042 shares of the registrant's Class A Common
Stock were outstanding and 3,237,121 shares of the registrant's Class
B Common Stock were outstanding.
<PAGE> 2
<TABLE>
THE TIMBERLAND COMPANY
FORM 10-Q
TABLE OF CONTENTS
<CAPTION>
Page(s)
------
<S> <C>
Independent Accountants' Review Report 1
Part I Financial Information (Unaudited)
----------------------------------------
Condensed Consolidated Balance Sheets -
July 1, 1994 and December 31, 1993 2 - 3
Condensed Consolidated Statements of Operations -
For the three and six months ended July 1, 1994 and July 2, 1993 4
Condensed Consolidated Statements of Cash Flows -
For the six months ended July 1, 1994 and July 2, 1993 5
Notes to Condensed Consolidated Financial Statements 6 - 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 10
Part II Other Information 11
-------------------------
</TABLE>
<PAGE> 3
Form 10-Q
Page 1
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
--------------------------------------
To the Stockholders and Board of Directors of
The Timberland Company:
We have reviewed the accompanying condensed consolidated balance sheet
of The Timberland Company and subsidiaries as of July 1, 1994, and the
related condensed consolidated statements of operations and cash flows
for the three-month and six-month periods ended July 1, 1994 and July 2,
1993. These condensed consolidated financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and of making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications
that should be made to such condensed consolidated financial
statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of The Timberland
Company and subsidiaries as of December 31, 1993, and the related
consolidated statements of income, changes in stockholders' equity,
and cash flows for the year then ended (not presented herein), and, in
our report dated February 15, 1994, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1993, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from
which it was derived.
Deloitte & Touche
Boston, Massachusetts
July 21, 1994
<PAGE> 4
Form 10-Q
Page 2
Part I Financial Information
- - ----------------------------
<TABLE>
THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
July 1, December 31,
1994 1993
---------- -------------
<S> <C> <C>
Current assets
Cash and equivalents $ 3,064 $ 3,281
Accounts receivable, net 117,928 93,226
Inventories 194,662 111,380
Prepaid expenses 11,548 7,571
Deferred and refundable income taxes 5,641 5,625
---------- ----------
Total current assets 332,843 221,083
---------- ----------
Property, plant and equipment, at cost 89,596 79,145
Less accumulated depreciation and
amortization (39,532) (33,530)
---------- ----------
Net property, plant and
equipment 50,064 45,615
---------- ----------
Excess of cost over fair value of net
assets acquired, net 24,546 18,157
Other assets, net 4,864 5,756
---------- ----------
$ 412,317 $ 290,611
========= ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 5
Form 10-Q
Page 3
<TABLE>
THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(Dollars in Thousands)
(Unaudited)
<CAPTION>
July 1, December 31,
1994 1993
--------- ------------
<S> <C> <C>
Current liabilities
Notes payable $ 53,741 $ 10,061
Current maturities of long-term obligations 719 682
Accounts payable 37,084 32,526
Accrued expenses
Payroll and related 9,738 8,873
Interest and other 18,942 9,609
Income taxes payable 1,710 3,672
--------- ---------
Total current liabilities 121,934 65,423
--------- ---------
Long-term obligations, less current maturities 155,440 90,809
--------- ---------
Deferred income taxes 6,700 6,016
--------- ---------
Stockholders' equity
Preferred stock, $.01 par value; 2,000,000 shares authorized;
none issued - -
Class A Common Stock, $.01 par value (1 vote per share);
30,000,000 shares authorized; 7,650,565 shares issued at
July 1, 1994 and 7,630,556 shares at December 31, 1993 77 76
Class B Common Stock, $.01 par value (10 votes per share);
15,000,000 shares authorized; 3,237,121 shares issued
and outstanding at July 1, 1994 and 3,237,598 shares at
December 31, 1993 32 32
Additional paid-in capital 56,281 55,805
Retained earnings 72,632 74,106
Cumulative translation adjustment (659) (1,536)
Less treasury stock at cost, 18,369 shares at July 1, 1994
and 18,513 shares at December 31, 1993 (120) (120)
--------- ---------
128,243 128,363
--------- ---------
$ 412,317 $ 290,611
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 6
Form 10-Q
Page 4
<TABLE>
THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
<CAPTION>
For the For the
Three Months Ended Six Months Ended
------------------ ----------------
July 1, July 2, July 1, July 2,
1994 1993 1994 1993
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales $126,944 $84,849 $235,037 $155,455
Cost of goods sold 86,795 54,263 162,397 97,402
-------- ------- -------- --------
Gross profit 40,149 30,586 72,640 58,053
-------- ------- -------- --------
Operating expenses
Selling 27,038 17,980 49,890 33,273
General and administrative 9,667 7,560 19,624 14,351
Amortization of goodwill 250 193 444 387
-------- ------- -------- --------
Total operating expenses 36,955 25,733 69,958 48,011
-------- ------- -------- --------
Operating income 3,194 4,853 2,682 10,042
-------- ------- -------- --------
Other expense (income)
Interest 3,440 1,388 5,325 2,598
Other, net (481) 477 (266) 812
-------- ------- -------- --------
Total other expense 2,959 1,865 5,059 3,410
-------- ------- -------- --------
Income (loss) before income taxes 235 2,988 (2,377) 6,632
Provision (benefit) for income taxes 90 1,076 (903) 2,388
-------- ------- -------- --------
Net income (loss) $ 145 $ 1,912 $ (1,474) $ 4,244
======== ======= ======== ========
Earnings (loss) per share $ .01 $ .17 $ (.13) $ .38
======== ======= ======== ========
Weighted average shares outstanding 11,201 11,139 11,216 11,110
======== ======= ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 7
Form 10-Q
Page 5
<TABLE>
THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
For the
Six Months Ended
----------------
July 1, July 2,
1994 1993
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,474) $ 4,244
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Deferred income taxes 684 10
Depreciation and amortization 7,017 4,770
Increase (decrease) in cash from
changes in working capital items,
net of effects of acquisition:
Accounts receivable (25,977) (16,279)
Inventories (76,471) (31,161)
Prepaid expenses (3,077) (1,575)
Accounts payable 4,459 15,072
Accrued expenses 9,835 3,036
Income taxes (1,944) (923)
-------- --------
Net cash used
in operating activities (86,948) (22,806)
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment, net (9,170) (10,585)
Acquisition of Italian distributor (14,086) -
Other, net 1,061 (320)
-------- --------
Net cash used in investing activities (22,195) (10,905)
-------- --------
Cash flows from financing activities:
Net borrowings under short-term credit facilities 43,676 15,889
Proceeds from long-term obligations 65,000 20,000
Payments on long-term debt and
capital lease obligations (332) (2,154)
Issuance of common stock 477 288
-------- --------
Net cash provided by financing activities 108,821 34,023
-------- --------
Effect of exchange rate changes on cash 105 (32)
-------- --------
Net increase (decrease) in cash and equivalents (217) 280
Cash and equivalents at beginning of period 3,281 1,220
-------- --------
Cash and equivalents at end of period $ 3,064 $ 1,500
======== ========
Supplemental disclosures of cash flow information:
Interest paid $ 4,158 $ 2,464
Income taxes paid 391 3,299
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 8
Form 10-Q
Page 6
THE TIMBERLAND COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain the
adjustments necessary to present fairly the Company's financial
position, results of operations and changes in cash flows for the
interim periods presented. Such adjustments consisted of normal
recurring items. The unaudited condensed consolidated financial
statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1993
and the current year's previously issued quarterly report on Form
10-Q for the quarter ended April 1, 1994.
Certain prior period amounts have been reclassified for consistent
presentation with the current period.
2. The results of operations for the six months ended July 1, 1994
are not necessarily indicative of the results to be expected for
the full year. Historically, the Company's revenues have been
more heavily weighted to the second half of the year.
<TABLE>
3. Inventories consist of the following (in thousands):
<CAPTION>
July 1, 1994 December 31, 1993
------------ -----------------
<S> <C> <C>
Raw materials $ 16,865 $ 11,108
Work-in-process 14,563 13,060
Finished goods 163,234 87,212
--------- ---------
$ 194,662 $ 111,380
========= =========
</TABLE>
4. Indebtedness
On April 15, 1994, the Company finalized a private placement with
a group of lenders for $65 million of senior unsecured notes (the
"Notes") dated April 1, 1994 and maturing on April 15, 2000. The
Notes bear interest at a fixed rate of 7.16% per annum. The proceeds
will be used to repay existing short-term debt and for general
corporate purposes.
On May 4, 1994, the Company entered into a new unsecured committed
revolving credit agreement (the "Agreement"), with a group of banks.
The Agreement, which replaced the Company's existing revolving credit
facility, matures on May 30, 1996 and provides for revolving credit
loans of up to $125 million, subject to a borrowing base formula.
Under the terms of the Agreement, the Company may borrow at interest
rates based upon the lender's cost of funds (4.73% at July 1, 1994).
The Agreement provides for a facility fee of 3/8% per annum on
the full commitment and places limitations on the payment of dividends
and the incurrence of additional debt, and also contains certain other
financial and operating covenants.
<PAGE> 9
Form 10-Q
Page 7
THE TIMBERLAND COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. Acquisition of Italian Distributor
In April 1994, the Company entered into a Distributorship Termination
Agreement (the "Agreement") with its Italian distributor, which terminated
all distribution rights of the distributor on May 31, 1994. In accordance
with the Agreement, the Company also acquired certain assets of the
distributor. Effective on the termination date, Timberland assumed the
distribution of its own products in Italy.
This transaction has been accounted for as a purchase and, accordingly,
the results of operations of the Company's Italian business has been
included in the consolidated statements of operations from the termination
date. The results of the Italian operations are not significant to the
consolidated results of operations, and accordingly, pro forma data has
been omitted. The excess of the purchase price ($6.8 million) over the
fair value of net assets acquired in this transaction ($7.3 million,
consisting primarily of inventory) is being amortized on a straight-line
basis over 10 years.
6. Commitment
Effective March 31, 1994, the Company entered into an operating lease for
a 246,000 square feet facility in Stratham, New Hampshire, which will
become its new corporate headquarters during the fourth quarter of 1994.
The lease expires in July 1999 and has a fixed annual rental rate of $.7
million. The Company is currently reviewing various alternatives for its
existing headquarters facility.
7. Litigation
On June 21, 1994, the plaintiff in the stockholder lawsuit filed on
February 15, 1994 against the Company and one of its officers agreed
voluntarily to withdraw the action, and the case was dismissed.
<PAGE> 10
Form 10-Q
Page 8
<TABLE>
THE TIMBERLAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
RESULTS OF OPERATIONS
The following table sets forth selected items in the Company's condensed
consolidated statements of operations as percentages of net sales for the
periods indicated.
<CAPTION>
For the For the
Three Months Ended Six Months Ended
------------------ ----------------
July 1, July 2, July 1, July 2,
1994 1993 1994 1993
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of goods sold 68.4 64.0 69.1 62.7
----- ----- ----- -----
Gross profit 31.6 36.0 30.9 37.3
----- ----- ----- -----
Operating expenses
Selling 21.3 21.2 21.2 21.4
General and administrative 7.6 8.9 8.3 9.2
Amortization of goodwill .2 .2 .2 .3
----- ----- ----- -----
Total operating expenses 29.1 30.3 29.8 30.9
----- ----- ----- -----
Operating income 2.5 5.7 1.1 6.4
----- ----- ----- -----
Other expense (income)
Interest 2.7 1.6 2.3 1.7
Other, net (.4) .6 (.1) .5
----- ----- ----- -----
Total other expense 2.3 2.2 2.2 2.2
----- ----- ----- -----
Income (loss) before income taxes .2 3.5 (1.0) 4.2
Provision (benefit) for income taxes .1 1.2 (.4) 1.5
----- ----- ----- -----
Net income (loss) .1% 2.3% (.6)% 2.7%
===== ===== ===== =====
<FN>
Note: Percentages may not add due to rounding
</TABLE>
Second Quarter 1994 Compared to Second Quarter 1993
---------------------------------------------------
Net sales for the second quarter of 1994 were $126.9 million, an increase
of 50% over the $84.8 million reported in the same quarter of 1993. This
increase was attributable to an overall increase in the number of
footwear, apparel and accessory units sold. Net sales in 1994 reflect a
price reduction on certain products designed to improve the price/value
proposition for the consumer.
Gross profit as a percentage of net sales was 31.6% as compared to
36.0% in 1993. This decline is primarily a result of a price reduction
for certain footwear and apparel lines, not fully offset by anticipated
product cost reductions. The margin performance for the second quarter
compares favorably to the 30.1% achieved in the first quarter of 1994.
<PAGE> 11
Form 10-Q
Page 9
Second Quarter 1994 Compared to Second Quarter 1993 (continued)
---------------------------------------------------------------
While overall operating expenses increased to $37.0 million for the
second quarter of 1994 from $25.7 million for the comparable period in
1993, total operating expenses as a percentage of net sales in 1994
decreased to 29.1% from 30.3% in 1993. The comparative dollar
increase in spending was principally attributable to increased sales
and marketing expenditures and the Company's investment in worldwide
infrastructure to support sales growth.
Interest expense for the second quarter of 1994 increased by $2.1
million over the comparable period in 1993, primarily as a result of
increased borrowings, in support of sales growth.
First Six Months 1994 Compared To First Six Months 1993
-------------------------------------------------------
Net sales for the first six months of 1994 were $235.0 million, an
increase of 51% over the $155.5 million for the comparable
period in 1993. This increase was attributable to an overall increase
in the number of footwear, apparel and accessory units sold.
Gross profit as a percentage of net sales for the first six months of
1994 was 30.9% as compared to 37.3% for the comparable period in 1993.
This decline is primarily attributed to the effect of a price
reduction for certain footwear and apparel lines, not fully offset by
anticipated product cost reductions.
Total operating expenses for the first half of 1994 increased to $70.0
million from $48.0 million for the comparable period in 1993, principally
as a result of increased sales and marketing expenditures and the
Company's investment in worldwide infrastructure to support sales growth.
As a percentage of net sales, total operating expenses decreased to 29.8%
in 1994 from 30.9% in 1993.
Interest expense for the first six months of 1994 increased by $2.7 million
over the comparable period in 1993, primarily as a result of increased
borrowings, in support of sales growth.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company uses unsecured revolving and committed lines of credit as
the primary sources of financing for its seasonal and other working
capital requirements. In anticipation of increased financing
requirements to support planned near-term growth, the Company
completed a private placement in April 1994 for $65 million of senior
unsecured notes, and entered into a new revolving credit agreement on
May 4, 1994, which provides for revolving credit loans of up to $125
million. (See notes to condensed consolidated financial statements.)
Management believes that such facilities, and the ability to obtain
additional financing, together with cash flow from operations, will
provide the funds necessary to support the Company's business.
At July 1, 1994, the Company had working capital of $210.9 million
versus $155.7 million at December 31, 1993 and $112.3 million at July
2, 1993. As a result of increased sales, accounts receivable have
grown to $117.9 million at July 1, 1994 compared to $70.2 million at
July 2, 1993. Days sales outstanding at July 1, 1994 were 88 days
compared to 79 days at July 2, 1993. Inventories at July 1, 1994 were
$194.7 million, an increase of $83.3 million since year end 1993 and of
$93.3 million since July 2, 1993, in support of anticipated sales.
Inventory turns were 2.0 times and 2.2 times for the six months ended
July 1, 1994 and July 2, 1993, respectively.
<PAGE> 12
Form 10-Q
Page 10
The increase in the level of total borrowings since December 31, 1993,
is due primarily to the inventory build up. As a result of the increase
in overall borrowings, the Company's debt to capital ratio rose to 62% at
July 1, 1994 compared to 44% at December 31, 1993 and July 2, 1993. The
Company expects its short-term financing requirements to reach a peak
during the third quarter in response to its historical seasonal pattern
of demand.
In April 1994, the Company entered into a Distributorship Termination
Agreement (the "Agreement") with its Italian distributor, which
terminated all distribution rights of the distributor on May 31, 1994.
In accordance with the Agreement, the Company also acquired certain
assets of the distributor. Effective on the termination date, Timberland
assumed the distribution of its own products in Italy. (See notes to
condensed consolidated financial statements.)
<PAGE> 13
Form 10-Q
Page 11
Part II Other Information
- - -------------------------
Item 1. Legal Proceedings.
In Germano v. The Timberland Company, et al, the plaintiff alleged
------- -----------------------------
material misstatements and omissions in public filings and statements
made by the Company in 1993. On June 21, 1994, the plaintiff agreed
voluntarily to withdraw the action, and the case was dismissed.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Company held its Annual Meeting of Stockholders on May 19, 1994.
(b) At such Annual Meeting proxies were solicited pursuant to Regulation
14A of the Securities Exchange Act of 1934 and all nominees for
director were elected as indicated by the following schedule of votes
cast for each director. The holders of Class A Common Stock elected
the following directors:
Total Votes for each Total Votes withheld
Nominee Director from each Director
------- -------- ------------------
John F. Brennan 7,021,105 16,458
Thomas R. Schwarz 6,986,411 51,152
The holders of Class A Common Stock and Class B Common Stock voting
together as a single class elected the following directors:
Total Votes for each Total Votes withheld
Nominee Director from each Director
------- -------- ------------------
Robert M. Agate 39,392,815 15,958
Jeffrey B. Swartz 39,357,371 51,402
Sidney W. Swartz 39,389,115 19,658
Abraham Zaleznik 39,392,315 16,458
There were no abstentions or broker non-votes with respect to the
election of the director nominees.
Thomas R. Schwarz resigned from the Company effective July 14, 1994.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Description
------- -----------
(10) Material Contracts
10.1 Sublease dated March 31, 1994 between Hewlett-Packard
Company and The Timberland Company.
10.2 Note Agreements dated as of April 1, 1994 regarding
$65,000,000 7.16% Senior Notes due April 15, 2000.
10.3 Amended and restated Note Agreements dated as of
April 1, 1994 regarding $35,000,000 9.70% Senior
Notes due December 1, 1999.
10.4 Credit Agreement dated as of May 4, 1994 among The
Timberland Company, certain banks listed therein and
Morgan Guaranty Trust Company of New York, as Agent.
(b) Reports on Form 8-K - There were no reports on Form 8-K filed during
the period covered by this report.
<PAGE> 14
Form 10-Q
Page 12
Signatures
- - ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Timberland Company
---------------------------------
(Registrant)
Date: August 12, 1994 Jeffrey B. Swartz
--------------- ---------------------------------
Jeffrey B. Swartz
Executive Vice President,
Chief Operating Officer
and Director
Date: August 12, 1994 Keith D. Monda
--------------- ---------------------------------
Keith D. Monda
Senior Vice President-Finance and
Administration and Chief Financial
Officer
(Principal Financial Officer)
<PAGE> 1
EXHIBIT 10.1
SUBLEASE
This Sublease (the "Sublease") is entered into by HEWLETT-PACKARD
COMPANY, a California corporation ("Sublessor"), as successor by merger
to Apollo Computer Inc., and THE TIMBERLAND COMPANY, a Delaware
corporation ("Sublessee"), as of the day of , 1994.
1. PROPERTY SUBLEASED. Sublessor hereby subleases to Sublessee, and
Sublessee hereby subleases from Sublessor, upon the terms and
conditions set forth herein, a certain building (the "Building")
situated on certain land described in Exhibit "A" hereto attached and
incorporated herein by this reference, commonly referred to as 200
Domain Drive, Stratham, New Hampshire containing approximately
246,000 rentable square feet of space (determined in accordance with
the BOMA Standard Method for Measuring Floor Area in Office
Buildings), together with the exclusive right to use the "common
areas" (as hereinafter defined) located upon said land (the Building
and the land upon which it is located as described in said
Exhibit "A", including, without limitation, the "common areas" (as
hereinafter defined) are sometimes hereinafter referred to as the
"Premises"). The term "common areas", as herein used, shall mean all
areas, sidewalks, parking areas, access roads and drives, driveways,
landscaped areas, truck serviceways, docks, and pedestrian walkways,
facilities, equipment and signs situated on said land. Only
Sublessee and those claiming under Sublessee shall have the right to
use the common areas, which common areas shall be deemed a part of
the Premises for purposes of this Sublease; provided, however, that
Sublessee acknowledges and agrees that Master Lessor (as defined in
Paragraph 3 of this Sublease) has reserved the right in the Master
Lease (as defined in said Paragraph 3) to grant for itself and for
others drainage and/or utilities easements in, upon and over the
common areas so long as such easements and the facilities installed
pursuant thereto shall not materially interfere with Sublessee's use
of the common areas. To the best of Sublessor's knowledge, the
Premises include all appurtenant easements and other rights that are
needed by Sublessee to use the Premises for the purposes herein
permitted.
<PAGE> 2
2. PARKING. Sublessee shall have the exclusive use of the existing
parking spaces delineated on the Premises. Sublessor shall have no
obligation to patrol, enforce, or supervise the use of such parking
spaces. Sublessee shall have the right to mark any parking spaces on
the Premises as reserved by signage or otherwise. Without having
made any investigation or inquiry, Sublessor has no reason to believe
that the number of parking spaces on the Premises does not comply
with the applicable requirements of the zoning regulations of the
Town of Stratham, New Hampshire.
3. MASTER LEASE AND MASTER LESSOR. The Premises are presently leased by
Sublessor from the trustees of First Altex Realty Trust ("Master
Lessor"). Sublessor and Master Lessor entered into a lease for the
Premises on June 19, 1984, as amended by a certain Amendment A, dated
December 21, 1984, as further amended by a certain Stratham Lease
Amendment, dated as of May 21, 1986, as affected by a certain letter,
dated September 26, 1990, from Sublessor to the Master Lessor and as
further amended by a certain Amendment to Lease of even date herewith
(said lease, as amended and affected by the above-listed documents,
is hereinafter referred to as the "Master Lease"). A copy of the
Master Lease is attached hereto as Exhibit "B".
<PAGE> 3
4. PREMISES SUBJECT TO CERTAIN PROVISIONS OF MASTER LEASE. This
Sublease is subject to, and Sublessee shall be bound with respect to
the Premises and this Sublease by, all of the terms, covenants and
conditions of Articles V; VIII; XVI through XIX; XXVIII; and
Exhibit "A" of the Master Lease, which are incorporated herein by
this reference.
Notwithstanding any obligations of the Sublessor, as the "Tenant"
under the Master Lease, to the contrary, it is expressly understood
and agreed that the following provisions of the Master Lease are not
incorporated herein by reference and are entirely superseded and of
no force or effect, as between the Sublessee, on the one hand, and
the Sublessor, Master Lessor and its mortgagee, as applicable, on the
other, by the provisions of this Sublease: Articles I through IV; VI
and VII; IX through XV; XX through XXVII; XXIX; and Exhibit "B".
To the extent that there are any inconsistencies between the terms
and provisions of this Sublease and the terms and provisions of the
Master Lease that are incorporated herein by reference, the terms and
provisions of this Sublease shall control. Any obligations of the
Sublessor, as the "Tenant" under the Master Lease, that are not
expressly set forth herein as an obligation of the Sublessee under
this Sublease shall remain the obligation of the Sublessor under the
Master Lease. Sublessor agrees that it shall comply with the terms,
covenants and conditions of the Master Lease and not act or suffer or
permit anything to be done which would result in a default under the
Master Lease beyond any applicable notice and cure period.
In the event that the Master Lessor succeeds to the Sublessor's
interest under this Sublease, Sublessee acknowledges and agrees that
any obligation under this Sublease on the part of Sublessee to pay
over to Sublessor any amount that Sublessor is obligated under the
Master Lease to pay over to the Master Lessor shall thereupon become
the direct obligation of Sublessee to pay over such amount to the
Master Lessor.
Sublessor agrees that it will not terminate the Master Lease without
Sublessee's prior written consent, except as provided in Paragraph 14
of this Sublease. Except as provided in said Paragraph 14, if
Sublessor desires to terminate the Master Lease, Sublessor shall
notify Sublessee of its desire so to do, whereupon Sublessee shall
either consent or not consent to such termination by giving written
notice to Sublessor within twenty (20) business days after receipt of
Sublessor's notice. Failure by Sublessee to give such notice within
such twenty (20) business day period shall constitute irrevocable and
<PAGE> 4
conclusive consent to such termination on the part of Sublessee. In
the event that Sublessor thereafter elects to terminate the Master
Lease as aforesaid, Sublessor shall notify Sublessee of such
termination and this Sublease shall likewise terminate as of the
effective date of the termination of the Master Lease.
5. TERM. The term of this Sublease (the "Sublease Term") shall commence
on April 1, 1994 ("Commencement Date") and end on July 14, 1999
("Expiration Date"), subject to Sublessee's right to extend the term
as hereinafter provided. The Sublessee shall be entitled to install
fixtures and other equipment, and do other work, prior to the
Commencement Date, provided, however, that all of Sublessee's
obligations hereunder (except the obligations to pay Base Rent and
Operating Expenses) shall commence on the date Sublessee first enters
upon the Premises to perform any such work. If this Sublease is
still in full force and effect, and if Sublessee is not then in
default hereunder beyond any applicable grace period, Sublessee shall
have the right to exercise any one of the following options of
extension:
(a) the option to extend the term of this Sublease until
September 30, 2000 (the "First Extension Option"), provided
that Sublessee shall send written notice of its election to
exercise such option to Sublessor on or before January 15,
1999, in which event the term of this Sublease shall be
automatically extended until September 30, 2000, without
the requirement of any further instrument, upon all of the
same terms, provisions and conditions set forth in this
Sublease; or
(b) the option to extend the term of this Sublease until any
date between and including October 14, 1999, at a minimum,
and September 30, 2000, at a maximum (the "Second Extension
Option"), provided that Sublessee shall send written notice
of its election to exercise such option (which notice shall
specify the term of the extension period) to Sublessor on
or before April 15, 1999, in which event the term of this
Sublease shall be automatically extended for the period of
time specified in such notice (which shall in no event be
for an extension period ending earlier than October 14,
1999 or later than September 30, 2000), without the
requirement of any further instrument, upon all of the same
terms, provisions and conditions set forth in this
Sublease; or
(c) the option to extend the term of this Sublease until any
date between and including October 14, 1999, at a minimum,
and September 30, 2000, at a maximum (the "Third Extension
Option"), provided that Sublessee shall send written notice
of its election to exercise such option (which notice shall
specify the term of the extension period) to Sublessor on
or before May 15, 1999, in which event the term of this
Sublease shall be automatically extended for the period of
<PAGE> 5
time specified in such notice (which shall in no event be
for an extension period ending earlier than October 14,
1999 or later than September 30, 2000), without the
requirement of any further instrument, upon all of the same
terms, provisions and conditions set forth in this Sublease.
Except with respect to the aforesaid options of extension, Sublessee
shall have no right to extend its occupancy beyond the Expiration
Date (or, if any of said options of extension is duly exercised by
Sublessee, beyond the expiration of the applicable extension period)
or to purchase all or any portion of the Premises except as may be
agreed upon between the Sublessee and Master Lessor. Sublessor shall
have no liability to Sublessee as a result of any lease entered into
between Sublessee and Master Lessor, nor shall Sublessor have any
liability to Master Lessor beyond that set forth in the Master Lease.
6. RENT. For and with respect to the period from July 15, 1994 through
July 14, 1999, Sublessee shall pay Sublessor, as an absolute net rent
for the Premises ("Base Rent"), a fixed annual rental at the rate of
Six Hundred Seventy-Six Thousand Five Hundred and 00/100 Dollars
($676,500.00), which is the product arrived at by multiplying the
approximate rentable area of the Premises by Two and 75/100 Dollars
($2.75), in equal monthly installments of Fifty-Six Thousand Three
Hundred Seventy-Five and 00/100 Dollars ($56,375.00) each. Sublessee
shall pay all the estimated Operating Expenses (as hereinafter
defined) for the Premises on a monthly basis commencing on April 1,
1994 and continuing through the end of the term hereof, initial or
extended. Sublessee shall pay all utilities and services associated
with Sublessee's use of the Premises, including, without limitation,
the share attributable to the Premises of the costs of water and
sewer service provided to the Industrial Park of which the Premises
are a part and of the cost of repairs and maintenance (but not the
cost of replacements which are capital in nature, as determined in
accordance with generally accepted accounting principles,
consistently applied, which shall be Sublessor's responsibility) of
the water and sewer lines serving the Premises and other portions of
said Industrial Park (such utilities and services, together with
Operating Expenses, are hereinafter referred to as "Additional Rent")
commencing on the date Sublessee first enters upon the Premises.
If Sublessee duly and timely exercises the First Extension Option,
then Sublessee shall pay to Sublessor, as Base Rent for and with
respect to the period from July 15, 1999 through September 30, 2000,
a fixed annual rental at the rate of Seven Hundred Thirty-Eight
Thousand and 00/100 Dollars ($738,000.00), which is the product
arrived at by multiplying the approximate rentable area of the
Premises by Three and 00/100 Dollars ($3.00), in equal monthly
installments of Sixty-One Thousand Five Hundred and 00/100 Dollars
($61,500.00) each, together with Additional Rent.
If Sublessee duly and timely exercises the Second Extension Option,
then Sublessee shall pay to Sublessor, as Base Rent for and with
respect to the applicable extension period, a fixed annual rental at
the rate of One Million Four Hundred Seventy-Six Thousand and 00/100
Dollars ($1,476,000.00), which is the product arrived at by
multiplying the approximate rentable area of the Premises by Six and
00/100 Dollars ($6.00), in equal monthly installments of One Hundred
Twenty-Three Thousand and 00/100 Dollars ($123,000.00) each, together
with Additional Rent.
If Sublessee duly and timely exercises the Third Extension Option,
<PAGE> 6
then Sublessee shall pay to Sublessor, as Base Rent for and with
respect to the applicable extension period, a fixed annual rental at
the rate of One Million Eight Hundred Forty-Five Thousand and 00/100
Dollars ($1,845,000.00), which is the product arrived at by
multiplying the approximate rentable area of the Premises by Seven
and 50/100 Dollars ($7.50), in equal monthly installments of One
Hundred Fifty-Three Thousand Seven Hundred Fifty and 00/100 Dollars
($153,750.00) each, together with Additional Rent.
All rents hereunder shall be payable in advance on the first day of
each month, without deduction or offset and without prior notice or
demand. Any rents more than 10 days past due shall bear interest at
the rate of ten percent (10%) per annum or the Wall Street Journal
prime rate plus one and one-half percent (1#%), whichever is
greater. Rents shall be payable to the order of Sublessor and shall
be tendered to Sublessor at 3000 Hanover Street, Palo Alto,
California 94304, Attention: Mr. Keith Mehl, Mail Stop 20DF.
7. BUILDING SERVICES; OPERATING EXPENSES; ADJUSTMENTS TO ADDITIONAL RENT.
Building Services: Sublessee shall provide, and/or shall retain a
property manager and/or contractor to provide, at Sublessee's sole
cost and expense, services for the Premises as are required to be
provided by the "Tenant" under the Master Lease.
Operating Expenses: The term "Operating Expenses" as used in this
Sublease, means:
(a) Real property taxes which accrue against the Premises during the
term hereof, initial or extended. Real property taxes shall be
deemed to include any ad valorem tax, levy, charge or assessment
charged against the Premises; any tax or charge for maintenance
or services provided to the Premises, or any tax that may be
imposed on Sublessor's income from the Premises in lieu of ad
valorem or other tax on the Premises (excluding federal or state
income, franchise, inheritance or estate taxes); and
(b) Insurance premiums Sublessor is required to pay or deems necessary
to pay with respect to the Premises
Sublessor agrees, during the term of this Sublease, initial or extended, to
pay said real property taxes directly to the taxing authority of the Town
of Stratham, New
<PAGE> 7
Hampshire, and to provide Sublessee with evidence of such payment
reasonably satisfactory to Sublessee (such as, for example, a copy of the
tax bill stamped "paid" by said taxing authority) so that it is received on
or before the date which is ten (10) days prior to the date when any
payment of same would become delinquent. If Sublessor fails to pay said
real property taxes and to provide Sublessee with such evidence of payment
within such time, then, unless and until Sublessor actually pays said real
property taxes to such taxing authority, Sublessee shall have the right,
but not the obligation, to pay said real property taxes directly to such
taxing authority, in which event Sublessee shall have the right to set-off
the amount of such payment against any monthly payment(s) of or on account
of any or all of fixed rent, Additional Rent and the Contributed Amount
(as defined in Paragraph 21 hereof) otherwise due and payable from
Sublessee to Sublessor under the terms of this Sublease, until the amount
of such real property tax payment is fully recouped by Sublessee.
Sublessee shall have the right to file an application for an abatement of
real property taxes in accordance with and subject to the following terms
and conditions. If at least thirty (30) days prior to the last day for
filing application for such an abatement for any tax year, Sublessor shall
receive notice from Sublessee that it desires to file an application for
such an abatement for said tax year and, if within twenty (20) days after
the receipt of said notice Sublessor shall not give notice to Sublessee
that Sublessor or Master Lessor shall file such application, Sublessee
shall have the right either in its own name or in the name of Sublessor,
but at its own cost and expense, to file such application. If within
twenty (20) days after receipt by Sublessor of such notice from Sublessee,
Sublessor shall give Sublessee notice that it shall file such application,
Sublessor shall file the same prior to the expiration of the time for the
filing of the same at its own cost and expense. In any event,
notwithstanding the foregoing, if any abatement by whomever prosecuted
shall be obtained, the cost and expense of obtaining the same shall be a
first charge upon said abatement. If Sublessee shall file an application
for abatement pursuant to the provisions hereof, Sublessee will prosecute
the same to final determination with due diligence and shall not, without
Sublessor's written consent (which consent will not be unreasonably
withheld or delayed), settle, compromise or discontinue the same except,
however, that Sublessee may discontinue the prosecution of the same at any
time after giving Sublessor and Master Lessor notice thereof and an
opportunity to take over prosecution of the same. If Sublessor or Master
Lessor shall file an application for an abatement for any tax year after
having received notice from Sublessee that Sublessee desires to file an
application for abatement for said tax year, Sublessor or Master Lessor
shall prosecute the same to final determination with due diligence and
shall not, without Sublessee's written consent (which consent will not be
unreasonably withheld or delayed), settle, compromise or discontinue the
same except, however, that Sublessor or Master Lessor may discontinue the
prosecution of the same at any time after giving Sublessee notice thereof
and an opportunity to take over the prosecution of the same. If any party
shall prosecute an application for an abatement, the other parties will
cooperate and furnish any pertinent information in either of their
respective files reasonably required by the prosecuting party.
<PAGE> 8
Adjustments to Additional Rent: A statement of current estimated
Operating Expenses is attached hereto as Exhibit "C" and incorporated
herein by this reference. Sublessor shall, within 180 days following
the end of each calendar year of the Sublease Term, and within 180
days following the expiration of the term hereof, initial or
extended, notify the Sublessee of any increases or decreases to the
Additional Rent for the prior calendar year. Such notice shall
include, in reasonable detail, all computations of the Additional
Rent and appropriate documentation evidencing the reason for any
increase or decrease thereto. In the event of an increase, Sublessee
shall pay the Additional Rent due within thirty (30) days following
receipt of the applicable notice and adjust the monthly payment on
account of Additional Rent as reasonably estimated by Sublessor for
the next calendar year. In the event of a decrease, any overpayment
shall be (i) credited against Additional Rent thereafter due under
this Sublease, or (ii) if no such Additional Rent is thereafter due,
promptly refunded to Sublessee.
"Operating Expenses" shall not include any legal fees or legal
expenses payable to Master Lessor under the terms of the Master
Lease, except to the extent that such fees or expenses are incurred
by Master Lessor as a result of the acts or omissions of Sublessee.
8. USE. Sublessee shall use the Premises only for general office, light
manufacture, research and development and related uses and such other
uses as are from time to time approved in writing by Sublessor and
Master Lessor. It is specifically understood and agreed that
Sublessee shall have the right to use the Premises for the purposes
indicated in the Sublessee's Plans (as defined in Paragraph 11 of
this Sublease), including, without limitation, the use of a portion
of the Premises as an employee store, provided that Sublessee obtains
any and all governmental permits, licenses and other approvals as may
be required under applicable law for any and all such uses.
Sublessee shall not discontinue occupancy of or abandon the
Premises. Notwithstanding anything to the contrary contained in this
Sublease, Sublessee agrees that nothing shall be done upon the land
described in Exhibit A which shall violate those certain Protective
Covenants applicable to said land, a copy of which Sublessee
acknowledges is in Sublessee's possession. Without having made any
investigation or inquiry, Sublessor is unaware of any reason why
Sublessee may not use the Premises for purposes of office, research
and development and light manufacturing. Further, Sublessee
covenants and agrees as follows:
(a) Not to injure or deface the Premises; not to permit on the
Premises any auction, sale, nuisance, objectionable vibration,
noise or odor; not to permit the use of the Premises for any
purpose other than those set forth herein or any use which is
contrary to law or ordinance, or liable to invalidate or
increase the premiums for any insurance carried by Sublessor or
Master Lessor on the Premises, or liable to render necessary any
structural alterations or additions to the Premises; and if such
<PAGE> 9
insurance premiums are increased as a result of the use or
occupancy of the Premises by Sublessee, Sublessee shall pay for
such increase, the responsibility for the payment of which
increase shall apply during each and every year of the term of
this Sublease; and to use the sewer system for normal discharge
of sanitary waste and not to introduce any chemical fluid,
cooling water or any other substance, liquid or material into
such system which may be harmful or destructive to such system;
(b) Not to obstruct in any manner any portion of the common areas;
and to conform to all reasonable rules and regulations now or
hereafter made by Master Lessor and provided in writing to
Sublessee for the care and use of the Premises, its facilities
and approaches and common areas;
(c) Not to store any goods, equipment or any other items outside of
the Building, and not to place or empty any trash or rubbish
outside of the Building (except in enclosed dumpsters), and to
provide for its own rubbish or trash removal;
(d) Not to move any heavy equipment or fixtures in or out of or
within the Building except in such manner as Sublessor and
Master Lessor shall designate after written request from
Sublessee, and not to place a load on any floor of the Building
which would be in violation of what is allowed by law;
(e) That Sublessor, Master Lessor, or their respective agents, may
enter the Premises after prior written notice to Sublessee
(except in case of emergency, when no such notice need be given)
to make any repairs either or both of such parties may deem
necessary or any addition or alteration required to comply with
governmental regulations, and with prior oral or written notice
and at Sublessee's expense, to remove any alterations, signs or
the like for which the prior written consent of either or both
of such parties was required hereunder but not obtained by
Sublessee; it being understood and agreed that such entry shall
be made in such a way as to minimize interference with
Sublessee's use of the Premises;
(f) Subject to Sublessor's obligations to repair and maintain as set
forth herein, neither Sublessor nor Master Lessor shall be
responsible or liable for any defect, latent or otherwise, in
the Premises or any of the equipment, machinery, utilities,
appurtenances therein, nor shall Sublessor or Master Lessor be
responsible or liable for any injury, loss or damage to any
person or to any property of Sublessee or any other person
caused by or resulting from rain, snow, ice, wind, frost, water,
fire or by the bursting or leakage of windows, doors, walls,
ceilings, floors, pipes, gutters or other fixtures, or the
overflow of water or sewage in any part of the Premises or for
any injury or damage caused by or resulting from acts of God or
the elements, or for any injury or damage caused by or resulting
from any defect or negligence in the occupancy, construction,
<PAGE> 10
operation or use of the Premises, except to the extent caused by
the negligence of Sublessor or Master Lessor. Sublessee shall
give prompt notice to Sublessor and Master Lessor in case of
fire or accidents in the Premises or of defects therein or in
any fixtures or equipment;
(g) To hold all personal property of Sublessee, including trade
fixtures, furniture, equipment and the like of Sublessee, or of
any other owner situated at the Premises, at Sublessee's own
risk, and that neither Sublessor nor Master Lessor shall be
liable for theft thereof or any damage thereto occasioned from
any acts of any other person, except to the extent caused by the
negligence of Sublessor or Master Lessor, as the case may be,
and to pay when due all taxes assessed against any such personal
property or leasehold interest;
(h) To permit Master Lessor and its agents at reasonable times to
show the Premises to prospective purchasers and mortgagees and
to permit Master Lessor and Sublessor and their respective
agents at reasonable times to show the Premises to prospective
tenants and subtenants during the one hundred eighty (180) days
preceding the expiration of the term of the Master Lease or the
Sublease, as the case may be;
(i) Not to suffer or permit any lien of any nature or description to
be placed against the Premises or any portion thereof, and in
the case of any said lien attaching by reason of the conduct of
Sublessee, to immediately pay and discharge the same of record
(provided, however, that Sublessee may contest the same in good
faith so long as it provides a sufficient and recordable lien
bond or other adequate security with respect to such lien);
provided, however, that this provision shall not be interpreted
as meaning that the Sublessee has any authority or power to
permit any lien of any nature or description to attach to or be
placed upon the title or interest of the Master Lessor or the
Sublessor in the Premises or any portion thereof;
(j) That the rights and remedies to which the Sublessor may be
entitled under the terms of this Sublease are cumulative and are
not intended to be exclusive of any other rights or remedies to
which the Sublessor may be properly entitled in case of any
breach or threatened breach by Sublessee of any term or
provision of this Sublease;
(k) That no failure of either party to exercise any power conferred
to it in this Sublease or to insist upon strict compliance by
the other party of any obligation, covenant or agreement and no
custom or practice of the parties at variance with the terms
hereof shall constitute a waiver of such party's right to demand
an exact compliance with the terms hereof;
(l) That, without limitation of anything else herein or in the
Master Lease
<PAGE> 11
contained, the Sublessor and the Master Lessor may enter upon the
Premises and exercise and perform any and all of Sublessor's and
Master Lessor's respective rights without being deemed guilty of an
eviction or disturbance of Sublessee's use or possession, and
without being liable in any manner to Sublessee; provided, however,
that such entry shall be made in such a way as to minimize
interference with Sublessee's use of the Premises;
(m) To promptly comply, at the expense of Sublessee (except to the
extent that Sublessor is otherwise responsible for compliance
and the cost thereof as set forth in Paragraph 9 hereof), with
all requirements of any governmental agency, whether the same be
local, state or federal, having competent jurisdiction, which
requirements are made necessary by reason of Sublessee's
occupancy and use of the Premises as permitted under this
Sublease (provided, however, that Sublessee may contest the same
in good faith in accordance with, subject to and to the extent
permitted by applicable law);
(n) That if the Sublessee shall at any time breach or default in the
performance of any of the obligations, covenants or agreements
of Sublessee under this Sublease, and if such breach or default
continues beyond the applicable grace period set forth in
Paragraph 16 hereof, then Sublessor and Master Lessor shall each
have the right to enter upon the Premises and to perform such
obligations of the Sublessee, including the payment of money and
the performance of any other act; all sums so paid by the
Sublessor and/or the Master Lessor, as the case may be, and all
necessary and reasonable incidental costs and expenses in
connection therewith shall be deemed to be additional rent under
this Sublease which shall be payable to Sublessor or Master
Lessor, as the case may be, immediately upon demand; and
(o) To insure the contents, equipment and improvements of Sublessee
against standard extended coverage risks, in such amounts as
Sublessor and Master Lessor shall reasonably approve, under a
policy or policies of insurance which shall provide that such
insurance shall not be cancelled without at least ten (10) days'
prior written notice to Sublessor and Master Lessor. Copies of
such insurance policy or policies or certificates of insurance
evidencing such coverage, together with evidence of payment of
premiums, shall be furnished to Sublessor and Master Lessor.
9. CONDITION OF THE PREMISES; MAINTENANCE. Sublessee has inspected the
Premises prior to executing this Sublease. Upon delivery of
possession of the Premises by Sublessor to Sublessee on the
Commencement Date, Sublessee shall conclusively be deemed to have
accepted the Premises in "as-is" condition and to have acknowledged
that (a) the same are in good condition and satisfactory to Sublessee
in all respects and (b) Sublessor has no obligation to make any
improvements to the Premises. After receiving notice from Sublessee
of any failure by Master Lessor to perform any of its obligations to
maintain the Premises, as set
<PAGE> 12
forth in the Master Lease, Sublessor agrees to use reasonable efforts to
enforce any right Sublessor may have under the Master Lease to cause
Master Lessor to perform any such obligation.
Sublessee agrees that from and after the date that possession of the
Premises is delivered to Sublessee, and until the end of the term
hereof, initial or extended, it will keep neat and clean and maintain
in good order, condition and repair, the Premises and every part
thereof, including, without limitation, the exterior and interior
portions of all doors, windows and plate glass in the Premises, all
plumbing, sewage, septic, heating, air conditioning systems and
mechanical equipment which serve the Premises, including all rooftop
units, fixtures and interior walls, floors, ceilings, signs
(including exterior signs where permitted), and all wiring,
electrical systems, interior building appliances, and similar
equipment within the Premises, reasonable wear and tear and damage by
casualties excepted. Sublessee further agrees that the Premises
shall be kept in a clean, sanitary and safe condition in accordance
with the laws of the State of New Hampshire and by-laws of the Town
of Stratham, and in accordance with all directions, rules and
regulations of the Health Officer, Fire Marshal, Building Inspector
and other proper officers of the governmental agencies having
jurisdiction thereover. Sublessee shall not permit or commit any
waste. Sublessee shall provide and pay for its own janitorial and
cleaning services. Sublessee further agrees that it will obtain and
maintain in full force and effect a heating and air conditioning
equipment service contract which shall provide for the periodic
maintenance of the heating and air conditioning equipment serving the
Building. Said contract shall be made with a reputable contractor
and shall be subject to Sublessor's and Master Lessor's approval,
which approval shall not be unreasonably withheld or delayed. Copies
of said contract and any renewals and/or replacements thereof shall
be delivered to Sublessor and Master Lessor. Sublessee further
agrees that it will obtain and maintain in full force and effect a
service contract which shall provide for the periodic inspection and
maintenance of each elevator within the Building. Said contract
shall be made with a reputable contractor and shall be subject to
Sublessor's and Master Lessor's approval, which approval shall not be
unreasonably withheld or delayed. Copies of said contract and any
renewals and/or replacements thereof shall be delivered to Sublessor
and Master Lessor. In addition, Sublessee agrees to keep the inlets
and outlets of all storm retention and drainage facilities in the
common areas free of obstruction and to keep, maintain and repair all
of the common areas (including, without limitation, any required
patching and other maintenance of the parking lot, but excluding any
replacement or repaving thereof (which shall be Sublessor's
responsibility), and also excluding the maintenance, repair and
replacement of water and sewer lines, for which provision is made
below) in as good order, repair and condition as they were in at the
commencement of the term of this Sublease, reasonable wear and tear
and damage by casualty excepted, free and clear of snow, ice, refuse
and obstructions and lighted at least during such hours of darkness
as may be required by applicable law and/or by the requirements of
<PAGE> 13
any insurance company which issues any policy of insurance upon the
Premises. In addition, Sublessee shall be responsible for paying to
Sublessor any amounts which Sublessor is obligated to pay to Master
Lessor under Article VI of the Master Lease, for the cost of making
any reasonable, necessary repairs to the roof of the Building (but
not for the cost of replacing said roof, unless such replacement is
required as a result of any negligent or willful act or omission of
Sublessee). Such cost shall include any amount on account of the
administrative and management charge payable by Sublessor to Master
Lessor under said Article VI. Any amount required to be paid by
Sublessee to Sublessor pursuant to this Paragraph shall be paid
within fifteen (15) days after receipt by Sublessee of a written
request from Sublessor, each such request to be accompanied by copies
of bills, invoices or similar supporting data with respect to the
work covered thereby. In addition, Sublessee shall pay to Sublessor
any amount that Sublessor is obligated to pay to Master Lessor on
account of any assessments made by the Association described in
Article V of the Master Lease for the cost of maintaining the water
and sewer lines which serve the Premises. Further, with respect to
any obligations imposed on Sublessee by this Sublease to comply with
requirements of governmental agencies or other lawful authorities
having jurisdiction, Sublessor agrees that if any such requirements
relate to the removal, replacement or modification of items or
materials that are present in or on the Premises as of the date of
this Sublease and if such removal, replacement or modification would
be required even if the Premises were unused and vacant, that is to
say, irrespective of the use and occupancy of the Premises by
Sublessee as permitted under this Sublease, then Sublessor shall be
responsible for such removal, replacement or modification and
Sublessee shall have no responsibility therefor. Sublessee shall
have no right or obligation to make any structural or roof repairs
to, or to replace or modify any structural portion or the roof of,
the Building, except as may be done in connection with the
performance of the Sublessee's Work, as approved by Master Lessor and
Sublessor. Except as aforesaid, said structural or roof repairs to,
or replacements or modifications of structural portions or the roof
of, the Building shall be the responsibility of the Master Lessor or
the Sublessor as provided in the Master Lease or the Sublease.
10. UTILITIES. Sublessee agrees to pay when due, directly to the
appropriate utility companies, the cost of all water, gas,
electricity and other utilities used by Sublessee at the Premises,
including, without limitation, all utilities necessary for heating
and air conditioning the Premises and to pay the share attributable
to the Premises of the costs of water and sewer service provided to
the Industrial Park of which the Premises are a part and of the cost
of repairs and maintenance of the water and sewer lines serving the
Premises and other portions of said Industrial Park (but not the cost
of any replacement of said water and sewer lines which is capital in
nature, as determined in accordance with generally accepted
accounting principles consistently applied, which shall be
Sublessor's responsibility). Sublessee agrees that it will only
discharge into the sewer system serving the Premises so-called
<PAGE> 14
"domestic" sewage from employee washrooms and employee food service
operations, and that no industrial waste will be discharged into said
sewer system. Sublessee further agrees that not more than twenty
thousand (20,000) gallons of water will be used by the Premises each
day, and not more than twenty thousand (20,000) gallons of effluent
will be discharged each day by the Premises into said sewer system.
Sublessee shall provide adequate heat to the Premises to prevent the
freezing and/or bursting of any pipes or duct work in the Premises.
11. CONSTRUCTION; SIGNAGE. Sublessee agrees that it will, at its sole
cost and expense (subject to payment by Sublessor of Sublessor's
Construction Allowance as provided in Paragraph 21 hereof) prior to
commencing Sublessee's remodeling work (the "Sublessee's Work"),
prepare and submit to Sublessor and Master Lessor for their
respective approvals, plans and specifications for such work (the
"Plans and Specifications"). Sublessor hereby approves the general
scope of Sublessee's Work shown on those certain plans consisting of
one "study plan" for each of the floors, dated November 15, 1993 and
stamped November 18, 1993, as updated by two floor plans dated
March 4, 1994; two plans (one floor and one elevation) for the front
lobby entrance, stamped November 18, 1993; and a plan of the
employee/cafe entrance, unstamped and undated; all of which were
prepared by Schwartz/Silver Architects Inc., have been reviewed by
Sublessor and are herein referred to as the "Sublessee's Plans";
provided, however, that Sublessor and Master Lessor shall each have
the opportunity to review the details of the Plans and Specifications
with respect thereto. Sublessee agrees to perform, at the
Sublessee's sole cost and expense (subject to payment by Sublessor of
Sublessor's Construction Allowance as provided in Paragraph 21
hereof), all of the Sublessee's Work described in the Plans and
Specifications. All of the Sublessee's Work shall be performed in
accordance with the Plans and Specifications as approved by Sublessor
and Master Lessor, and shall be governed in all respects by, and be
subject to, the following:
A. The Sublessee's Work shall be performed in a good and
workmanlike manner and shall be in good and usable condition at
the date of completion thereof.
B. Compliance with Laws: All the Sublessee's Work shall be
performed in full compliance with and shall conform to all
applicable federal, state and local laws, codes, regulations
and ordinances, including, without limitation, the Americans
with Disabilities Act, all applicable building and zoning
codes and laws relating to the use, storage, removal,
transportation or disposal of hazardous or toxic materials
or oil, and all directions, rules and regulations of the
Health Officer, Fire Marshal, Building Inspector and other
proper officers of the governmental agencies having jurisdiction
thereover, and all reasonable requirements of the Sublessor's
and Master Lessor's underwriters, if any. Sublessor's and
Master Lessor's approval of the Plans and Specifications shall
not constitute an acknowledgment that work done in conformity
therewith will so comply and conform, it being expressly
<PAGE> 15
understood and agreed that Sublessee shall be solely responsible
for ensuring such compliance and conformity and for any
modifications to or corrections in the Sublessee's Work required
by any governmental agency or insurance underwriters. Sublessee
shall obtain and furnish to Sublessor approvals from all
agencies with jurisdiction over matters relative to the
performance of the Sublessee's Work, including, without
limitation, electrical, gas, water, heating and cooling, and
telephone work, and shall secure its own building and occupancy
permits. Sublessor reserves the right to require changes in the
Sublessee's Work when necessary by reason of code requirements
or directives of governmental authorities having jurisdiction
over the Premises. Notwithstanding anything to the contrary
contained in this subparagraph B of Paragraph 11, Sublessee
shall have the right to appeal adverse decisions relative to
state, local or other land use laws in good faith, so long as
any risk to Sublessor or Master Lessor is adequately provided
against by bond or other security reasonably acceptable to
Sublessor or Master Lessor or both, as the case may be.
C. Insurance: Prior to commencement of the Sublessee's Work and
until completion thereof, the Sublessee shall maintain, or cause
to be maintained, casualty insurance in builder's risk form,
covering Sublessor, Master Lessor and its mortgagee and their
respective agents, employees and beneficiaries, Sublessee and
Sublessee's contractor as their interests may appear, against
loss or damage by fire, vandalism and malicious mischief, and
such other risks as are customarily covered by the so-called
"extended coverage endorsement" upon all the Sublessee's Work in
place, and all materials stored at the site of the Sublessee's
Work and all materials, equipment, supplies and temporary
structures of all kinds incident to the Sublessee's Work and
builder's machinery, tools and equipment, all while forming a
part of, or contained in, such improvements or temporary
structures while on the Premises or when adjacent thereto while
on sidewalks, streets or alleys, all in the full insurable value
thereof at all times. In addition, the Sublessee agrees to
require all contractors and subcontractors engaged in the
performance of the Sublessee's Work to effect and maintain and
deliver to Sublessee, Sublessor and Master Lessor certificates
evidencing the existence of, prior to the commencement of the
Sublessee's Work and until completion thereof, the following
insurance coverages:
1. Workmen's Compensation Insurance - In accordance with the
laws of the State of New Hampshire, including Employer's
Liability Insurance, to the limit of $100,000 each accident.
2. Comprehensive General Liability Insurance against bodily
injury, including death resulting therefrom, to the limit
of $3,000,000 for any one person or more than one person in
any one accident and against property damage to the limit
of $250,000 in each occurrence and $500,000 aggregate.
<PAGE> 16
Prior to the commencement of the Sublessee's Work, the Sublessee
shall deliver to Sublessor, Master Lessor and its mortgagee (if
applicable) certificates of all required insurance, and evidence
of the payment of premiums thereon (and certificates of renewal,
and evidence of premium payments with reference thereto, where
appropriate). All such insurance shall provide, and certificates
thereof shall state, that the same is non-cancellable and materially
non-amendable without ten (10) days' prior written notice to
Sublessor, Master Lessor and its mortgagee (if applicable),
respectively.
D. Within ten (10) business days after receipt by Sublessor and
Master Lessor of the Plans and Specifications from Sublessee,
such parties agree to review the same, approve or disapprove the
same in writing (Sublessor and Master Lessor both agreeing that
such approval shall not be unreasonably withheld or delayed
(except, with respect to Master Lessor's approval only, as to
structural, exterior and/or roof work) and that any disapproval
shall specify in reasonable detail the reasons therefor), and
specify by written notice to Sublessee all fixtures and other
leasehold improvements to be removed by Sublessee at the
expiration or earlier termination of the Sublease Term. Master
Lessor and Sublessor agree to act reasonably in designating such
fixtures and leasehold improvements for removal as aforesaid.
Sublessee agrees to remove the same at such time in accordance
with the provisions of Paragraph 18 hereof. Failure to give
such notice within such ten (10) business day period approving
or disapproving the Plans and Specifications and specifying such
items to be removed shall constitute approval thereof and
agreement that all such items may remain in the Premises at the
time of surrender thereof.
Sublessee shall be entitled to install or display advertising
devices, signs or other things upon the exterior walls or the
windows, together with monument signs on the land portion of the
Premises, as long as the same comply with applicable requirements of
the zoning regulations of the Town of Stratham, New Hampshire or any
other applicable laws or regulations, do not constitute a nuisance
and are consistent with the exterior architectural and aesthetic
appearance of the improvements located on the Premises.
12. ALTERATIONS. Notwithstanding anything to the contrary contained in
the Master Lease, Sublessee shall make no alteration, addition or
improvement to the Premises without the prior written consent of
the Sublessor and Master Lessor, which consent shall not be
unreasonably withheld or delayed (except, with respect to Master
Lessor's consent only, as to structural, exterior and/or roof work).
Any and all such alterations shall be made in accordance with all
applicable laws and regulations, in accordance with plans and
specifications therefor subject to review and approval by Master
Lessor and Sublessor (Sublessor and Master Lessor both agreeing
that such approval shall not be unreasonably withheld or delayed
(except, with respect to Master Lessor's approval only, as to
structural, exterior and/or roof work) and that any disapproval of
which shall specify in reasonable detail the reasons therefor),
<PAGE> 17
and in a good and workmanlike manner. Any request for Sublessor's
and Master Lessor's consent to such alterations shall specify the
commencement date and the approximate completion date thereof, and
shall include the plans and specifications therefor.
Notwithstanding the foregoing, Sublessor and Master Lessor agree that
Sublessee may make interior, non-structural alterations within the
Premises that do not affect the utility or mechanical systems
thereof, without having to obtain their prior written consent,
provided that, in each instance, (i) Sublessee shall first give
written notice to Sublessor and Master Lessor specifying the proposed
alterations, the commencement and approximate completion dates
thereof and a list of all contractors who will be performing work in
connection therewith, (ii) upon Sublessor's or Master Lessor's
request therefor, Sublessee shall provide to such requesting party
copies of plans and specifications for such alterations, (iii) such
alterations shall be made in accordance with all applicable laws and
regulations and in a good and workmanlike manner by licensed and
insured contractors experienced in the kind and scope of the proposed
work and in accordance with all of the applicable provisions of this
Sublease relating to construction of improvements by Sublessee, and
(iv) Sublessee shall provide Sublessor and Master Lessor with a
certificate in form and substance reasonably satisfactory to
Sublessor and Master Lessor stating that such alterations were
constructed substantially in accordance with the plans and
specifications therefor. Notwithstanding the requirement that any
such alteration work not involve utility or mechanical systems, it is
expressly understood and agreed that Sublessee shall have the right
to alter duct work and redistribute utilities within the Premises so
as to adapt the same to any alterations in the location of interior
partitions and non-structural walls that are permitted by the
provisions of the immediately preceding sentence. Sublessor and
Master Lessor shall have the right to impose reasonable conditions
upon the nature, scope or conduct of such alteration work to insure
that the structure or support of the Building is not impaired and
that the purposes and quality of the Building are not adversely
affected. Within ten (10) business days after receipt by such
parties of such notice and plans and specifications from Sublessee,
such parties agree to review the same and specify by written notice
to Sublessee all fixtures and other leasehold improvements to be
removed by Sublessee at the expiration or earlier termination of the
Sublease Term. Master Lessor and Sublessor agree to act reasonably
in designating such fixtures and leasehold improvements for removal
as aforesaid. Sublessee agrees to remove the same at such time in
accordance with the provisions of Paragraph 18 hereof. Failure to
give such notice within such ten (10) business day period specifying
such items to be removed shall constitute agreement that all such
items may remain in the Premises at the time of surrender thereof.
Notwithstanding anything to the contrary contained in this Paragraph
12, if Sublessor fails to approve or disapprove the plans and
specifications for any alteration work requiring Sublessor's approval
hereunder within ten (10) business days after Sublessor receives a
<PAGE> 18
complete set thereof, such plans and specifications shall
conclusively be deemed to have been approved by Sublessor.
13. INDEMNITY AND INSURANCE. Sublessee agrees to indemnify and hold
harmless Sublessor, Master Lessor and its mortgagee from and against
all claims arising from any accident, injury or damage whatsoever
caused to any person, or to the property of any person occurring
during the term hereof in or about the Premises, where such accident,
damage or injury results or is claimed to have resulted from
negligence or willful misconduct on the part of Sublessee or
Sublessee's contractors, licensees, agents, servants or employees,
except that Sublessee shall not indemnify and hold harmless any of
Sublessor, Master Lessor or its mortgagee, respectively, to the
extent that any such accident, damage or injury results from the
negligence or willful misconduct of such party or its contractors,
licensees, agents, servants or employees. This indemnity and hold
harmless agreement shall include indemnity against all reasonable
costs, expenses and liabilities incurred in or in connection with any
such claim or proceeding brought thereon, including, without
limitation, reasonable attorneys' fees incurred in connection with
the defense thereof.
Sublessor agrees to indemnify and hold harmless Sublessee from and
against all claims arising from any accident, injury or damage
whatsoever caused to any person, or to the property of any person
occurring during the term hereof in or about the Premises, where such
accident, damage or injury results or is claimed to have resulted
from negligence or willful misconduct on the part of Sublessor or
Sublessor's contractors, licensees, agents, servants or employees,
except to the extent that any such accident, damage or injury results
from the negligence or willful misconduct of Sublessee or its
contractors, licensees, agents, servants or employees. This
indemnity and hold harmless agreement shall include indemnity against
all reasonable costs, expenses and liabilities incurred in or in
connection with any such claim or proceeding brought thereon,
including, without limitation, reasonable attorneys' fees incurred in
connection with the defense thereof.
Sublessee agrees to maintain policies of comprehensive public
liability insurance and insurance covering its leasehold improvements
and its own fixtures, merchandise, equipment and other property
contained in the Premises in such amounts as Sublessor and Master
Lessor shall reasonably approve, and otherwise in accordance with and
subject to the applicable provisions of the Master Lease, all as if
Sublessee were the Lessee therein named. Such policies of comprehensive
general liability insurance shall name Sublessor and Master Lessor and,
if requested by Master Lessor, all holders of mortgages on the Premises
as additional insured parties. Certificates of insurance evidencing
such coverage shall be delivered to Sublessor and Master Lessor at the
commencement of the Sublease Term and if any such policy requires renewal,
not less than ten (10) days prior to the expiration of such policy.
<PAGE> 19
Sublessee waives, as long as it may be permitted by Sublessee's
insurer, without payment of extra premiums, and shall cause its
insurance carrier to waive, its right of recovery against Sublessor,
Master Lessor, all holders of mortgages on the Premises, and their
employees, agents, successors and assigns, for any fire and extended
coverage losses occurring to Sublessee's leasehold improvements and
to property belonging to Sublessee which may be placed in or on the
Premises. In consideration thereof, so long as it may be permitted
by Sublessor's insurer, without payment of extra premiums, Sublessor
hereby agrees to waive, and to cause its insurance carrier to waive,
its right of recovery against Sublessee, its successors or assigns,
for any fire and extended coverage losses to the Premises. If either
party's insurance carrier shall charge extra premiums for the
incorporation of the above-described waiver of subrogation in its
policies, then such party shall give prompt written notice to the
other of the amount of such extra premiums and shall provide evidence
thereof reasonably satisfactory to the other party (such notice and
evidence are hereinafter referred to as the "Extra Premium Notice").
In that event, the other party shall have the right, but not the
obligation, to request that such waiver be provided by giving written
notice to the other party within fifteen (15) business days after
receiving the Extra Premium Notice and by paying such extra premiums
to the other party upon demand. If the party requesting such waiver
shall fail to pay such extra premiums as aforesaid, then the other
party shall be released from its obligation to provide such waiver.
14. CASUALTY AND EMINENT DOMAIN.
A. CASUALTY. If all or a substantial part of the Premises is
destroyed or damaged by fire or other casualty (a substantial
part of the Premises for the purposes of this Paragraph shall be
deemed to be fifty percent (50%) or more of its insurable
value), and if, as a result thereof, Master Lessor elects to
terminate the Master Lease pursuant to the provisions of Article
X thereof, then Sublessor shall notify Sublessee of such
termination and this Sublease shall likewise terminate as of the
effective date of the termination of the Master Lease. If
Master Lessor elects under said Article X of the Master Lease to
restore all or the damaged portion of the Premises, but such
restoration is not substantially completed with the result that
use and occupancy of substantially all of the Premises are not
granted to Sublessee within one hundred eighty (180) days after
the time the Premises are destroyed or damaged, Sublessee shall
have the right to terminate this Sublease by giving twenty (20)
business days' notice to Sublessor, unless Master Lessor
substantially completes such restoration as aforesaid within
such twenty (20) business day period, in which event such
termination shall be null and void and of no force or effect.
Sublessor agrees that it will not terminate the Master Lease
pursuant to Article X thereof without Sublessee's prior written
consent; except that no such consent shall be necessary if
Master Lessor has failed to restore the Premises as aforesaid
within three hundred sixty (360) days after the Premises are
<PAGE> 20
destroyed or damaged and Sublessor elects to terminate the
Master Lease after the expiration of such 360-day period. In
such event, Sublessor shall notify Sublessee of such termination
and this Sublease shall likewise terminate as of the effective
date of the termination of the Master Lease. If Sublessor
desires to terminate the Master Lease pursuant to the provisions
of Article X thereof prior to the expiration of such 360-day
period, then Sublessor shall notify Sublessee of its desire so
to do, whereupon Sublessee shall either consent or not consent
to such termination by giving written notice to Sublessor within
twenty (20) business days after receipt of Sublessor's notice.
Failure by Sublessee to give such notice within such twenty (20)
business day period shall constitute irrevocable and conclusive
consent to such termination on the part of Sublessee. In the
event that Sublessor thereafter elects to terminate the Master
Lease as aforesaid, Sublessor shall notify Sublessee of such
termination and this Sublease shall likewise terminate as of the
effective date of the termination of the Master Lease. Neither
Master Lessor nor Sublessor shall have any obligation to
Sublessee to restore the Premises or to repair or replace
Sublessee's furniture, furnishings and equipment after the same
are destroyed or damaged by any such fire or other casualty. If
this Sublease is not terminated as aforesaid, a just proportion
of the Base Rent, Additional Rent and Contributed Amount,
according to the nature and extent of the damage, shall be
abated until use and occupancy of substantially all of the
Premises shall have been granted to Sublessee as aforesaid.
B. EMINENT DOMAIN. If the Premises shall be completely taken by
exercise of eminent domain, then this Sublease shall terminate
as of the date of such taking. If any substantial part of the
Premises shall be taken by the exercise of eminent domain or by
action of any public or other authority (a substantial part of
the Premises for the purposes of this Paragraph shall be deemed
to be fifty percent (50%) or more of its insurable value), and
if, as a result thereof, Master Lessor elects to terminate the
Master Lease pursuant to the provisions of Article XI thereof,
then Sublessor shall notify Sublessee of such termination and
this Sublease shall likewise terminate as of the effective date
of the termination of the Master Lease. If Master Lessor elects
under said Article XI of the Master Lease to restore any
remaining portion of the Premises, but such restoration is not
substantially completed with the result that use and occupancy
of substantially all of such remaining portion are not granted
to Sublessee within one hundred eighty (180) days after the time
of such taking, Sublessee shall have the right to terminate this
Sublease by giving twenty (20) business days' notice to
Sublessor, unless Master Lessor substantially completes such
restoration as aforesaid within such twenty (20) business day
period, in which event such termination shall be null and void
and of no force or effect. Sublessor agrees that it will not
terminate the Master Lease pursuant to Article XI thereof
<PAGE> 21
without Sublessee's prior written consent. If Sublessor desires
to terminate the Master Lease pursuant to the provisions of
Article XI thereof, then Sublessor shall notify Sublessee of its
desire so to do, whereupon Sublessee shall either consent or not
consent to such termination by giving written notice to Sublessor
within twenty (20) business days after receipt of Sublessor's
notice. Failure by Sublessee to give such notice within such
twenty (20) business day period shall constitute irrevocable
and conclusive consent to such termination on the part of
Sublessee. In the event that Sublessor thereafter elects to
terminate the Master Lease as aforesaid, Sublessor shall notify
Sublessee of such termination and this Sublease shall likewise
terminate as of the effective date of the termination of the Master
Lease. If this Sublease is not terminated as aforesaid, a just
proportion of the Base Rent, Additional Rent and Contributed Amount,
according to the nature and extent of the portion of the Premises
rendered untenantable, shall be abated until use and occupancy of
substantially all of the remaining portion of the Premises shall have
been granted to Sublessee as aforesaid, and thereafter a just
proportion of the Base Rent, according to the nature and extent of the
portion of the Premises so taken, shall be abated for the balance
of the term of this Sublease. Master Lessor reserves and excepts all
rights to damages to the Premises, including, without limitation, the
Building and the leasehold improvements therein, accrued or
subsequently accruing by reason of anything lawfully done in
pursuance of any public or other authority; and, by way of
confirmation, Sublessee grants to Master Lessor all of Sublessee's
rights to such damages, except for damages to trade fixtures and other
property which Sublessee may remove from the Premises pursuant to the
provisions of this Sublease, relocation expenses and any other award
which would not diminish the amount of Master Lessor's said award
pursuant to Article XI of the Master Lease, and covenants to execute
and deliver such further instruments or assignments thereof as Master
Lessor may from time to time request.
15. NOTICES. Any notice given under this Sublease shall be in writing
and shall be hand-delivered or mailed (by certified or registered
mail, return receipt requested, postage prepaid) or by a national
overnight courier service that provides for a return receipt,
addressed as follows (or addressed as directed in writing by any of
the following parties by subsequent notice to the other parties given
in the same manner):
Sublessee: THE TIMBERLAND COMPANY
200 Domain Drive
Stratham, New Hampshire 03885
Attn: Chief Financial Officer
with a copy to: THE TIMBERLAND COMPANY
200 Domain Drive
Stratham, New Hampshire 03885
Attn: General Counsel
<PAGE> 22
Sublessor: HEWLETT-PACKARD COMPANY
2101 Gaither Road
Rockville, Maryland 20850
Attn: Corporate Real Estate Manager
Master Lessor: TRUSTEES OF FIRST ALTEX REALTY TRUST
c/o Altid Properties
17 Monsignor O'Brien Highway
Cambridge, Massachusetts 02141-1817
Master Lessor's
Mortgagee: TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
730 Third Avenue
New York, New York 10017
Any notice shall be deemed to have been given upon the earlier to
occur of (a) when hand-delivered; or, if mailed, upon receipt; or, if
sent by overnight courier, when delivered by such courier; or (b)
whether hand-delivered, mailed or sent by overnight courier, upon the
first business day on which delivery of such notice is attempted.
16. REMEDIES OF SUBLESSOR UPON DEFAULT. Any one of the following shall
be deemed to be an "Event of Default" under this Sublease:
A. Failure on the part of the Sublessee to make payment of or on
account of Base Rent, Additional Rent, the Contributed Amount or
any other monetary amount due under this Sublease within ten
(10) days after the Sublessor has sent to the Sublessee notice
of such default.
B. With respect to a non-monetary default under this Sublease,
failure of the Sublessee to cure the same within thirty (30)
days after the Sublessor has sent to the Sublessee notice of
such default.
C. The commencement of any of the following proceedings, with such
proceeding not being dismissed within sixty (60) days after it
has begun: (i) the estate hereby created being taken on
execution or by other process of law; (ii) the Sublessee being
judicially declared bankrupt or insolvent according to law;
(iii) an assignment being made of the property of the Sublessee
for the benefit of creditors; (iv) a receiver, guardian,
conservator, trustee in involuntary bankruptcy or other similar
officer being appointed to take charge of all or any substantial
part of the Sublessee's property by a court of competent
jurisdiction; or (v) a petition being filed for the
reorganization of the Sublessee under any provisions of the
Bankruptcy Code or any federal or state law now or hereafter
enacted.
<PAGE> 23
D. The Sublessee filing a petition for reorganization or for
rearrangement under, or otherwise availing itself of any
provisions of, the Bankruptcy Code or any federal or state law
now or hereafter enacted providing a plan or other means for a
debtor to settle, satisfy or extend the time for the payment of
debts.
Should any Event of Default occur then, notwithstanding any license
of any former breach of covenant or waiver of the benefit hereof or
consent in a former instance, the Sublessor lawfully may, in addition
to any remedies available to the Sublessor under applicable statutes
or case law, or otherwise, immediately or at any time thereafter,
and, to the maximum extent permitted by law, without demand or notice
(and the Sublessee hereby expressly waives any notice to quit
possession of the Premises), enter into and upon the Premises or any
part thereof in the name of the whole and repossess the same as of
the Sublessor's former estate, and expel the Sublessee and those
claiming through or under it and remove its or their effects without
being deemed guilty of any manner of trespass, and without prejudice
to any remedies which might otherwise be used for arrears of rent or
preceding breach of covenant and/or the Sublessor may send written
notice to the Sublessee terminating the term of this Sublease; and
upon the first to occur of: (i) entry as aforesaid; or (ii) the
fifth (5th) day following the sending of such notice of termination,
the term of this Sublease shall terminate.
The Sublessee covenants and agrees, notwithstanding any termination
of this Sublease as aforesaid or any entry or re-entry by the
Sublessor, whether by summary proceedings, termination, or otherwise,
to pay and be liable for on the days originally fixed herein for the
payment thereof, amounts equal to the several installments of Base
Rent, Additional Rent, the Contributed Amount and other charges
reserved as they would, under the terms of this Sublease, become due
if this Sublease had not been terminated or if the Sublessor had not
entered or re-entered, as aforesaid, and whether the Premises be
relet or remain vacant, in whole or in part, or for a period less
than the remainder of the term, and for the whole thereof; but in the
event the Premises be relet by the Sublessor, the Sublessee shall be
entitled to a credit in the net amount of rent received by the
Sublessor in reletting, after deduction of all reasonable expenses
incurred in reletting the Premises (including, without limitation,
remodelling costs, brokerage fees, and the like) and in collecting
the rent in connection therewith. It is specifically understood and
agreed that the Sublessor shall be entitled to take into account in
connection with any reletting of the Premises all relevant factors
which would be taken into account by a sophisticated tenant in
securing a replacement subtenant for the Premises, such as, but not
limited to, the type of operation proposed to be conducted by any
such replacement subtenant, and the financial responsibility of any
such replacement subtenant. Sublessor agrees to use reasonable
efforts to relet the Premises in the event that this Sublease is
terminated as aforesaid. As an alternative, at the election of the
Sublessor (such election to be made within ninety (90) days of entry,
<PAGE> 24
re-entry or termination), the Sublessee will upon such termination
pay to the Sublessor, as full and complete, final, agreed upon
liquidated damages for Sublessee's liability hereunder for failure to
pay the Base Rent, Additional Rent and Contributed Amount from and
after the date of termination (but not as such liquidated damages for
any liability of Sublessee under this Sublease for failure to perform
any of its other obligations specifically set forth in this Sublease,
including, without limitation, liability for Sublessor's attorneys'
fees and expenses and environmental and holdover liability), such a
sum as at the time of such termination represents the amount of the
excess, if any, of the then present value of the total Base Rent,
Additional Rent, Contributed Amount and other benefits which would
have accrued to the Sublessor under this Sublease for the remainder
of the Sublease term if the Sublease terms had been fully complied
with by the Sublessee (calculated using a discount rate of six
percent (6%) over and above the then fair market cash rental value
(in advance) of the Premises for the balance of the term (calculated
using the same discount rate).
17. NONASSIGNMENT. Sublessee's interest in this Sublease is not
assignable, whether by operation of law or otherwise. Sublessee
shall have no right to sublet the Premises or to transfer any
interest of Sublessee therein. As between Sublessor and Sublessee,
Sublessor shall have the right to assign its interest in the Master
Lease, this Sublease or both without Sublessee's consent.
The provisions of this Paragraph shall not, however, be applicable to
an assignment of this Sublease or subletting of the entire Premises
by Sublessee to its wholly owned subsidiary or immediate controlling
corporation or to a corporation or other entity under common control
with Sublessee (for such period of time as such corporation remains
such a subsidiary or such a controlling corporation or such a
corporation or other entity under common control, respectively, it
being agreed that the subsequent sale or transfer of stock or other
legal or beneficial ownership interest resulting in a change in
voting control, or any other transaction(s) having the overall effect
that such corporation ceases to be such a subsidiary or such a
controlling corporation or such a corporation or other entity under
common control, respectively, of Sublessee, shall be treated as if
such sale or transfer or transaction(s) were, for all purposes, an
assignment of this Sublease governed by the provisions of this
Paragraph), or to a corporation or other entity which acquires all or
substantially all of the assets of Sublessee, provided (and it shall
be a condition of the validity of any such assignment) that such
wholly owned subsidiary or such immediate controlling corporation or
such a corporation or other entity under common control or such
acquiring corporation or entity first agree directly with the
Sublessor and/or the Master Lessor, as the case may be, to be
primarily liable for performing all of the obligations of Sublessee
hereunder, including, without limitation, the obligation to pay the
rent and other amounts provided for under this Sublease, the covenant
to use the Premises only for the purposes specifically permitted
under this Sublease and the covenant against further assignment and
<PAGE> 25
subletting; but such assignment shall not relieve the Sublessee
herein named of any of its obligations hereunder, and Sublessee shall
remain fully and primarily liable therefor.
18. SURRENDER OF THE PREMISES. Upon the expiration of the Sublease Term
or earlier termination of this Sublease, Sublessee shall remove its
furniture, trade fixtures, equipment and other goods and effects, and
shall also remove any of its fixtures that Sublessor or Master Lessor
shall have required to be so removed in accordance with the terms and
provisions of Paragraph 11 and/or 12 of this Sublease, and shall
peaceably yield up the Premises, clean and in as good order, repair
and condition as Sublessee is required to maintain same during the
term of this Sublease, reasonable wear and tear and damage by
casualties excepted, and Sublessor's or Master Lessor's failure to
perform their respective repair, maintenance and replacement
obligations under this Sublease or the Master Lease also excepted;
and Sublessee shall repair any injury done to the Premises by the
installation or removal of the Sublessee's fixtures or other
property. Prior to the expiration or earlier termination of this
Sublease, Sublessee shall remove any of the fixtures and other
leasehold improvements originally installed and/or constructed by
Sublessee that are specified for removal by any written notice given
by Sublessor or Master Lessor to Sublessee pursuant to Paragraphs 11
and/or 12 hereof.
19. ATTORNEYS' FEES. Should either party commence any legal action or
proceeding against the other based on this Sublease, the prevailing
party shall be entitled to an award of reasonable attorneys' fees, in
addition to any other relief to which such party would be entitled.
20. REAL ESTATE COMMISSION. Except for the Kane Company and Hunneman
Commercial Company (the "Brokers"), whose entire commission shall be
paid by Sublessor pursuant to separate written agreements between
each of the Brokers, respectively, and Sublessor, each party
represents and warrants to the other that it has not had any dealings
with any real estate broker or other person in respect to this
Sublease. Each party shall indemnify and hold harmless the other
from all damages or claims that may be asserted by any person with
whom the indemnifying party has purportedly dealt.
21. SUBLESSOR'S CONSTRUCTION ALLOWANCE. Sublessor agrees to contribute
up to Three Million Five Hundred Thousand and 00/l00 Dollars
($3,500,000.00), as Sublessor's construction allowance ("Sublessor's
Construction Allowance") toward the cost of Sublessee's Work
("Sublessee's Costs"), it being understood and agreed that the
payment of Sublessor's Construction Allowance shall be made subject
to the following conditions and according to the following schedule:
(a) If there then exists no Event of Default under this Sublease,
during the time between the date on which Sublessee commences
Sublessee's Work and the date on which Sublessee's Work has been
substantially completed, Sublessor agrees to make an initial
partial payment (the "Initial Payment") to Sublessee of
<PAGE> 26
Sublessor's Construction Allowance within fifteen (15) days
after Sublessor's receipt of the Initial Requisition (as herein
defined) and the other documents specified in clauses (ii)
through (iv) of this subparagraph (a). The Initial Payment
shall be paid to Sublessee or, at Sublessor's election, directly
to Sublessee's contractors, subcontractors and/or vendors
specified in the Initial Requisition, and shall be equal to
eighty-five percent (85%) of the amount of the Initial
Requisition; provided, however, that in no event shall the
Initial Payment exceed fifty percent (50%) of the full amount of
Sublessor's Construction Allowance. Sublessor's obligation to
make the Initial Payment shall be contingent upon Sublessee's
first having furnished to Sublessor the following: (i) a
statement in form and substance reasonably satisfactory to
Sublessor (the "Initial Requisition"), certified to be true,
accurate and complete by an executive officer of Sublessee,
stating the amount that has actually been paid out and that will
be paid out from the proceeds of the Initial Payment on account
of Sublessee's Costs actually incurred as of the date thereof
(excluding reasonable retainage amounts), (ii) invoices,
including receipted invoices for amounts already paid out,
substantiating any and all such payments made and to be made by
Sublessee on account of Sublessee's Costs actually incurred as
of the date of the Initial Requisition, (iii) an affidavit of
Sublessee's general contractor, in form and substance reasonably
satisfactory to Sublessor, dated no later than the date of the
Initial Requisition, stating that any and all amounts then due
to said general contractor and all subcontractors and other
parties attributable to labor and materials furnished in
connection with Sublessee's Work have been paid in full or will
be paid in full from the proceeds of the Initial Payment
(subject to applicable retainage amounts), and (iv) executed
lien waivers from said general contractor and said
subcontractors and other parties, in form and substance
reasonably satisfactory to Sublessor, waiving any and all liens
attributable to labor and materials theretofore furnished by
such parties in connection with Sublessee's Work.
(b) If there then exists no Event of Default under this Sublease,
after the date on which Sublessor makes the Initial Payment, but
before Sublessee's Work has been finally completed, Sublessor
agrees to make additional payments of Sublessor's Construction
Allowance (each such payment being hereinafter referred to as an
"Additional Payment"), no more frequently than once every thirty
(30) days. Sublessor agrees to make each Additional Payment
within fifteen (15) days after Sublessor's receipt of the
applicable Additional Requisition (as herein defined) and the
other documents specified in clauses (ii) through (iv) of this
subparagraph (b). Each Additional Payment shall be paid to
Sublessee or, at Sublessor's option, to the contractors,
subcontractors and/or vendors specified in the applicable
Additional Requisition, and shall be equal to eighty-five
percent (85%) of Sublessee's Costs as shall have actually been
<PAGE> 27
paid or as are payable as of the date of such Additional
Requisition, less the amount of Sublessee's Costs theretofore
paid by Sublessor on account of Sublessor's Construction
Allowance; provided, however, that in no event shall the sum of
any Additional Payment, plus the Initial Payment and all prior
Additional Payments, exceed eighty-five percent (85%) of the
full amount of Sublessor's Construction Allowance. Sublessor's
obligation to make any Additional Payment shall be contingent
upon Sublessee's furnishing to Sublessor the following: (i) a
statement in form and substance reasonably satisfactory to
Sublessor (an "Additional Requisition") certified to be true,
accurate and complete by an executive officer of Sublessee
stating the amount that Sublessee has paid out and that will be
paid out from the proceeds of such Additional Payment on account
of Sublessee's Costs actually incurred after the date of the
Initial Requisition or the last previous Additional Requisition,
as the case may be (excluding reasonable retainage amounts),
(ii) invoices, including receipted invoices for amounts already
paid out, substantiating any and all such payments made or to be
made on account of Sublessee's Costs actually incurred after the
date of the Initial Requisition or the last previous Additional
Requisition, as the case may be, (iii) an affidavit of
Sublessee's general contractor, in form and substance reasonably
satisfactory to Sublessor, dated no later than the date of the
applicable Additional Requisition, stating that any and all
amounts then due to said general contractor and all
subcontractors and other parties attributable to labor and
materials furnished in connection with Sublessee's Work have
been paid in full or will be paid in full from the proceeds of
the applicable Additional Payment (subject to applicable
retainage amounts), and (iv) executed lien waivers from said
general contractor and said subcontractors and other parties, in
form and substance reasonably satisfactory to Sublessor, waiving
any and all liens attributable to labor and materials
theretofore furnished by such parties in connection with
Sublessee's Work.
(c) If there then exists no Event of Default under this Sublease,
upon or after the date on which Sublessee's Work has been
finally completed, Sublessor agrees to make the final payment on
account of Sublessor's Construction Allowance (the "Final
Payment") within fifteen (15) days after Sublessor's receipt of
the Final Requisition (as herein defined) and the other
documents specified below in clauses (ii) through (vii) of this
subparagraph (c). The Final Payment shall be paid to Sublessee
or, at Sublessor's option, to the contractors, subcontractors
and/or vendors specified in the Final Requisition, and shall be
equal to so much of Sublessee's Costs as shall have actually
been paid or as are payable as of the date of the Final
Requisition, less the amount of Sublessee's Costs theretofore
paid by Sublessor on account of Sublessor's Construction
Allowance; provided, however, that in no event shall the Final
Payment exceed the then balance of Sublessor's Construction
<PAGE> 28
Allowance. Sublessor's obligation to make the Final Payment
shall be contingent upon Sublessee's furnishing to Sublessor the
following: (i) a statement in form and substance reasonably
satisfactory to Sublessor (the "Final Requisition") certified to
be true, accurate and complete by an executive officer of
Sublessee stating the amount that Sublessee has paid out and
that will be paid out from the proceeds of the Final Payment on
account of Sublessee's Costs actually incurred after the date of
the last previous Additional Requisition, (ii) invoices,
including receipted invoices for amounts already paid out,
substantiating any and all such payments made or to be made on
account of Sublessee's Costs actually incurred after the date of
the last previous Additional Requisition, (iii) an affidavit of
Sublessee's general contractor, in form and substance reasonably
satisfactory to Sublessor, stating that any and all amounts due
to said general contractor and all subcontractors and other
parties attributable to labor and materials furnished in
connection with Sublessee's Work have been paid in full or will
be paid in full from the proceeds of the Final Requisition, (iv)
executed lien waivers from said general contractor and said
subcontractors and other parties, in form and substance
reasonably satisfactory to Sublessor, waiving any and all liens
attributable to labor and materials theretofore furnished by
such parties in connection with Sublessee's Work, (v) evidence
reasonably satisfactory to Sublessor that all of Sublessee's
Work and all of Sublessee's obligations with respect thereto as
contained in this Sublease shall have been finally completed in
all respects in accordance therewith, and (vi) copies of all
governmental approvals, including, without limitation,
certificate(s) of occupancy, necessary for Sublessee to occupy
the Premises.
Sublessee shall pay to Sublessor the total amount of all funds
contributed by Sublessor on account of Sublessor's Construction
Allowance as hereinabove provided (which funds shall in no event
exceed Three Million Five Hundred Thousand and 00/100 Dollars
($3,500,000.00) in the aggregate and are hereinafter referred to as
the "Contributed Amount"), with interest at the rate of six percent
(6%) per annum, payable in sixty (60) consecutive, equal monthly
payments of principal and interest commencing on July 15, 1994 and
continuing on the first day of every month thereafter through and
including the month of July, 1999 (the "Payment Period"). The amount
of each monthly payment on account of the Contributed Amount shall be
calculated so as to result in the full repayment by Sublessee of the
Contributed Amount, with interest at the aforesaid rate, after
payment of all such monthly payments over the aforesaid sixty (60)
month period.
Promptly after the amount of each monthly payment on account of the
Contributed Amount shall have been determined as aforesaid, Sublessor
shall prepare and the parties shall execute and deliver to each other
an agreement memorializing the amount of each such payment payable by
Sublessee during the Payment Period. Sublessor shall have the same
<PAGE> 29
remedies hereunder for any failure by Sublessee to pay any payment on
account of the Contributed Amount when due as Sublessor has hereunder
for any failure by Sublessee to pay Base Rent and Additional Rent
when due, including, without limitation, the right to terminate this
Sublease.
22. PROVISIONS BINDING, ETC. Except as herein otherwise expressly
provided, the terms hereof shall run with the land, be binding upon
and inure to the benefit of those claiming under, by and through,
respectively, Sublessor and Sublessee, including, without limitation,
their respective successors and assigns. The reference contained in
the preceding sentence to successors and assigns of Sublessee is not
intended to and does not constitute a consent to assignment by
Sublessee. As between Sublessee and Sublessor, Sublessor shall have
the right to sell, assign, transfer or otherwise alienate its
interest in the Premises, and upon such sale, assignment, transfer or
alienation, the new holder of such interest shall succeed to and
thereby assume all of Sublessor's obligations hereunder, except that
Sublessor and each new holder shall only be liable for obligations
accruing during its respective period of ownership, and Sublessee
shall be bound to the new holder to the same extent as it was bound
to Sublessor. Without limiting the generality of the foregoing, as
between Sublessee and Sublessor, Sublessor shall be entirely freed
and relieved of any obligation or responsibility accruing under this
Sublease from and after any such sale, assignment, transfer or other
alienation by Sublessor of its interest in the Premises.
23. APPLICABLE LAWS. This Sublease shall be construed and interpreted in
accordance with the laws of the State of New Hampshire.
24. ENTIRE AGREEMENT. This Sublease contains the entire agreement of the
parties. No representations, inducements, promises or agreements,
oral or otherwise, not embodied herein shall be of any force or
effect. Nothing in this Sublease shall relieve Sublessor of its
primary liability for its obligations to Master Lessor under the
Master Lease. Master Lessor's consent to this Sublease does not
constitute consent to any future subletting or assignment, except as
expressly permitted in Paragraph 17 hereof with respect to an
assignment of this Sublease or subletting of the entire Premises by
Sublessee to its wholly owned subsidiary or immediate controlling
corporation or to a corporation or other entity under common control
with Sublessee or to a corporation or other entity which acquires all
or substantially all of the assets of Sublessee.
25. ENVIRONMENTAL HAZARDS
25.1 Sublessee's Use of Hazardous Material.
Sublessee shall not cause or permit any hazardous material or oil to
be used, stored, generated, or disposed of by Sublessee or its agents
on, in or from the Premises or in connection with Sublessee's use of
the Premises, except those used, stored, generated, or disposed of by
Sublessee in the ordinary course of its business activities at the
<PAGE> 30
Premises, without first obtaining Sublessor's and Master Lessor's
written consent, which consent may be withheld by either party in
such party's sole and absolute discretion. Any request by Sublessee
for such consent by Sublessor and Master Lessor shall be in writing.
Prior to the full execution and delivery of this Sublease, Sublessee
shall deliver to Sublessor and Master Lessor, for their respective
review and approval, which approval may be withheld by either party
in such party's sole and absolute discretion, a list of all hazardous
material or oil that Sublessee intends to use, store, generate, or
dispose of in the ordinary course of its business activities at the
Premises.
25.2 General Standards of Compliance.
Sublessee shall inspect, use, store, generate, transport and dispose
of all hazardous material or oil in compliance with the Environmental
Requirements and shall cause its agents, employees, contractors,
licensees and invitees to so comply. Sublessee shall not release, or
permit to be released by its agents, on, in or from the Premises or
in connection with Sublessee's use of the Premises any hazardous
material or oil in violation of the Environmental Requirements.
25.3 Specific Standards of Compliance.
Without limiting Sublessee's obligations under Paragraph 25.2,
Sublessee shall comply, and cause its agents to comply, with the
specific requirements set forth in this Paragraph 25.3.
(a) Transformers. For all transformers installed by Sublessee on
the Premises, Sublessee shall comply with 40 CFR Part 761.
(b) Discharges to Sanitary Sewer. If required by applicable law,
Sublessee shall obtain permit(s) from all governmental
authorities having jurisdiction with respect to discharges to
sanitary sewers and shall comply with the Federal Clean Water
Act and any pretreatment or other conditions contained in the
applicable sewer permit and shall cause its agents to so comply.
(c) Asbestos. [Intentionally Omitted]
(d) Handling Hazardous Wastes. Sublessee shall comply, and shall
cause its agents to comply, with all applicable laws and
regulations relating to the handling, storage, generation,
transportation, and disposal of hazardous waste.
If Sublessee or its agents generate hazardous waste, upon request of
Sublessor or Master Lessor, Sublessee shall provide any information
and copies of permits required under applicable state laws and
regulations to Sublessor and Master Lessor, and shall make available
upon written request of Sublessor or Master Lessor within thirty (30)
days of the date of such request, copies of all manifests used for
the transportation and disposal of hazardous waste.
<PAGE> 31
(e) Inventories of Hazardous Material. Sublessee shall make
available to Sublessor and Master Lessor within seven (7) days
of the date of written request: (a) copies of all inventories
of hazardous materials and safety plans filed with the Fire
Department under the Emergency Planning and Community
Right-To-Know Act, 42 U.S.C. Section 11001 et seq. and
applicable New Hampshire laws, (b) copies of material safety
data sheets ("MSDS") that accompany any product used or stored
at the Premises, pursuant to the hazard communications standard
under the Occupational Safety and Health Act ("OSHA") and
evidence that the MSDSs have been made available to Sublessee's
employees, and (c) all other plans and reports required to be
prepared pursuant to the Environmental Requirements.
25.4 Notices.
Sublessor and Sublessee shall promptly deliver to the other and to
Master Lessor any notices, orders or similar documents received from
any governmental agency or official affecting the Premises and
concerning the alleged violation of the Environmental Requirements.
Sublessee shall give notice to the Sublessor and Master Lessor of any
violation or potential violation of the Environmental Requirements
immediately upon becoming aware of same. Sublessor shall give notice
to Sublessee and Master Lessor, within a reasonable time after
receipt thereof, of any official notice received by Sublessor from
any governmental agency or official affecting the Premises and
concerning the alleged violation of the Environmental Requirements.
25.5 Sublessee's Obligation to pay Costs and Fines.
Sublessee shall bear the full cost of, and be solely responsible for,
carrying out its obligations under this Paragraph 25. Sublessee
shall pay forthwith any fine assessed for any violation by Sublessee
or its agents of the Environmental Requirements or shall diligently
proceed to contest the same.
Any cost or fine required under this Paragraph 25 to be borne by
Sublessee may be paid by Sublessor or Master Lessor, at the election
of either party (provided that Sublessor or Master Lessor shall not
pay any such amount if Sublessee is contesting the imposition of the
same, unless such payment is required under the terms of any mortgage
covering the Premises, in which event payment may be made by any such
party if accompanied by an acknowledgement of such contest and a
statement that payment is being made without any waiver of
Sublessee's rights in connection therewith), after at least thirty
(30) days' notice to Sublessee, except that, in cases where such
payment is necessary in order to avoid a lien against or other
material adverse effect on or with respect to the Premises, such
payment may be made immediately after notice, and such payment shall
be reimbursed by Sublessee to Sublessor or Master Lessor, as the case
may be, within 30 days of written demand therefor and may at
Sublessor's election, be treated as additional rent hereunder; and
Sublessor shall have the same rights and remedies for the nonpayment
thereof as for the nonpayment of rent.
<PAGE> 32
During the investigation and cleanup of any release that is the
responsibility of Sublessee under this Paragraph 25 or under
applicable Environmental Requirements and during any restoration,
maintenance, or repair work that is the responsibility of Sublessee
under this Paragraph 25 or under applicable Environmental
Requirements, Sublessee shall continue to pay rent even though part
or all of the Premises may be unusable.
25.6 Sublessee's Responsibility to Clean Up Any Release.
Upon written demand by Sublessor or Master Lessor, if hazardous
material or oil has been released in or on the Premises or has
migrated to or off the Premises, by acts or negligence of Sublessee,
Sublessee shall take all actions which are necessary to attain
cleanup levels in accordance with the Environmental Requirements and
to mitigate Environmental Damages, provided, however, to the extent
the same has been expressly permitted by Sublessor and Master Lessor
in writing pursuant to Paragraph 25.1 above, such actions may be
postponed provided they are taken and completed prior to the
expiration of the term of this Sublease and there is no violation of
the Environmental Requirements. These actions include, without
limitation, investigation and cleanup as may be required under
CERCLA, RCRA, or applicable state laws and regulations, whichever is
applicable. All such investigation and remedial work shall be
performed by contractors reasonably acceptable to Sublessor and
Master Lessor in accordance with the Environmental Requirements. Any
such action shall be performed in a good, safe and workmanlike
manner. Upon payment of the reasonable cost of copies thereof,
Sublessee shall promptly provide to Sublessor and Master Lessor
copies of testing results and all other reports.
Following such cleanup, Sublessee shall promptly take all actions as
are necessary to return the Premises and any areas outside the
Premises to the condition existing prior to the release or migration
of any such hazardous material or oil including the repair of any
damage caused by the investigation or remediation.
25.7 Removal.
Sublessee shall remove all hazardous material or oil used, stored,
generated, discharged, released or disposed of by Sublessee and the
containers in which such substances were ever packaged or stored from
the Premises prior to the termination of this Sublease and prior to
vacating; and such removal and disposal of such substances and
containers shall be performed in accordance with all applicable laws
and regulations.
25.8 Inspection.
Upon the written request of Sublessor and/or Master Lessor,
Sublessee, through a duly authorized officer and any employee
responsible for the proper handling and disposal of hazardous
<PAGE> 33
material and oil, shall give an annual certification, and a
certification prior to the termination of this Sublease and prior to
vacating, to the effect that the requirements in Paragraphs 25.1
through 25.8, inclusive, and any other of the Environmental
Requirements for which Sublessor or Master Lessor has requested a
certification have been satisfied.
Sublessee grants Sublessor and Master Lessor, upon reasonable written
notice, the right to inspect the Premises throughout the term of this
Sublease to determine whether Sublessee is in compliance with the
provisions in this Paragraph 25; and Sublessee shall provide
Sublessor and Master Lessor with all information retained by
Sublessee in the ordinary course of its business, or required to be
retained by the Environmental Requirements, deemed by Sublessor and
Master Lessor necessary for Sublessor and Master Lessor to ascertain
whether Sublessee so complies.
25.9 Default.
A breach of the obligations contained in this Paragraph 25 shall be
deemed a breach of a material obligation of Sublessee under this
Sublease which breach shall entitle Sublessor to enforce all remedies
against Sublessee for breach and default. Provided, however, the
notice and grace periods set forth in Paragraph 16 of this Sublease
shall apply to any such breach.
25.10 Self Help.
If Sublessor or Master Lessor determines that Sublessee has not
proceeded diligently to cure any default within a reasonable time
period, as reasonably determined by Sublessor and Master Lessor as
the case may be, or in the event of an emergency as determined by
Sublessor or Master Lessor in its reasonable judgment, Sublessor or
Master Lessor, in addition to any other remedy under this Sublease,
shall have the right, if such default continues for ten (10) days
after written notice (or at any time after such notice in the event
of an emergency) but not the obligation, to enter upon the Premises
and to perform Sublessee's obligations hereunder, including the
payment of money and the performance of any other act. All sums so
paid by Sublessor or Master Lessor, as the case may be, and all
reasonable incidental costs and expenses in connection therewith
shall be reimbursed by Sublessee as additional rent to Sublessor
within fifteen (15) days after written request from Sublessor or to
Master Lessor (such written request to include invoices and other
documentation evidencing in reasonable detail all costs paid by
Sublessor or Master Lessor). Notwithstanding any such performances
by Sublessor or Master Lessor, Sublessee shall remain liable for any
violation of the provisions in this Paragraph 25.
25.11 Sublessee's and Sublessor's Indemnification.
Sublessee and its successors, assigns and guarantors shall release,
defend (with an attorney reasonably acceptable to Sublessor and
<PAGE> 34
Master Lessor), indemnify and hold harmless Sublessor and Master
Lessor and their respective successors and assigns and the officers,
directors, stockholders, partners, beneficial owners, trustees,
employees, agents, contractors and attorneys, of Sublessor and Master
Lessor, or of the successors and assigns of any of the foregoing,
from and against all Environmental Damages which may be asserted by
Sublessee, any other person or entity, or government agency on
account of the release of any hazardous material or oil upon, in or
from the Premises by Sublessee or its agents, or on account of other
action by Sublessee or its agents in violation of the Environmental
Requirements or on account of breach of any of Sublessee's
obligations under this Paragraph 25, except to the extent that any
such Environmental Damages are caused by the indemnified party. The
provisions of this Paragraph 25.11 shall not apply to hazardous
materials or oil upon or in the Premises on the date hereof or to any
migration of same upon or to the Premises from other property or
caused by third parties, except to the extent caused by Sublessee or
its agents, and Sublessor and its successors, assigns and guarantors
shall release, defend (with an attorney reasonably acceptable to
Sublessee), indemnify and hold harmless Sublessee and its successors
and assigns and the officers, directors, stockholders, partners,
beneficial owners, trustees, employees, agents, contractors and
attorneys of Sublessee, or the successors and assigns of any of the
foregoing, from and against all Environmental Damages which may be
asserted by Sublessor or Master Lessor, any other person or entity,
or government agency on account of the release of any hazardous
material or oil upon, in or from the Premises by Sublessor or Master
Lessor or their respective agents, or on account of other action by
Sublessor, Master Lessor or their respective agents in violation of
the Environmental Requirements, except to the extent that any such
Environmental Damages are caused by Sublessee. In the event that the
Master Lessor succeeds to the interest of the Sublessor under this
Sublease, it is understood and agreed that (a) Master Lessor shall be
liable to Sublessee under the foregoing indemnity only for
Environmental Damages which may be asserted as aforesaid on account
of the release of any hazardous material or oil upon, in or from the
Premises by Master Lessor or its agents that first occurs from and
after the date on which Master Lessor first succeeds to Sublessor's
interest hereunder, or on account of other action by Master Lessor or
its agents in violation of the Environmental Requirements that first
occurs from and after such date (such Environmental Damages are
hereinafter referred to as "After-Occurring Damages"), and (b)
Sublessor shall not be liable to Sublessee under the foregoing
indemnity for any After-Occurring Damages.
25.12 Definitions.
The following terms as used herein shall have the meanings set forth
below:
"Hazardous material or oil" shall mean any substance (i) which is
toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous substance which is or
<PAGE> 35
becomes regulated by any governmental authority, agency, commission
or instrumentality of the United States, the State of New Hampshire
or any political subdivision thereof including city or town; or (ii)
which is or becomes defined as a "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Section 9601 et seq. ("CERCLA") or the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901
et seq. ("RCRA"); as well as any material or substance which is or
becomes defined as hazardous material or oil under applicable state
laws and regulations; or (iii) which is or becomes a pollutant regulated
under the Clean Air Act, 42 U.S.C. Section 7401 et seq. and 40 CFR Parts
50 to 85 or applicable state laws and regulations; or (iv) which is or
becomes defined as "hazardous waste" below; or (v) the presence of which
requires investigation or remediation under any present or future federal,
state or local statute, regulation, ordinance, by-law, order, action,
policy or common law; or (vi) which contains gasoline, diesel fuel, oil
or other petroleum hydrocarbons.
"Hazardous waste" shall mean any material designated as such under
any applicable federal, state or local law, regulation, ordinance or
by-law.
"Environmental Damages" shall mean liabilities, injuries, losses,
claims, damages, settlements, reasonable attorneys' and consultants'
fees, penalties, interest and expenses, and costs of environmental
site investigations, reports and cleanup. The costs of environmental
site investigations, reports and cleanup include costs incurred in
connection with any investigation or assessment of site conditions or
health of Sublessee's agents or other persons using the Premises,
risk assessment, monitoring, or any cleanup, remedial, removal or
restoration work required by any federal, state or local governmental
agency or political subdivision or recommended by Sublessor's or
Master Lessor's environmental consultant (or Sublessee's
environmental consultant in the event Sublessor or Master Lessor
elect not to employ their own consultant) in the exercise of its
reasonable professional judgment.
"Environmental Requirements" shall mean all applicable laws, rules
and regulations (including without limitation the laws and
regulations referenced in Paragraphs 25.2 through 25.8, inclusive),
and the orders of any governmental authority having jurisdiction with
respect thereto, insofar as such laws, rules and regulations and
orders relate to the release, maintenance, use, keeping in place, or
disposal of hazardous material or oil, including those pertaining to
reporting, licensing, permitting, housekeeping, upgrading of
equipment, health and safety of tenant's agents and other persons,
investigation, remediation, and disposal; and shall include both
present and future laws and regulations and orders.
"Release" shall mean any release, spill, emission, discharge or other
disposal into the environment including the atmosphere, ground,
building materials, sewer system, storm drainage system, or body of
water.
<PAGE> 36
25.13 Other.
(a) The provisions of this Paragraph 25 shall be in addition to any
other obligations and liabilities Sublessee may have to
Sublessor under this Sublease or at law or in equity.
(b) In the case of conflict between this Paragraph 25 and other
provisions of this Sublease, the provisions imposing the most
stringent requirement as to Sublessee shall control.
(c) The obligations of Sublessee and Sublessor under this Paragraph
25 shall survive the expiration or termination of this Sublease
and the transfer of title to the Premises.
(d) Sublessee's liabilities and obligations under this Paragraph 25,
including, without limitation, Sublessee's indemnification
obligations, shall include liability for and obligations
relating to the acts and omissions of Sublessee, anyone claiming
by, through or under the Sublessee, and any and all employees,
agents, contractors and subcontractors of Sublessee or any such
party. Sublessor's indemnification obligations under this
Paragraph 25 shall include liability for and obligations
relating to the acts and omissions of Sublessor, anyone claiming
by, through or under the Sublessor, and any and all employees,
agents, contractors and subcontractors of Sublessor or any such
party.
26. HOLDING OVER. If Sublessee remains in possession of the Premises or
any part thereof beyond the Expiration Date (or, if Sublessee shall
duly exercise any of the options of extension set forth in Paragraph
5 of this Sublease, beyond the expiration of the applicable extension
period), Sublessee shall be deemed to be occupying the Premises from
month to month, subject to such occupancy being terminated by either
party upon at least thirty (30) days' written notice (except that
such occupancy shall in any event automatically terminate on
September 30, 2000 without the need of any such notice), at a monthly
rental equal to One Hundred Eighty-Four Thousand Five Hundred and
00/100 Dollars ($184,500.00), together with Additional Rent, and
subject to all of the same terms, provisions, and conditions set
forth in this Sublease; it being understood and agreed that Sublessee
shall have no right to and shall in no event remain in occupancy of
the Premises or any part thereof beyond September 30, 2000 without
having first entered into a new lease agreement relative to the
Premises with Master Lessor. Sublessee shall indemnify and hold
harmless Sublessor from and against any and all liability, loss,
cost, damage and expense suffered by Sublessor arising out of or
resulting from any failure on the part of Sublessee to yield up the
Premises when and as required under this Sublease.
27. QUIET ENJOYMENT. Sublessee, subject to the terms and provisions of
this Sublease, on payment of the rent and observing, keeping and
performing all of the terms and provisions of this Sublease on its
<PAGE> 37
part to be observed, kept and performed, shall lawfully, peaceably
and quietly have, hold, occupy and enjoy the Premises during the term
hereof without hindrance or ejection by any persons lawfully claiming
under Sublessor. To the best of Sublessor's knowledge, there is no
pending or overtly threatened litigation or administrative action
involving the Premises that would adversely affect Sublessee's
ability to lawfully, peaceably and quietly have, hold, occupy and
enjoy the Premises as aforesaid.
28. OPTION TO PURCHASE. Sublessor hereby assigns to Sublessee
Sublessor's option to purchase the Premises and certain other real
property, as set forth in, and subject to and in accordance with the
terms and conditions of, Article XXIV of the Master Lease. In the
event that Sublessee exercises such option to purchase and acquires
record title to the Premises and such other property, then this
Sublease shall thereupon cease and determine and be of no further
force and effect, without recourse to either of Sublessor or
Sublessee as to matters accruing from and after the date on which
Sublessee acquires record title to the Premises and such other
property.
29. FORCE MAJEURE. In the event that any party hereto shall be delayed,
hindered in or prevented from the performance of any act (other than
the payment of Base Rent, Additional Rent or the Contributed Amount
by Sublessee and the performance of restoration work by the Master
Lessor in the event of a casualty or taking as provided in Paragraph
14 of this Sublease) required hereunder by reason of strikes,
lock-outs, labor troubles, inability to procure materials, fuel or
gas, failure of power, riots, insurrection, the act, failure to act
or default of the other party, war, accidents or any other reason
beyond such party's control, then performance of such act shall be
excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equivalent
to the period of such delay.
30. SUBLESSOR AND MASTER LESSOR DEFAULT AND LIABILITY. Sublessor and
Master Lessor shall in no event be in default in the performance of
any of their respective obligations hereunder unless and until
Sublessor or Master Lessor, as the case may be, shall have failed to
perform such obligations within thirty (30) days or such additional
time as is reasonably required to correct any such default after
notice by Sublessee to such party properly specifying wherein such
party has failed to perform any such obligation. Notwithstanding
anything contained herein to the contrary, in the event that any
failure by Sublessor or Master Lessor to perform their respective
obligations under this Sublease or the Master Lease shall prevent
Sublessee from using all or a portion of the Premises for the
purposes permitted under this Sublease for any period of five (5)
consecutive business days or longer after the date on which Sublessor
receives notice of such failure specifying in reasonable detail the
particulars thereof, and if there then exists no Event of Default
under this Sublease, then a just proportion of the Base Rent,
Additional Rent, Contributed Amount, according to the nature and
<PAGE> 38
extent of the portion of the Premises rendered untenantable, shall be
abated until use and occupancy of substantially all of the Premises
shall be restored. In the event that the Sublessee shall be prevented
from using all of the Premises for the purposes permitted under this
Sublease by reason of any such failure by Sublessor or Master Lessor
for a period of thirty (30) consecutive days or longer after the date
on which Sublessor receives notice of such failure specifying in
reasonable detail the particulars thereof, and if there then exists no
Event of Default under this Sublease, then Sublessee shall have the right
to terminate this Sublease upon twenty (20) business days' written notice
to Sublessor, in which event this Sublease shall terminate with the same
effect as if the date set forth in such notice were the expiration date
set forth in this Sublease. Notwithstanding anything contained herein to
the contrary, Sublessee agrees that Master Lessor shall have no personal
liability with respect to any of the provisions of this Sublease at any
time, whether before or after Master Lessor succeeds, if at all, to
Sublessor's interest hereunder, and Sublessee shall look solely to the
estate and property of the Master Lessor in the Premises for the
satisfaction of any of Sublessee's remedies, including, without
limitation, the collection of any judgment or the enforcement of any other
judicial process requiring the payment or expenditure of money by Master
Lessor in the event of any default or breach by Master Lessor with respect
to any of the terms and provisions of this Sublease to be observed and/or
performed by Master Lessor, subject, however, to the prior rights of any
holder of any mortgage covering all or part of the Premises, and no other
assets of Master Lessor or any principal of Master Lessor shall be subject
to levy, execution or other judicial process for the satisfaction of
Sublessee's claim and in the event Sublessee obtains a judgment against
Master Lessor, the judgment docket shall be so noted. Without in any way
limiting the foregoing, Sublessee reserves the right to seek judicial
injunctive relief to enforce any obligations of Master Lessor which have
not been complied with.
IN WITNESS WHEREOF, the parties have executed this Sublease, under
seal, as of the date first written above.
SUBLESSOR: SUBLESSEE:
HEWLETT-PACKARD COMPANY THE TIMBERLAND COMPANY
By: By:
Its Its
Hereunto duly authorized Hereunto duly authorized
/4282
<PAGE> 39
CONSENT OF MASTER LESSOR
Pursuant to Article IX of the Master Lease, the undersigned Master
Lessor under the Master Lease hereby consents to the subletting of the
Premises in accordance with the terms and conditions of the foregoing
Sublease but does not consent to any future subletting or assignment,
notwithstanding anything to the contrary contained in Sections 17 and 22
of said Sublease.
In connection with its consent to the Sublease, the Master Lessor
hereby agrees as follows:
1. The Master Lessor hereby confirms, to the best of its knowledge,
that there exists no default under the Master Lease nor any event which
with the giving of notice or passage of time or both could constitute a
default under the Master Lease and the Master Lessor hereby waives all
rights to claim a default (a) under Article XII(f) of the Master Lease
relating to any discontinuance of occupancy or abandonment of the
Premises accrued or occurring prior to the date hereof or (b) under
Article IX of the Master Lease relating to any assignment of the Master
Lease in connection with the transfer of all of the outstanding shares of
Apollo Computer, Inc. to Sublessor;
2. As between the Master Lessor and the Sublessee, to the extent
there are any inconsistencies between the terms and provisions of the
Sublease and the terms and provisions of the Master Lease, the terms and
provisions of the Sublease shall control;
3. The Master Lessor agrees to be bound by the obligations of the
Master Lessor to the Sublessee set forth in the following provisions of
the Sublease: (i) Master Lessor's obligation under Paragraph 7 to
prosecute tax abatement proceedings once commenced and to notify
Sublessee of the discontinuance thereof; (ii) Master Lessor's obligation
under Paragraph 8(e) to minimize interference with Sublessee's use of the
Premises in connection with the exercise by the Master Lessor of its
rights thereunder; (iii) Master Lessor's obligations under Paragraphs
8(f) and 8(g) to be liable to Sublessee for damages caused by its
negligence; (iv) Master Lessor's obligation under Paragraph 8(o) to act
reasonably in approving or disapproving insurance amounts; (v) Master
Lessor's obligation under Paragraph 9 to act reasonably in approving or
disapproving maintenance contracts; (vi) Master Lessor's obligations
under Paragraph 11 to act reasonably in approving or disapproving Plans
and Specifications (except as to structural, exterior and/or roof work),
in designating fixtures and leasehold improvements for removal from the
Premises at the expiration or earlier termination of the Sublease Term,
and in acting to approve or disapprove Plans and Specifications within
ten (10) business days after receipt thereof and failing such action, in
being bound by the provisions thereof relative to the consequences of
such failure; (vii) Master Lessor's obligations under Paragraph 12 to act
reasonably in approving or disapproving subsequent alterations and the
plans and specifications therefor (except as to structural, exterior
and/or roof work), in designating fixtures and leasehold improvements for
<PAGE> 40
removal from the Premises at the expiration or earlier termination of the
Sublease Term, and in acting to approve or disapprove such plans and
specifications within ten (10) business days after receipt thereof and
failing such action, to be bound by the provisions thereof relative to
the consequences of such failure; (viii) Master Lessor's obligation under
Paragraph 17 to permit, without the need for Master Lessor's consent, any
assignment of the Sublease or subletting of the Premises expressly therein
permitted; and (ix) Master Lessor's obligation under Paragraph 25.11 to act
reasonably in approving or disapproving an attorney designated by Sublessee
in connection with any matter that is the subject of the indemnity therein
provided.
The Master Lessor hereby certifies as of the date hereof as follows:
A. The Master Lease represents the entire agreement between the
Master Lessor and the Sublessor, is in full force and effect and has not
been assigned, modified, supplemented or amended in any way (except that
Master Lessor has assigned the Master Lease to its mortgagee); a true,
correct and complete copy of the Master Lease, including any and all
amendments thereto (which documents consist of a lease dated June 19,
1984, as amended by a certain Amendment A, dated December 21, 1984, as
further amended by a certain Stratham Lease Amendment, dated as of May
21, 1986, as affected by a certain letter, dated September 26, 1990, from
Sublessor to the Master Lessor and as further amended by a certain
Amendment to Lease of even date herewith), is attached as Exhibit "B" to
the Sublease of which this consent is a part; and
B. Rental payments under the Master Lease are being made on a
current basis and have been paid through the month of April, 1994.
The undersigned hereby agrees to enter into a subordination,
non-disturbance and attornment agreement with Sublessee, in the form
attached to the Sublease of which this consent is a part as Exhibit
"SNDA", concurrently with the full execution and delivery of said
Sublease.
As between Master Lessor and Sublessor, nothing herein or in said
Sublease shall relieve Sublessor of its obligations to Master Lessor
under said Master Lease or modify any of the terms of said Master Lease.
Executed under seal this day of , 1994.
FIRST ALTEX REALTY TRUST
By:
Hereunto duly authorized, as
Trustee and not individually
(Signatures continued on next page)
<PAGE> 41
By:
Hereunto duly authorized, as
Trustee and not individually
By:
Hereunto duly authorized, as
Trustee and not individually
<PAGE> 42
EXHIBIT NOT FILED
EXHIBIT "A"
PLAN OF PREMISES
<PAGE> 43
EXHIBIT NOT FILED
EXHIBIT "B"
MASTER LEASE
<PAGE> 44
EXHIBIT "C"
ESTIMATED OPERATING EXPENSES AND OTHER COSTS
200 DOMAIN DRIVE
STRATHAM, NH
Estimated 1994 Operating Expenses:
Real Property Taxes $0.796/r.s.f.
Insurance $0.147/r.s.f.
TOTAL $0.943/r.s.f.
<PAGE> 45
EXHIBIT "SNDA"
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT is made as of the day of March, 1994 by and
between the TRUSTEES of FIRST ALTEX REALTY TRUST, u/d/t dated as of
May 15, 1984 and recorded with the Rockingham County Registry of Deeds in
Book 2499, Page 1348, as amended (the "Master Lessor"), having a business
address in care of Altid Properties, 17 Monsignor O'Brien Highway,
Cambridge, Massachusetts 02141-1817, and THE TIMBERLAND COMPANY, a
Delaware corporation ("Sublessee"), having a business address of 11
Merrill Industrial Drive, P.O. Box 5050, Hampton, New Hampshire
03842-5050.
W I T N E S S E T H:
WHEREAS, Master Lessor holds the lessor's interest in and to a
certain lease, dated June 19, 1984, the lessee's interest in which is
held by Hewlett-Packard Company (the "Sublessor"), relating to certain
premises located at 200 Domain Drive in Stratham, Rockingham County, New
Hampshire, as more particularly therein described (the "Premises"), as
amended by a certain Amendment A, dated December 21, 1984, as further
amended by a certain Stratham Lease Amendment, dated as of May 21, 1986,
as affected by a certain letter, dated September 26, 1990, from Sublessor
to the Master Lessor and as further amended by a certain Amendment to
Lease dated March , 1994 (said lease, as amended and affected by the
above-listed documents, is hereinafter referred to as the "Master Lease");
WHEREAS, Sublessor holds the sublessor's interest in and to a certain
sublease, dated March , 1994, the sublessee's interest in which is
held by Sublessee, relating to the Master Lease and the Premises; and
WHEREAS, Master Lessor has been requested by Sublessor and Sublessee
to enter into this agreement with Sublessee;
NOW, THEREFORE, in consideration of the Premises and the mutual
covenants herein contained, the parties hereto mutually covenant and
agree as follows:
1. Subject to the terms and provisions of this agreement, the
Sublease and all of the right, title and interest of Sublessee
thereunder in and to the Premises are and shall be subject and
subordinate to the Master Lease.
2. In the event that Master Lessor comes into possession of the
Premises as a result of the termination or other enforcement of
lessor's rights under the Master Lease as the result of a
default by the Sublessor thereunder, as long as Sublessee is not
then in default under the Sublease beyond any applicable notice
<PAGE> 46
and cure period provided to Sublessee under the Sublease, Master
Lessor will recognize Sublessee and will not disturb Sublessee
in its possession of the Premises for the full term of years in
the Sublease provided subject to the terms, covenants and
conditions of the Sublease for any reason other than one which
would entitle Sublessor to terminate the Sublease under its
terms or would entitle Sublessor to dispossess Sublessee from
the Premises.
3. Sublessee agrees with Master Lessor that if the interest of
Sublessor in the Premises shall be held by Master Lessor by
reason of termination or other proceedings brought by Master
Lessor, Sublessee shall be bound to Master Lessor and Master
Lessor shall be bound to Sublessee under all of the terms,
covenants and conditions of the Sublease for the then balance of
the term thereof and any extensions or renewals thereof which
may be effected in accordance with any option therefor in the
Sublease, with the same force and effect as if Master Lessor
were the original holder of the sublessor's interest in and to
the Sublease (except that Master Lessor shall in no event be
liable for or bound by the obligations of Sublessor under
Paragraph 21 of the Sublease), and the Sublease shall be a
direct lease between the Master Lessor and the Sublessee, and
Sublessee shall attorn to Master Lessor as its lessor, said
attornment to be effective and self-operative without the
execution of any further instruments on the part of Sublessor
and Master Lessor immediately upon Master Lessor's succeeding to
the interest of Sublessor in the Premises.
4. Sublessee agrees with Master Lessor that if Master Lessor shall
succeed to the interest of Sublessor under the Sublease, Master
Lessor shall not be (a) liable for any action or omission of
Sublessor under the Sublease prior to such succession, or (b)
subject to any offsets or defenses which Sublessee might have
against Sublessor, or (c) bound by any rent or additional rent
which Sublessee might have paid for more than the then current
month to Sublessor, or (d) bound by any amendment or
modification of the Sublease made without Master Lessor's and
its mortgagee's written consent, or (e) personally liable with
respect to any of the provisions of the Sublease and Sublessee
shall look solely to the estate and property of the Master
Lessor in the Premises for the satisfaction of any of
Sublessee's remedies, including, without limitation, the
collection of any judgment or the enforcement of any other
judicial process requiring the payment or expenditure of money
by Master Lessor in the event of any default or breach by Master
Lessor with respect to any of the terms and provisions of the
Sublease to be observed and/or performed by Master Lessor,
subject, however, to the prior rights of any holder of any
mortgage covering all or part of the Premises, and no other
assets of Master Lessor or any principal of Master Lessor shall
be subject to levy, execution or other judicial process for the
satisfaction of Sublessee's claim and in the event Sublessee
obtains a judgment against Master Lessor, the judgment docket
shall be so noted.
<PAGE> 47
5. This Agreement shall bind and inure to the benefit of Master
Lessor and Sublessee and their respective successors and assigns.
6. This Agreement shall be governed by and construed in accordance
with the laws of the State of New Hampshire.
Executed under seal as of the date first above written.
WITNESS: FIRST ALTEX REALTY TRUST
By:
Hereunto duly authorized, as
Trustee and not individually
[SIGN IN BLACK INK]
By:
Hereunto duly authorized, as
Trustee and not individually
[SIGN IN BLACK INK]
By:
Hereunto duly authorized, as
Trustee and not individually
[SIGN IN BLACK INK]
ATTEST: THE TIMBERLAND COMPANY
By: Secretary
Its
Hereunto duly authorized
[SIGN IN BLACK INK]
<PAGE> 48
STATE OF )
) ss.
COUNTY OF )
On this day of , 1994, before me personally
appeared , who, being by me duly sworn, did say
that he/she is of The Timberland Company, a Delaware
corporation, that said instrument was signed and sealed on behalf of said
corporation by authority of its Board of Directors; and said
acknowledged said instrument to be the free act and
deed of said corporation.
Notary Public
My Commission Expires:
[COMPLETE AND SIGN IN BLACK INK]
STATE OF )
) ss.
COUNTY OF )
On this day of , 1994, before me personally
appeared , Trustee of First Altex Realty
Trust as aforesaid, and acknowledged the foregoing instrument to be
his/her free act and deed, as said Trustee.
Notary Public
My Commission Expires:
[COMPLETE AND SIGN IN BLACK INK]
STATE OF )
) ss.
COUNTY OF )
On this day of , 1994, before me personally
appeared , Trustee of First Altex Realty
Trust as aforesaid, and acknowledged the foregoing instrument to be
his/her free act and deed, as said Trustee.
Notary Public
My Commission Expires:
[COMPLETE AND SIGN IN BLACK INK]
<PAGE> 49
STATE OF )
) ss.
COUNTY OF )
On this day of , 1994, before me personally
appeared , Trustee of First Altex Realty
Trust as aforesaid, and acknowledged the foregoing instrument to be
his/her free act and deed, as said Trustee.
Notary Public
My Commission Expires:
[COMPLETE AND SIGN IN BLACK INK]
<PAGE> 1
EXHIBIT 10.2
================================================================================
THE TIMBERLAND COMPANY
NOTE AGREEMENT
Dated as of April 1, 1994
Re: $65,000,000 7.16% Senior Notes
due April 15, 2000
================================================================================
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
(Not a part of the Agreement)
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT............................ 1
Section 1.1. Description of Notes........................................ 1
Section 1.2. Commitment, Closing Date.................................... 1
Section 1.3. Other Agreements............................................ 2
SECTION 2. PREPAYMENT OF NOTES............................................ 2
Section 2.1. No Required Prepayments..................................... 2
Section 2.2. Optional Prepayments With Premium........................... 2
Section 2.3. Prepayment on Failure of Holders to Give Certain Consents... 2
Section 2.4. Notice of Prepayments....................................... 3
Section 2.5. Allocation of Prepayments................................... 3
Section 2.6. Direct Payment.............................................. 3
SECTION 3. REPRESENTATIONS................................................ 4
Section 3.1. Representations of the Company.............................. 4
Section 3.2. Representations of the Purchaser............................ 4
SECTION 4. CLOSING CONDITIONS............................................. 5
Section 4.1. Conditions.................................................. 5
Section 4.2. Waiver of Conditions........................................ 5
SECTION 5. COMPANY COVENANTS.............................................. 6
Section 5.1. Corporate Existence, Etc.................................... 6
Section 5.2. Insurance................................................... 6
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with Laws. 6
Section 5.4. Maintenance, Etc............................................ 7
Section 5.5. Nature of Business.......................................... 7
Section 5.6. Current Ratio............................................... 7
Section 5.7. Consolidated Tangible Net Worth............................. 7
Section 5.8. Limitations on Indebtedness................................. 7
Section 5.9. Fixed Charges Coverage...................................... 8
Section 5.10. Limitation on Liens......................................... 8
Section 5.11. Restricted Payments......................................... 10
Section 5.12. Sale and Leasebacks......................................... 11
Section 5.13. Mergers, Consolidations and Sales of Assets................. 11
Section 5.14. Guaranties.................................................. 14
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 5.15. Repurchase of Notes......................................... 14
Section 5.16. Transactions with Affiliates................................ 14
Section 5.17. Investments................................................. 15
Section 5.18. Termination of Pension Plans................................ 16
Section 5.19. Reports and Rights of Inspection............................ 16
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR....................... 20
Section 6.1. Events of Default........................................... 20
Section 6.2. Notice to Holders........................................... 21
Section 6.3. Acceleration of Maturities.................................. 21
Section 6.4. Rescission of Acceleration.................................. 22
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.............................. 22
Section 7.1. Consent Required............................................ 22
Section 7.2. Effect of Amendment or Waiver............................... 23
SECTION 8. INTERPRETATION OF AGREEMENT................................... 23
Section 8.1. Definitions................................................. 23
Section 8.2. Accounting Principles....................................... 32
Section 8.3. Directly or Indirectly...................................... 32
SECTION 9. MISCELLANEOUS................................................. 32
Section 9.1. Registered Notes............................................ 32
Section 9.2. Exchange of Notes........................................... 32
Section 9.3. Loss, Theft, Etc. of Notes.................................. 33
Section 9.4. Expenses, Stamp Tax Indemnity............................... 33
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative........... 33
Section 9.6. Notices..................................................... 33
Section 9.7. Successors and Assigns...................................... 34
Section 9.8. Survival of Covenants and Representations................... 34
Section 9.9. Severability................................................ 34
Section 9.10. Governing Law............................................... 34
Section 9.11. Captions.................................................... 34
Signatures..................................................................... 35
</TABLE>
-ii-
<PAGE> 4
ATTACHMENTS TO NOTE AGREEMENT:
Schedule I - Name and Address of Purchasers
Exhibit A - Form of 7.16% Senior Note due April 15, 2000
Exhibit B - Closing Certificate of the Company
Exhibit C - Description of Special Counsel's Closing Opinion
Exhibit D - Description of Closing Opinion of Counsel to the Company
-iii-
<PAGE> 5
THE TIMBERLAND COMPANY
11 MERRILL INDUSTRIAL DRIVE
HAMPTON, NEW HAMPSHIRE 03842-5050
NOTE AGREEMENT
Re: $65,000,000 7.16% Senior Notes
Due April 15, 2000
Dated as of
April 1, 1994
To the Purchaser named In Schedule I
hereto which is a signatory of this
Agreement
Ladies and Gentlemen:
The undersigned, The Timberland Company, a Delaware corporation (the
"Company"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1. Description of Notes. The Company will authorize the issue
and sale of $65,000,000 aggregate principal amount of its 7.16% Senior Notes
(the "Notes") to be dated the date of issue, to bear interest from such date at
the rate of 7.16% per annum, payable semiannually in arrears on the fifteenth
day of each April and October in each year (commencing October 15, 1994) and at
maturity and to bear interest on overdue principal (including any overdue
optional prepayment of principal) and premium, if any, and (to the extent
legally enforceable) on any overdue installment of interest at the rate of 9.16%
per annum after maturity, whether by acceleration or otherwise, until paid, to
be expressed to mature on April 15, 2000, and to be substantially in the form
attached hereto as Exhibit A. Interest on the Notes shall be computed on the
basis of a 360-day year of twelve 30-day months. The term "Notes" as used
herein shall include each Note delivered pursuant to this Agreement and the
separate agreements with the other purchasers named in Schedule I. You and the
other purchasers named in Schedule I are hereinafter sometimes referred to as
the "Purchasers".
Section 1.2. Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you, and you
agree to purchase from the Company, the aggregate principal amount of the Notes
set forth opposite your name in Schedule I hereto, at a price of 100% of the
principal amount thereof on the Closing Date hereinafter mentioned.
Delivery of the Notes will be made at the offices of Chapman and Cutler,
111 West Monroe Street, Chicago, Illinois 60603, against payment therefor in
Federal Reserve or
<PAGE> 6
The Timberland Company Note Agreement
other funds current and immediately available at the principal office of The
Northern Trust Company, Chicago, Illinois in the amount of the purchase price at
10:00 A.M., Chicago, Illinois time, on April 15, 1994 or such earlier date as
the Company shall specify by not less than five business days' prior written
notice to you (the "Closing Date"). The Notes delivered to you on the Closing
Date will be delivered to you in the form of registered Notes for the full
amount of your purchase (unless different denominations are specified by you),
registered in your name or in the name of such nominee as you may specify and in
substantially the form attached hereto as Exhibit A, all as you may specify at
any time prior to the date fixed for delivery.
Section 1.3. Other Agreements. Simultaneously with the execution and
delivery of this Agreement, the Company is entering into similar agreements with
the other Purchasers under which such other Purchasers agree to purchase from
the Company the principal amount of Notes set opposite such Purchasers' names in
Schedule I, and your obligation and the obligations of the Company hereunder are
subject to the execution and delivery of the similar agreements by the other
Purchasers. This Agreement and said similar agreements with the other
Purchasers are herein collectively referred to as the "Agreements". The
obligations of each Purchaser shall be several and not joint and no Purchaser
shall be liable or responsible for the acts of any other Purchaser.
SECTION 2. PREPAYMENT OF NOTES.
Section 2.1. No Required Prepayments. No mandatory prepayments of
principal of the Notes are scheduled to be made prior to their expressed
maturity date, and the Notes are not subject to prepayment or redemption at the
option of the Company prior to their expressed maturity date except on the terms
and conditions and in the amounts and with the premium, if any, set forth below
in this [Section]2.
Section 2.2. Optional Prepayments With Premium. Upon compliance with
[Section]2.4, 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 principal amount of $100,000) 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 with respect to such principal amount then to be prepaid.
Section 2.3. Prepayment on Failure of Holders to Give Certain
Consents. In the event that (i) the Company shall have determined in good faith
to enter into a transaction which will result in a violation of any the
provisions of [Section] 5.13, (ii) the Company shall have requested the holders
of the Notes in writing (accompanied by a reasonably detailed description of the
proposed transaction) to consent to such transaction, and (iii) the holders of
more than 49% of the aggregate unpaid principal amount of the Notes shall have
failed to consent to such transaction within 30 days from the date of such
request, then and in such event the Company may upon the consummation of such
transaction, within 90 days after the expiration of such 30-day period, prepay
all (but not less than all) of the Notes held by such holders who have failed to
consent to such transaction. Any such prepayment shall be made
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<PAGE> 7
The Timberland Company Note Agreement
by payment of the principal amount of the Notes being prepaid, and accrued
interest thereon to the date of such prepayment, together with a premium equal
to the Make-Whole Amount with respect to such principal amount then to be
prepaid.
Section 2.4. Notice of Prepayments. The Company will give notice of any
prepayment of the Notes to each holder thereof not less than 30 days nor more
than 60 days before the date fixed for such optional prepayment specifying (i)
such date, (ii) the section of this Agreement under which the prepayment is to
be made, (iii) the principal amount of the holder's Notes to be prepaid on such
date, (iv) that a premium may be payable, (v) the date when such premium will be
calculated, and (vi) the accrued interest applicable to the prepayment. Such
notice of prepayment shall also certify all facts 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
the premium, if any, and accrued interest thereon shall become due and payable
on the date of consummation of the related transaction (in the case of any
prepayment pursuant to [Section] 2.3) or on the date specified in the notice
given pursuant to the first sentence of this [Section] 2.4 (in the case of any
other prepayment). Not later than the prepayment date the Company shall provide
each holder of a Note written notice of the amount of the premium payable in
connection with such prepayment, whether or not any premium is payable, together
with a reasonably detailed computation thereof.
Section 2.5. Allocation of Prepayments. All partial prepayments, other
than prepayments pursuant to [Section] 2.3, shall be applied on all outstanding
Notes ratably in accordance with the unpaid principal amounts thereof.
Section 2.6. Direct Payment. Notwithstanding anything to the contrary
in this Agreement or the Notes, in the case of any Note owned by the Purchaser
or its nominee or owned by any other institutional holder who has given written
notice to the Company requesting that the provisions of this Section shall
apply, the Company will promptly and punctually pay when due the principal
thereof and premium, if any, and interest thereon, without any presentment
thereof directly to the Purchaser or such subsequent holder at the address of
the Purchaser set forth in Schedule I or at such other address as the Purchaser
or such subsequent holder may from time to time designate in writing to the
Company or, if a bank account is designated for the Purchaser on Schedule I
hereto or in any written notice to the Company from the Purchaser or any such
subsequent holder, the Company will make such payments in immediately available
funds to such bank account, marked for attention as indicated, or in such other
manner or to such other account of the Purchaser or such holder in any bank in
the United States as the Purchaser or any such subsequent holder may from time
to time direct in writing. No such notice shall be effective with respect to
any payment if such notice is given to the Company less than 14 days before the
date of such payment. The holder of any Notes to which this Section applies
agrees that in the event it shall sell or transfer any such Notes (i) it will,
prior to the delivery of such Notes (unless it has already done so), make a
notation thereon of all principal, if any, prepaid on such Notes and will also
note thereon the date to which interest has been paid on such Notes, and (ii)
it will promptly notify the Company of the name and address of the transferee
of any Notes so transferred. With respect to Notes to which this Section
applies, the Company shall be
<PAGE> 8
The Timberland Company Note Agreement
entitled to presume conclusively that the original or such subsequent
institutional holder as shall have requested the provisions hereof to apply to
its Notes remains the holder of such Notes until (y) the Company shall have
received notice from the transferor of the transfer of such Notes, and of the
name and address of the transferee, or (z) such Notes shall have been presented
to the Company as evidence of the transfer.
SECTION 3. REPRESENTATIONS.
Section 3.1. Representations of the Company. The Company represents and
warrants that all representations set forth in the form of certificate attached
hereto as Exhibit B are true and correct as of the date hereof and are
incorporated herein by reference with the same force and effect as though herein
set forth in full.
Section 3.2. Representations of the Purchaser.
(a) Purchase for Investment. You represent, and in entering into this
Agreement the Company understands, that you are acquiring the Notes for the
purpose of investment and not with a view to the resale or distribution thereof,
and that you have no present intention of selling, negotiating or otherwise
disposing of the Notes; provided that the disposition of your property shall at
all times be and remain within your control.
(b) You represent and warrant that either:
(i) you are acquiring the Notes for your own account and with your
general corporate assets and not with the assets of any separate account in
which any employee benefit plan has any interest; or
(ii) (A) you are an insurance company, and
(1) a portion of the funds to be used to make your investment
hereunder constitutes plan assets allocated to a separate account
maintained by you, and
(2) the names of each employee benefit plan whose assets in
such account exceed ten percent of the total assets or are expected to
exceed ten percent of the total assets of such account as of the date
of such investment (for the purposes of this [Section] 3.2(b)(ii)
(A)(2), all employee benefit plans maintained by the same employer or
employee organization are deemed to be a single plan) have been
disclosed in writing to the Company; and
(B) the remaining portion of the funds used to purchase the Notes does
not constitute assets allocated to any separate account maintained by you
such that the application of such funds constitutes a "prohibited
transaction" under Section 406 of the Employee Retirement Income Security
Act of 1974, as amended.
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<PAGE> 9
The Timberland Company Note Agreement
(c) You acknowledge that the Notes have not been registered under the
Securities Act of 1933, as amended, and you understand that the Notes must be
held indefinitely unless they are subsequently registered under said Securities
Act or an exemption from such registration is available. You have been advised
that the Company does not contemplate registering, and is not legally required
to register, the Notes under said Securities Act.
SECTION 4. CLOSING CONDITIONS.
Section 4.1. Conditions. Your obligation to purchase the Notes on the
Closing Date shall be subject to the performance by the Company of its
agreements hereunder which by the terms hereof are to be performed at or prior
to the time of delivery of the Notes and to the following further conditions
precedent:
(a) Closing Certificate. You shall have received a certificate dated
the Closing Date, signed by the President or a Vice President of the Company
substantially in the form attached hereto as Exhibit B, the truth and
accuracy of which shall be a condition to your obligation to purchase the
Notes proposed to be sold to you.
(b) Legal Opinions. You shall have received from Chapman and Cutler,
who are acting as your special counsel in this transaction, and from Ropes &
Gray, counsel for the Company, their respective opinions dated the Closing
Date, in form and substance satisfactory to you, and covering the matters
set forth in Exhibits C and D, respectively, hereto.
(c) Related Transactions. The Company shall have consummated the sale
of the entire principal amount of the Notes scheduled to be sold on the
Closing Date pursuant to this Agreement and the other agreements referred
to in [Section] 1.3.
(d) Satisfactory Proceedings. All proceedings taken in connection with
the transactions contemplated by this Agreement, and all documents necessary
to the consummation thereof, shall be satisfactory in form and substance to
you and your special counsel, and you shall have received a copy (executed
or certified as may be appropriate) of all legal documents or proceedings
taken in connection with the consummation of said transactions.
Section 4.2. Waiver of Conditions. If on the Closing Date the Company
fails to tender to you the Notes to be issued to you on such date or if the
conditions specified in [Section] 4.1 have not been fulfilled, you may thereupon
elect to be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in [Section] 4.1 have not
been fulfilled, you may waive compliance by the Company with any such condition
to such extent as you may in your sole discretion determine. Nothing in this
[Section] 4.2 shall operate to relieve the Company of any of its obligations
hereunder or to waive any of your rights against the Company.
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<PAGE> 10
The Timberland Company Note Agreement
SECTION 5. COMPANY COVENANTS.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
Section 5.1. Corporate Existence, Etc. The Company will preserve and
keep in force and effect, and will cause each Restricted Subsidiary to preserve
and keep in force and effect, its corporate existence and all licenses and
permits reasonably necessary to the proper conduct of its business the absence
of which might materially and adversely affect the properties, business or
condition of the Company or of the Company and its Restricted Subsidiaries taken
as a whole, provided that the foregoing shall not prevent any transaction
permitted by [Section]5.13.
Section 5.2. Insurance. The Company will maintain, and will cause each
Restricted Subsidiary to maintain, insurance coverage by financially sound and
reputable insurers accorded a rating by A.M. Best Company, Inc. of A:XII or
better at the time of the issuance of any such policy and in such forms and
amounts and against such risks as are customary for corporations of established
reputation engaged in the same or a similar business and owning and operating
similar properties; provided, however, that if, during the term of any such
insurance policy, the rating accorded the insurer shall be less than A:XII, the
Company will, on the date of renewal of any such policy (or, if such change in
rating shall occur within 90 days prior to such renewal date, within 90 days of
the date of such change in rating), obtain such insurance policy from an insurer
so rated.
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with
Laws. The Company will promptly pay and discharge, and will cause each
Restricted Subsidiary promptly to pay and discharge, all lawful taxes,
assessments and governmental charges or levies imposed upon the Company or such
Restricted Subsidiary, respectively, or upon or in respect of all or any part of
the property or business of the Company or such Restricted Subsidiary, all trade
accounts payable in accordance with usual and customary business terms, and all
claims for work, labor or materials, which if unpaid might become a Lien upon
any property of the Company or such Restricted Subsidiary not permitted by
[Section] 5.10; provided the Company or such Restricted Subsidiary shall not be
required to pay any such tax, assessment, charge, levy, account payable or claim
if (i) the validity, applicability or amount thereof is being contested in good
faith by appropriate actions or proceedings which will prevent the forfeiture or
sale of any property of the Company or such Restricted Subsidiary or any
material interference with the use thereof by the Company or such Restricted
Subsidiary if such forfeiture, sale or interference might have a material
adverse effect on the properties, business or condition of the Company or of the
Company and its Restricted Subsidiaries taken as a whole, and (ii) the Company
or such Restricted Subsidiary shall set aside on its books, reserves deemed by
it to be adequate with respect thereto. The Company will promptly comply and
will cause each Restricted Subsidiary to comply with all laws, ordinances or
governmental rules and regulations to which it is subject, including without
limitation, the Occupational Safety and Health Act of 1970, the Employee
Retirement Income Security Act of 1974 and all laws, ordinances, governmental
rules and regulations relating to environmental protection in all applicable
jurisdictions, the violation
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<PAGE> 11
The Timberland Company Note Agreement
of which would materially and adversely affect the properties, business,
prospects, profits or condition of the Company and its Restricted Subsidiaries
or would result in any Lien upon any material property of the Company or any
Restricted Subsidiary.
Section 5.4. Maintenance, Etc. The Company will maintain, preserve and
keep, and will cause each Restricted Subsidiary to maintain, preserve and keep,
its properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order and from
time to time will make all necessary and reasonable repairs, replacements,
renewals and additions so that at all times the efficiency thereof shall be
maintained, unless the failure to do so would not have a material adverse effect
on the properties, business or condition of the Company or of the Company and
its Restricted Subsidiaries taken as a whole.
Section 5.5. Nature of Business. Neither the Company nor any
Restricted Subsidiary will engage in any business if, as a result, the general
nature of the business, taken on a consolidated basis, which would then be
engaged in by the Company and its Restricted Subsidiaries would be
substantially changed from the general nature of the business engaged in by the
Company and its Restricted Subsidiaries on the date of this Agreement.
Section 5.6. Current Ratio. The Company will at all times keep and
maintain Consolidated Current Assets at an amount not less than 125% of
Consolidated Current Liabilities.
Section 5.7. Consolidated Tangible Net Worth. The Company will at all
times keep and maintain Consolidated Tangible Net Worth at an amount not less
than (i) for the fiscal quarter of the Company ending June 30, 1994, the sum of
$56,759,000 plus 25% of Consolidated Net Income for the fiscal quarter of the
Company ended March 31, 1994 (but without deduction in the case of a deficit in
Consolidated Net Income) and (ii) for each fiscal quarter thereafter, the sum of
(x) the amount required to be maintained during the immediately preceding fiscal
quarter of the Company, and (y) an amount equal to 25% of Consolidated Net
Income for such preceding fiscal quarter (but without deduction in the case of a
deficit in Consolidated Net Income).
Section 5.8. Limitations on Indebtedness. (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) the Notes;
(2) Current Debt and Funded Debt of the Company and its Restricted
Subsidiaries outstanding as of the date of this Agreement and reflected in
Annex B to Exhibit B attached hereto (including any amendment, modification,
or other change to the Current Debt and Funded Debt described in such Annex
B and which does not increase the principal amount thereof);
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<PAGE> 12
The Timberland Company Note Agreement
(3) Current Debt or Funded Debt of the Company, provided that
at the time of incurrence thereof and after giving effect thereto and to the
application of the proceeds thereof:
(i) Total Debt will not exceed 175% of Total Equity, and
(ii) Net Income Available for Interest Charges for the four
immediately preceding fiscal quarters shall have been
at least 200% of Pro Forma Interest Charges for such
period;
(4) Current Debt or Funded Debt of a Restricted Subsidiary to
the Company or to aWholly-owned Restricted Subsidiary; and
(5) Current Debt or Funded Debt of a Restricted Subsidiary, other than
that permitted by [Section] 5.8(a)(4), provided that at the time of
incurrence thereof and after giving effect thereto and to the application of
the proceeds thereof, (i) Specified Debt does not exceed 20% of Consolidated
Tangible Net Worth, (ii) Total Debt does not exceed 175% of Total Equity and
(iii) Net Income Available for Interest Charges for the four immediately
preceding fiscal quarters shall have been at least 200% of Pro Forma
Interest Charges for such period.
(b) Any corporation which becomes a Restricted Subsidiary after the
date hereof shall for all purposes of this [Section] 5.8 be deemed to have
created, assumed or incurred at the time it becomes a Restricted Subsidiary
all Funded Debt and Current Debt of such corporation existing immediately
after it becomes a Restricted Subsidiary.
Section 5.9. Fixed Charges Coverage. The Company will keep and
maintain Net Income Available for Fixed Charges for each period of four
consecutive fiscal quarters at an amount which is not less than 150% of Fixed
Charges for such period.
Section 5.10. Limitation on Liens. The Company will not, and will not
permit any Restricted Subsidiary to, create or incur, or suffer to be incurred
or to exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, to secure any
Indebtedness or transfer any property for the purpose of subjecting the same to
the payment of obligations in priority to the payment of its or their general
creditors, or acquire or agree to acquire, or permit any Restricted Subsidiary
to acquire, any property or assets upon conditional sales agreements or other
title retention devices, except:
(a) Liens for property taxes and assessments or governmental charges or
Liens securing claims or demands of mechanics and material men, provided
that such claims or demands are being contested in a manner permitted by
[Section] 5.3;
(b) Liens of or resulting from any judgment or award, the time for the
appeal or petition for rehearing of which shall not have expired, or in
respect of which the Company or a Restricted Subsidiary shall at any time in
good faith be
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The Timberland Company Note Agreement
prosecuting an appeal or proceeding for a review and in respect of which a
stay of execution pending such appeal or proceeding for review shall have
been secured;
(c) Liens incidental to the conduct of business or the ownership of
properties and assets (including warehousemen's and attorneys' Liens and
statutory landlords' Liens) and Liens to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety or
appeal bonds or other Liens of like general nature incurred in the ordinary
course of business and not in connection with the borrowing of money,
provided in each case, the obligation secured is not overdue or, if overdue,
is being contested in good faith by appropriate actions or proceedings;
(d) Liens securing Indebtedness of a Restricted Subsidiary to the
Company or to another Restricted Subsidiary;
(e) Liens on property of a Restricted Subsidiary which secure Specified
Debt of such Restricted Subsidiary, provided that all such Specified Debt
shall have been incurred within the applicable limitations provided in
[Section] 5.8;
(f) Liens (including Capitalized Leases) (i) existing as of the date of
this Agreement and reflected in Annex B to Exhibit B attached hereto,
securing Indebtedness of the Company or any Restricted Subsidiary
outstanding on such date and (ii) securing refundings, refinancings,
restructurings or replacements of Indebtedness secured by Liens (including
Capitalized Leases) permitted by clause (i) of this [Section] 5.10(f),
provided that each such refunding, refinancing, restructuring and
replacement shall not exceed the total principal amount of Indebtedness
being refunded, refinanced, restructured or replaced and such Indebtedness
may not be secured by any additional property of the Company and its
Subsidiaries;
(g) Liens incurred after the date hereof (1) given to secure the
payment of the purchase price incurred in connection with the acquisition
of fixed assets useful and intended to be used in carrying on the business
of the Company or a Restricted Subsidiary, including Liens existing on such
fixed assets at the time of acquisition thereof or at the time of
acquisition by the Company or a Restricted Subsidiary of any business
entity then owning such fixed assets, whether or not such existing Liens
were given to secure the payment of the purchase price of the fixed assets
to which they attach so long as they were not incurred, extended or
renewed in contemplation of such acquisition, provided that (i) the Lien
shall attach solely to the property acquired or purchased, (ii) at the
time of acquisition of such fixed assets, the aggregate amount remaining
unpaid on all Indebtedness secured by Liens on such fixed assets whether
or not assumed by the Company or a Restricted Subsidiary shall not exceed
an amount equal to 100% of the lesser of the total purchase price or fair
market value at the time of acquisition of such fixed assets (as determined
in good faith by the Board of Directors of the Company), and (iii) all such
Indebtedness shall have been incurred within the applicable limitations
provided in [Section] 5.8 and (2) given to secure refundings, refinancings,
restructurings or replacements of Indebtedness secured by Liens permitted
by clause (1) of this [Section] 5.10(g), provided that each such refunding,
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The Timberland Company Note Agreement
refinancing, restructuring and replacement shall not exceed the total
principal amount of Indebtedness being refunded, refinanced, restructured or
replaced and such Indebtedness may not be secured by any additional property
of the Company and its Subsidiaries;
(h) Liens on documents and the underlying goods securing obligations in
respect of documentary letters of credit and bankers' acceptances;
(i) Liens that may arise from the sale or transfer of receivables
pursuant to a Securitized Asset Transaction (as defined in
[Section] 5.13(d)(3));
(j) provided that no Default or Event of Default exists at the time of
creation thereof, other Liens on fixed assets (in addition to those
permitted by the foregoing provisions of this [Section] 5.10) if, after
giving effect thereto (and to the application of the proceeds thereof), the
aggregate amount of Specified Debt would not exceed 20% of Consolidated
Tangible Net Worth; and
(k) other Liens securing Funded Debt or Current Debt (in addition to
those permitted by the foregoing provisions of this [Section] 5.10),
provided that the Notes shall be equally and ratably secured pursuant to
agreements or instruments in form and substance satisfactory to the
Noteholders as evidenced by their prior written consent thereto in
accordance with the provisions of [Section] 7.1.
Section 5.11. Restricted Payments. The Company will not, except as
hereinafter provided:
(a) Declare any dividends, either in cash or property, on any shares of
its capital stock of any class (except dividends or other distributions
payable solely in shares of capital stock of the Company); or
(b) Directly or indirectly, or through any Subsidiary, purchase, redeem
or retire any shares of its capital stock of any class or any warrants,
rights or options to purchase or acquire any shares of its capital stock,
other than purchases, redemptions or retirements of its capital stock in
connection with any employee benefit plans to the extent that the aggregate
amount of such purchases, redemptions and retirements during the fiscal year
which includes the date of the purchase, redemption or retirement in
question does not exceed the sum of (1) $100,000 plus (2) the proceeds from
sales of shares of the Company's capital stock in connection with employee
benefit plans during such fiscal year; or
(c) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock; or
(d) make, or permit any Restricted Subsidiary to make, any Restricted
Investment;
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<PAGE> 15
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options, and all such other
distributions and Restricted Investments being herein collectively called
"Restricted Payments"), if after giving effect thereto the aggregate amount of
Restricted Payments made during the period from and after December 31, 1988 to
and including the date of the making of the Restricted Payment in question,
would exceed the sum of (i) $33,879,500 plus (ii) 50% of Consolidated Net Income
for the period from and after December 31, 1993, computed on a cumulative basis
for said entire period (or if such Consolidated Net Income is a deficit figure,
then minus 100% of such deficit), plus (iii) the aggregate net cash proceeds to
the Company during such period from the sale of shares of its capital stock or
warrants, rights or option to purchase or acquire any shares of its capital
stock (other than any such sale in connection with employee benefit plans), plus
(iv) the aggregate amount of net proceeds received by the Company and its
Restricted Subsidiaries in connection with any sale or disposition of Restricted
Investments made during such period provided that for the purposes of this
[Section]5.11 the amount of proceeds from the sale or disposition of any
Restricted Investment may not exceed the original amount of such Restricted
Investment.
The Company will not declare any dividend which constitutes a Restricted
Payment payable more than 60 days after the date of declaration thereof.
For the purposes of this [Section] 5.11 the amount of any Restricted
Payment declared, paid or distributed in property of the Company shall be deemed
to be the greater of the book value or fair market value (as determined in good
faith by the Board of Directors of the Company) of such property at the time of
the making of the Restricted Payment in question.
Section 5.12. Sale and Leasebacks. The Company will not, and will not
permit any Restricted Subsidiary to, enter into any arrangement whereby the
Company or any Restricted Subsidiary shall sell or transfer any property owned
by the Company or any Restricted Subsidiary to any Person other than the Company
or a Restricted Subsidiary and thereupon the Company or any Restricted
Subsidiary shall lease or intend to lease, as lessee, the same property unless
(i) such property was constructed or installed for the Company or such
Restricted Subsidiary and is sold and leased back to the Company or such
Restricted Subsidiary within 18 months after such construction or installation,
and (ii) such sale by the Company or such Restricted Subsidiary and leaseback to
the Company or such Restricted Subsidiary would not violate the provisions of
[Section] 5.8 hereof.
Section 5.13. Mergers, Consolidations and Sales of Assets. (a) The
Company will not, and will not permit any Restricted Subsidiary to (i)
consolidate with or be a party to a merger with any other corporation or (ii)
sell, lease or otherwise dispose of all or any substantial part (as defined in
paragraph (d) of this Section) of the assets of the Company and its Restricted
Subsidiaries, provided, however, that:
(1) any Restricted Subsidiary may merge or consolidate with or into any
other corporation so long as (i) in any merger or consolidation involving
the Company, the Company shall be the surviving or continuing corporation
and (ii) in any merger or consolidation involving a corporation other than
the Company, (x) the
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The Timberland Company Note Agreement
survivor shall be a Restricted Subsidiary and the Minority Interests in the
surviving corporation, expressed as a percentage of the net worth of such
surviving corporation after giving effect to such merger or consolidation,
would not exceed the lesser of (I) 25% and (II) 10% plus the Minority
Interests in such Restricted Subsidiary on the date of this Agreement or, if
the Restricted Subsidiary is acquired or designated after the date of this
Agreement, on the date of such acquisition or designation, and (y) aggregate
Tangible Minority Interests (as defined in paragraph (d) of this Section) in
all Restricted Subsidiaries after giving effect to such merger or
consolidation would not exceed 10% of Consolidated Tangible Net Worth;
(2) the Company may consolidate or merge with any other corporation if
(i) the surviving or continuing corporation is a corporation organized under
the laws of any state of the United States, (ii) at the time of such
consolidation or merger and after giving effect thereto no Default or Event
of Default shall have occurred and be continuing, and (iii) after giving
effect to such consolidation or merger the surviving corporation would be
permitted to incur at least $1.00 of additional Funded Debt under the
provisions of [Section]5.8(a)(3);
(3) any Restricted Subsidiary may sell, lease or otherwise dispose of
all or any substantial part of its assets to the Company or any Wholly-owned
Restricted Subsidiary;
(4) the Company or any Restricted Subsidiary may sell, transfer or
otherwise dispose of any Restricted Investment and any shares of stock in
any Unrestricted Subsidiary; and
(5) a Restricted Subsidiary may consolidate or merge with any other
corporation in a transaction permitted under the provisions of
[Section]5.13(c).
(b) The Company will not permit any Restricted Subsidiary to issue or
sell any shares of stock of any class (including as "stock" for the purposes of
this [Section]5.13, any warrants, rights or options to purchase or otherwise
acquire stock or other Securities exchangeable for or convertible into stock) of
such Restricted Subsidiary to any Person other than the Company or a
Wholly-owned Restricted Subsidiary, unless (i) such issue or sale does not
constitute a substantial part (as hereinafter defined) of the assets of the
Company and its Restricted Subsidiaries, and (ii) to the extent that (x) the
Minority Interests in such Restricted Subsidiary, expressed as a percentage of
the net worth of such Restricted Subsidiary after giving effect to such issuance
or sale would not exceed the lesser of (I) 25% and (II) 10% plus the Minority
Interests in such Restricted Subsidiary on the date of this Agreement or, if
such Restricted Subsidiary is acquired or designated after the date of this
Agreement, on the date of such acquisition or designation, and (y) aggregate
Tangible Minority Interests in all Restricted Subsidiaries after giving effect
to such issuance or sale would not exceed 10% of Consolidated Tangible Net
Worth.
(c) The Company will not sell, transfer or otherwise dispose of any
shares of stock in any Restricted Subsidiary (except to qualify directors) or
any Indebtedness of any
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The Timberland Company Note Agreement
Restricted Subsidiary, and will not permit any Restricted Subsidiary to sell,
transfer or otherwise dispose of (except to the Company or a Wholly-owned
Restricted Subsidiary) any shares of stock or any Indebtedness of any other
Restricted Subsidiary, unless:
(1) either (x) such sale, transfer or disposition is made within the
limitations of [Section] 5.13(b), or (y) simultaneously with such sale,
transfer, or disposition, all shares of stock and all Indebtedness
(excluding any trade receivables) owed by such Restricted Subsidiary at the
time owned by the Company and by every other Subsidiary shall be sold,
transferred or disposed of as an entirety;
(2) the Board of Directors of the Company shall have determined, as
evidenced by a resolution thereof, that such sale, transfer or disposition
is in the best interests of the Company;
(3) such stock and Indebtedness is sold, transferred or otherwise
disposed of to a Person, for consideration and on terms reasonably deemed by
the Board of Directors to be adequate and satisfactory, provided that (i)
the amount of any non-cash consideration received by the Company or a
Restricted Subsidiary shall be determined in good faith by the Board of
Directors of the Company, as evidenced by a certificate of the president or
any vice president of the Company setting forth in reasonable detail the
basis of such determination and delivered to the Note Purchasers, which
determination shall, upon the written request of the holder or holders of
not less than 25% of the unpaid principal amount of the Notes, be subject to
verification by an independent appraiser designated and compensated by the
Company and not objected to by such holders, and (ii) any non-cash
consideration will be deemed a Restricted Investment made by the Company or
such Restricted Subsidiary on the date of such sale, transfer or disposition
in the amount of such valuation;
(4) except in the case of transactions permitted by [Section] 5.13(b),
the Restricted Subsidiary being disposed of shall not have any continuing
investment in the Company or any other Restricted Subsidiary not being
simultaneously disposed of; and
(5) such sale or other disposition does not involve a substantial part
(as hereinafter defined) of the assets of the Company and its Restricted
Subsidiaries.
(d) As used in this [Section] 5.13:
(1) A sale, lease or other disposition of assets (other than Restricted
Investments and investments in Unrestricted Subsidiaries) shall be deemed to
be a "substantial part" of the assets of the Company and its Restricted
Subsidiaries only if the book value of such assets when added to the book
value of all other assets sold, leased or otherwise disposed of by the
Company and its Restricted Subsidiaries (other than Securitized Asset
Transactions and other transactions in the ordinary course of business)
during the same fiscal year, exceeds 15% of the Consolidated Net Tangible
Assets of the Company and its Restricted Subsidiaries determined as of the
end of the immediately preceding fiscal year or contributed more than 15% of
Net Income
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The Timberland Company Note Agreement
Available for Interest Charges, during the next preceding three fiscal years
taken as a whole. Sales or other realization on delinquent receivables
shall not be included in any computation of sales or other dispositions
hereunder. Sales of assets shall not be included in any computations under
this paragraph (d) to the extent that (x) the proceeds from such sale are
applied to prepay the Notes pursuant to [Section]2.2 hereof, (y) the
proceeds from such sale are applied to the voluntary prepayment of Funded
Debt, or (z) the proceeds of such sale are applied, within one year of
such sale, to the purchase of other property useful and to be used in the
business of the Company and its Restricted Subsidiaries and, pending such
application, are maintained by the Company or any Restricted Subsidiary in a
separate segregated account.
(2) The term "Tangible Minority Interests" shall mean, with respect to
any Restricted Subsidiary, the amount that bears the same relationship to
Minority Interests in such Subsidiary as the Consolidated Tangible Net Worth
of such Subsidiary bears to the net worth of such Subsidiary. For purposes
of this definition, the "Consolidated Tangible Net Worth" of a Restricted
Subsidiary shall be determined for such Subsidiary and its Restricted
Subsidiaries in accordance with the definitions set forth in [Section]8.1,
mutatis mutandis.
(3) "Securitized Asset Transaction" shall mean a sale or other transfer
by any of the Company and its Restricted Subsidiaries of receivables which
were produced in the ordinary course of business and not contingent upon any
performance or product guarantee on the part of the Company or any
Restricted Subsidiary, which sale or transfer does not involve the creation
of any recourse obligation in respect thereof on the part of the Company or
any Restricted Subsidiary (other than matters of title to, and the character
of, the receivables so sold or transferred).
Section 5.14. Guaranties. The Company will not and will not permit any
Restricted Subsidiary to become or be liable in respect of any Guaranty except
Guaranties by the Company and its Restricted Subsidiaries of the obligations of
any Person so long as the Company and/or the Restricted Subsidiary guaranteeing
such obligation could have incurred such obligation within the limits of this
Agreement, provided that such underlying obligation shall be deemed to have been
incurred by, and to be the continuing direct obligation of, the guarantor for
all purposes of this Agreement.
Section 5.15. Repurchase of Notes. Neither the Company nor any
Restricted Subsidiary or Affiliate, directly or indirectly, may repurchase or
make any offer to repurchase any Notes unless the offer has been made to
repurchase Notes, pro rata, from all holders of the Notes at the same time and
upon the same terms. In case the Company repurchases any Notes, such Notes
shall thereafter be canceled and no Notes shall be issued in substitution
therefor.
Section 5.16. Transactions with Affiliates. The Company will not, and
will not permit any Restricted Subsidiary to, enter into or be a party to, any
transaction or arrangement with any Affiliate (including without limitation, the
purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except
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The Timberland Company Note Agreement
in the ordinary course of and pursuant to the reasonable requirements of the
Company's or such Restricted Subsidiary's business and upon fair and reasonable
terms (as determined in good faith by the Board of Directors of the Company)
no less favorable to the Company or such Restricted Subsidiary than would obtain
in a comparable arm's-length transaction with a Person other than an Affiliate.
Section 5.17. Investments. The Company will not, and will not permit
any Restricted Subsidiary to, make any investments in or loans, advances or
extensions of credit to, any Person, except:
(a) investments, loans, advances and extensions of credit by the Company
and its Restricted Subsidiaries in a corporation which, after giving effect
to such investment, will be a Restricted Subsidiary;
(b) investments in commercial paper maturing in 270 days or less from
the date of issuance which, at the time of acquisition by the Company or any
Restricted Subsidiary, is accorded a rating of P-1 by Standard & Poor's
Corporation or a rating of A-1 by Moody's Investors Services, Inc.;
(c) investments in direct obligations issued or guaranteed by the full
faith and credit of the United States of America, maturing, except in the
case of investments made with security deposits of rental customers, in
twelve months or less from the date of acquisition thereof;
(d) investments in certificates of deposit maturing within one year from
the date of origin or other obligations (including repurchase agreements),
issued by a bank or trust company organized under the laws of the United
States or any state thereof, having capital, surplus and undivided profits
aggregating at least $250,000,000 and a long term deposit rating of A or
better from either Standard & Poor's Corporation or Moody's Investors
Service, Inc.;
(e) loans or advances not exceeding $1,000,000 in the aggregate in the
usual and ordinary course of business to officers, directors and employees
of the Company and its Restricted Subsidiaries;
(f) Investments in money market preferred stock, which, at the time of
acquisition by the Company or any Restricted Subsidiary, is accorded a
rating of AA or better by Standard & Poor's Corporation or a rating of Aa2
or better by Moody's Investors Services, Inc.;
(g) Investments in money market mutual funds having total assets
aggregating at least $1,000,000,000 or which invests primarily in assets
described in clauses (b), (c), (d) and (f) of this [Section] 5.17;
(h) Investments in demand deposits and endorsements for collection;
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<PAGE> 20
The Timberland Company Note Agreement
(i) Investments to the extent that the consideration therefor consists
of capital stock of the Company; and
(j) Restricted Investments, subject to the limitations of [Section]
5.11.
In valuing any investments, loans and advances for the purpose of
applying the limitations set forth in this [Section] 5.17 and [Section] 5.11
such investments, loans and advances shall be taken at the original cost
thereof, without allowance for any subsequent write-offs or appreciation or
depreciation therein, but less any amount repaid or recovered on account of
capital or principal.
For purposes of this [Section] 5.17, at any time when a corporation
becomes a Restricted Subsidiary, all investments of such corporation at such
time shall be deemed to have been made by such corporation, as a Restricted
Subsidiary, at such time.
Section 5.18. Termination of Pension Plans. The Company will not and
will not permit any Subsidiary to permit any employee benefit plan maintained by
it to be terminated in a manner which could result in the imposition of a Lien
on any property of the Company or any Subsidiary pursuant to Section 4068 of the
Employee Retirement Income Security Act of 1974, as amended, if the incurrence
of such Lien would not be permitted by [Section] 5.10.
Section 5.19. Reports and Rights of Inspection. The Company will keep,
and will cause each Subsidiary to keep, proper books of record and account in
which full and correct entries will be made of all dealings or transactions of
or in relation to the business and affairs of the Company or such Subsidiary, in
accordance with generally accepted accounting principles consistently applied
(except for changes disclosed in the financial statements furnished to you
pursuant to this [Section] 5.19 and concurred in by the independent public
accountants referred to in [Section] 5.19(b) hereof), and will furnish to you so
long as you are the holder of any Note and to each other institutional holder of
the then outstanding Notes (in duplicate if so specified below or otherwise
requested):
(a) Quarterly Statements. As soon as available and in any event within
55 days after the end of each quarterly fiscal period (except the last) of
each fiscal year, duplicate copies of:
(1) consolidated and consolidating balance sheets of the Company
and its Restricted Subsidiaries and of the Company and its consolidated
Subsidiaries as of the close of such quarter setting forth, in the case
of such consolidated statements, in comparative form the amount for the
end of the preceding fiscal year,
(2) consolidated and consolidating statements of income of the
Company and its Restricted Subsidiaries and of the Company and its
consolidated Subsidiaries for such quarterly period, setting forth, in
the case of such consolidated statements, in comparative form the
amount for the corresponding period of the preceding fiscal year, and
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The Timberland Company Note Agreement
(3) consolidated statements of cash flows of the Company and its
Restricted Subsidiaries and of the Company and its consolidated
Subsidiaries for the portion of the fiscal year ending with such
quarter, setting forth in comparative form the amount for the
corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and correct, by an
authorized financial officer of the Company, provided that so long as the
Company shall file a quarterly report on Form 10-Q or any similar form with
the Securities and Exchange Commission or any successor agency which
contains the information set forth in this paragraph (a), the requirements
of this paragraph (a) shall be satisfied by forwarding Form 10-Q to the
holders of the Notes within 55 days after the end of such quarterly fiscal
period but, in any event, within five days of filing such Form 10-Q with the
Securities and Exchange Commission, and provided, further that so long as
the Unrestricted Subsidiaries of the Company taken as a whole do not
constitute a Significant Subsidiary, the Company shall not be required to
deliver to you financial statements of the Company and its Restricted
Subsidiaries referred to in paragraphs (1), (2) and (3) of this
[Section] 5.19(a);
(b) Annual Statements. As soon as available and in any event within 110
days after the close of each fiscal year of the Company, duplicate copies
of:
(1) consolidated and consolidating balance sheets of the Company
and its Restricted Subsidiaries and of the Company and its consolidated
Subsidiaries as of the close of such fiscal year, and
(2) consolidated and consolidating statements of income and
stockholders' equity and cash flows of the Company and its Restricted
Subsidiaries and of the Company and its consolidated Subsidiaries for
such fiscal year,
in each case setting forth in comparative form the consolidated figures for
the preceding fiscal year, all in reasonable detail and accompanied by an
opinion thereon of a firm of independent public accountants of recognized
national standing selected by the Company to the effect that the
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied (except for
changes in application in which such accountants concur) and present
fairly the financial condition of the companies reported on and that the
examination of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing standards and
accordingly, includes such tests of the accounting records and such other
auditing procedures as were considered necessary in the circumstances,
provided that so long as the Company shall file an annual report on Form
10-K or any similar form with the Securities and Exchange Commission or any
successor agency which contains the information set forth in this paragraph
(b), the requirements of this paragraph (b) shall be satisfied by forwarding
Form 10-K to the holders of the Notes within 110 days after the end of
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The Timberland Company Note Agreement
such fiscal year but, in any event, within five days of filing such Form
10-K with the Securities and Exchange Commission, and provided further that
so long as the Unrestricted Subsidiaries of the Company taken as a whole do
not constitute a Significant Subsidiary, the Company shall not be required
to deliver to you financial statements of the Company and its
Restricted Subsidiaries referred to in paragraphs (1) and (2) of this
[Section] 5.19(b);
(c) Audit Reports. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of the
Company or any Restricted Subsidiary and any management letter received from
such accountants;
(d) SEC and Other Reports. Promptly upon their becoming available, one
copy of each financial statement, report, notice or proxy statement sent by
the Company to stockholders generally and of each regular or periodic
report, and any registration statement or prospectus filed by the Company or
any Subsidiary with any securities exchange or the Securities and Exchange
Commission or any successor agency, and copies of any orders in any
proceedings to which the Company or any of its Subsidiaries is a party,
issued by any governmental agency, Federal or state, having jurisdiction
over the Company or any of its Subsidiaries;
(e) Requested Information. With reasonable promptness, such other data
and information as you or any such institutional holder may reasonably
request, provided, that with respect to any data and information obtained by
you as a result of any request pursuant to this paragraph (e), you agree
that, to the extent that such data and information has not theretofore
otherwise been disclosed by or as authorized by the Company in such a manner
as to render such data and information no longer confidential, you will use
reasonable efforts (consistent with your established procedures) to
reasonably maintain (and cause persons referred to in (i) below to maintain)
the confidential nature of the data and information therein contained;
provided, that anything herein contained to the contrary notwithstanding,
you may, to the extent necessary, disclose or disseminate such data and
information to: (i) your employees, agents, attorneys, and accountants who
would ordinarily have access to such data and information in the normal
course of the performance of their duties; (ii) such third parties as you
may, in your discretion, deem reasonably necessary or desirable in
connection with or in response to (x) compliance with any law, ordinance or
governmental order, regulation, rule, policy, subpoena, investigation,
regulatory authority request or request, or (y) any order, decree, judgment,
subpoena, notice of discovery or similar ruling or pleading issued, filed,
served or purported on its face to be issued, filed or served (A) by or
under authority of any court, tribunal, arbitration board of any
governmental or industry agency, commission, authority, board or similar
entity or (B) in connection with any proceeding, case or matter pending (or
on its face purported to be pending) before any court, tribunal, arbitration
board or any governmental agency, commission, authority, board or similar
entity; (iii) any prospective purchaser, securities broker or dealer or
investment banker in connection with the resale or proposed resale by you of
any portion of the Notes who shall agree in writing to accept such
information subject to
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The Timberland Company Note Agreement
the provisions of this paragraph (e); (iv) any Person holding your debt
Securities who shall have requested to inspect such information subject to
the provisions of this paragraph (e); (v) the National Association of
Insurance Commissioners; and (vi) any entity utilizing such information
to rate or classify your debt or equity Securities or to report to the
public concerning the industry of which you are a part; and, provided
further, that you shall not be liable to the Company or any other Person for
damages for any failure by you, despite your reasonable efforts so to do, to
comply with the provisions of this paragraph (e).
(f) Officers' Certificates. Within the periods provided in paragraphs
(a) and (b) above, a certificate of an authorized financial officer of the
Company stating that he has reviewed the provisions of this Agreement and
setting forth: (i) the information and computations (in sufficient detail)
required in order to establish whether the Company was in compliance with
the requirements of [Section] 5.5 through [Section] 5.18, inclusive, at the
end of the period covered by the financial statements then being furnished,
and (ii) whether there existed as of the date of such financial statements
and whether, to the best of his knowledge, there exists on the date of the
certificate or existed at any time during the period covered by such
financial statements any Default or Event of Default and, if any such
condition or event exists on the date of the certificate, specifying the
nature and period of existence thereof and the action the Company is taking
and proposes to take with respect thereto;
(g) Accountant's Certificates. Within the period provided in paragraph
(b) above, a certificate of the accountants who render an opinion with
respect to such financial statements, stating that they have reviewed this
Agreement and stating further, whether in making their audit, such
accountants have become aware of any Default or Event of Default under any
of the terms or provisions of [Section] 5.6 through [Section] 5.14,
inclusive, [Section] 5.17 or [Section] 5.18 of this Agreement insofar as
any such terms or provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists, specifying
the nature and period of existence thereof; and
(h) Unrestricted Subsidiaries. Within the respective periods provided
in paragraph (b) above, financial statements of the character and for the
dates and periods as in said paragraph (b) provided covering Unrestricted
Subsidiaries on a consolidated and consolidating basis.
Without limiting the foregoing, the Company will permit you, so long as
you are the holder of any Note, and each institutional holder of the then
outstanding Notes (or such Persons as either you or such holder may designate)
to visit and inspect, under the Company's guidance, any of the properties of the
Company or any Subsidiary, to examine all their books of account, records,
reports and other papers, to make copies and extracts therefrom, and to discuss
their respective affairs, finances and accounts with their respective officers,
employees, and independent public accountants (and by this provision the Company
authorizes said accountants to discuss with you the finances and affairs of the
Company and its Subsidiaries) all at such reasonable times and as often as may
be reasonably requested.
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The Timberland Company Note Agreement
The Company shall not be required to pay or reimburse you or any such holder for
expenses which you or any such holder may incur in connection with any such
visitation or inspection.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 6.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" as the term is used herein:
(a) Default shall occur in the payment of interest on any Note when the
same shall have become due and such default shall continue for more than
five days; or
(b) Default shall occur in the making of any payment of the principal of
any Note or the premium thereon at any date fixed for prepayment; or
(c) Default shall occur in the making of any other payment of the
principal of any Note or the premium thereon at the expressed or any
accelerated maturity date; or
(d) Default shall be made in the payment of the principal of or interest
on any Indebtedness of the Company or any Restricted Subsidiary for borrowed
money in an aggregate principal amount in excess of $1,000,000, as and when
the same shall become due and payable by the lapse of time, by declaration,
by call for redemption or otherwise, and such default shall continue beyond
the period of grace, if any, allowed with respect thereto; or
(e) Default or the happening of any event shall occur under any
indenture, agreement, or other instrument under which any Indebtedness of
the Company or any Restricted Subsidiary for borrowed money in an aggregate
principal amount in excess of $1,000,000 may be issued and such default or
event shall continue for a period of time sufficient to permit the
acceleration of the maturity of any Indebtedness of the Company or any
Restricted Subsidiary outstanding thereunder; or
(f) Default shall occur in the observance or performance of any covenant
or agreement contained in [Section] 5.6 through [Section] 5.15, inclusive,
or [Section] 5.17 hereof; or
(g) Default shall occur in the observance or performance of any other
provision of this Agreement which is not remedied within 30 days after
notice thereof to the Company by the holder of any Note; or
(h) If any representation or warranty made by the Company herein, or
made by the Company in any statement or certificate furnished by the
Company in connection with the consummation of the issuance and delivery
of the Notes or furnished by the Company pursuant hereto, is untrue in any
material respect as of the date of the issuance or making thereof; or
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The Timberland Company Note Agreement
(i) The Company or any Significant Subsidiary which is a Restricted
Subsidiary becomes insolvent or bankrupt, is generally not paying its debts
as they become due or makes an assignment for the benefit of creditors, or
the Company or any Significant Subsidiary which is a Restricted Subsidiary
causes or suffers an order for relief to be entered with respect to it under
applicable Federal bankruptcy law or applies for or consents to the
appointment of a custodian, trustee or receiver for the Company or such
Significant Subsidiary which is a Restricted Subsidiary or for the major
part of the property of either; or
(j) A custodian, trustee or receiver is appointed for the Company or any
Significant Subsidiary which is a Restricted Subsidiary or for the major
part of the property of either and is not discharged within 30 days after
such appointment; or
(k) Final judgment or judgments for the payment of money aggregating in
excess of $100,000 is or are outstanding against the Company or any
Significant Subsidiary which is a Restricted Subsidiary or against any
property or assets of either and any one of such judgments has remained
unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period
of 30 days from the date of its entry; or
(l) Bankruptcy, reorganization, arrangement or insolvency proceedings,
or other proceedings for relief under any bankruptcy or similar law or
laws for the relief of debtors, are instituted by or against the Company or
any Significant Subsidiary which is a Restricted Subsidiary and, if
instituted against the Company or any Significant Subsidiary which is a
Restricted Subsidiary, are consented to or are not dismissed within 60 days
after such institution.
Section 6.2. Notice to Holders. When any Event of Default described in
the foregoing [Section] 6.1 has occurred, or if the holder of any Note or of any
other evidence of Indebtedness of the Company gives any notice or takes any
other action with respect to a claimed default, the Company agrees to give
prompt notice of such event to all holders of the Notes then outstanding, such
notice to be in writing and sent by registered or certified mail or by telegram.
Section 6.3. Acceleration of Maturities. When any Event of Default
described in paragraph (a), (b) or (c) of [Section] 6.1 has happened and is
continuing, any holder of any Note may declare its Notes to be, and its Notes
shall thereupon become, forthwith due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived. When any Event of Default described in paragraphs (a) through (h),
inclusive, and (k) of said [Section] 6.1 has happened and is continuing, the
holder or holders of 25% or more of the principal amount of Notes at the time
outstanding may, by notice in writing sent by registered or certified mail to
the Company, declare the entire principal and all interest accrued on all Notes
to be, and all Notes shall thereupon become, forthwith due and payable, without
any presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived. When any Event of Default described in paragraphs (i),
(j) and (l) of [Section] 6.1 has occurred, then all outstanding Notes shall
immediately become due and payable without presentment, demand or notice of any
kind.
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The Timberland Company Note Agreement
Upon any or all Notes becoming due and payable as a result of any Event of
Default as aforesaid, the Company will forthwith pay to the holders of such
Notes the entire principal and interest accrued on such Notes and, with respect
to a payment made as a result of an Event of Default described in paragraph (a),
(b), (c) or (f) of [Section]6.1, and to the extent permitted by law, liquidated
damages for the loss of the bargain evidenced hereby in an amount equal to the
Make-Whole Amount. No course of dealing on the part of any Noteholder nor any
delay or failure on the part of any Noteholder to exercise any right shall
operate as a waiver of such right or otherwise prejudice such holder's rights,
powers and remedies. The Company further agrees, to the extent permitted
by law, to pay to the holder or holders of the Notes all costs and expenses
incurred by them in the collection of any Notes upon any default hereunder or
thereon, including reasonable compensation to such holder's or holders'
attorneys for all services rendered in connection therewith.
Section 6.4. Rescission of Acceleration. The provisions of [Section]
6.3 are subject to the condition that if the principal of and accrued interest
on all or any outstanding Notes have been declared immediately due and payable
by reason of the occurrence of any Event of Default described in paragraphs (a)
through (h), inclusive, and (k) of [Section] 6.1, the holders of 51% in
aggregate principal amount of the Notes then outstanding may, by written
instrument filed with the Company, rescind and annul such declaration and the
consequences thereof, provided that at the time such declaration is annulled
and rescinded:
(a) no judgment or decree has been entered for the payment of any monies
due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal,
interest or premium on the Notes which has become due and payable solely by
reason of such declaration under [Section] 6.3) shall have been duly paid;
and
(c) each and every other Default and Event of Default shall have been
made good, cured or waived pursuant to [Section] 7.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
Section 7.1. Consent Required. (a) Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company shall have obtained
the consent in writing of the holders of at least 51% in aggregate principal
amount of outstanding Notes; provided that without the written consent of the
holders of all of the Notes then outstanding, no such waiver, modification,
alteration or amendment shall be effective (i) which will change the time of
payment of the principal of or the interest on any Note or change the principal
amount thereof or change the rate of interest thereon, or (ii) which will change
any of the provisions
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The Timberland Company Note Agreement
with respect to optional prepayments, or (iii) which will change the percentage
of holders of the Notes required to consent to any such amendment, alteration
or modification or any of the provisions of this [Section] 7 or [Section] 6.
(b) So long as any outstanding Notes are owned by you, the Company will
not solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Agreement or the Notes unless each
holder of the Notes (irrespective of the amount of Notes then owned by it)
shall be informed thereof by the Company and shall be afforded the opportunity
of considering the same and shall be supplied by the Company with sufficient
information to enable it to make an informed decision with respect thereto.
Executed or true and correct copies of any waiver or consent effected pursuant
to the provisions of this [Section] 7.1 shall be delivered by the Company to
each holder of outstanding Notes forthwith following the date on which the same
shall have been executed and delivered by the holder or holders of the
requisite percentage of outstanding Notes. The Company will not, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any holder of the
Notes as consideration for or as an inducement to the entering into by any
holder of the Notes of any waiver or amendment of any of the terms and
provisions of this Agreement unless such remuneration is concurrently paid, on
the same terms, ratably to the holders of all of the Notes then outstanding,
provided however, that if any holder of Notes fails to consent to a transaction
which will result in a violation of [Section] 5.13 hereof, and as a result of
such failure the Notes of such holder are prepaid pursuant to [Section] 2.3
hereof, such holder shall not be entitled to any remuneration pursuant to this
[Section] 7.1(b) in connection with the requested consent to such transaction.
Section 7.2. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation
not expressly amended or waived or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 8.1. Definitions. Unless the context otherwise requires, the
terms hereinafter set forth when used herein shall have the following meanings
and the following definitions shall be equally applicable to both the singular
and plural forms of any of the terms herein defined:
"Affiliate" shall mean any Person (other than a Restricted Subsidiary)
(i) which directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or (iii) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the
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The Timberland Company Note Agreement
direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Capitalized Lease" shall mean any lease the obligation for Rentals with
respect to which is required to be capitalized on a balance sheet of the lessee
in accordance with generally accepted accounting principles.
"Capitalized Rentals" shall mean as of the date of any determination the
amount at which the aggregate Rentals due and to become due under all
Capitalized Leases under which the Company or any Restricted Subsidiary is a
lessee would be reflected as a liability on a consolidated balance sheet of the
Company and its Restricted Subsidiaries.
"Consolidated Current Assets" and "Consolidated Current Liabilities" shall
mean such assets and liabilities of the Company and its Restricted Subsidiaries
on a consolidated basis as shall be determined in accordance with generally
accepted accounting principles to constitute current assets and current
liabilities (including in current liabilities, in any event, Guaranties of
current liabilities of others), respectively.
"Consolidated Net Income" for any period shall mean the gross revenues of
the Company and its Restricted Subsidiaries for such period less all expenses
and other proper charges (including taxes on income), determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied and after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) any gains or losses on the sale or other disposition of investments
or fixed or capital assets, to the extent any such gain or loss constitutes
an "extraordinary item" under generally accepted accounting principles, and
any taxes on such excluded gains and any tax deductions or credits on
account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Restricted Subsidiary accrued prior
to the date it became a Restricted Subsidiary;
(d) net earnings and losses of any corporation (other than a Restricted
Subsidiary), substantially all the assets of which have been acquired in any
manner, realized by such other corporation prior to the date of such
acquisition;
(e) net earnings and losses of any corporation (other than a Restricted
Subsidiary) with which the Company or a Restricted Subsidiary shall have
consolidated or which shall have merged into or with the Company or a
Restricted Subsidiary prior to the date of such consolidation or merger;
(f) net earnings of any business entity (other than a Restricted
Subsidiary) in which the Company or any Restricted Subsidiary has an
ownership interest unless such
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The Timberland Company Note Agreement
net earnings shall have actually been received by the Company or such
Subsidiary in the form of cash distributions;
(g) any portion of the net earnings of any Restricted Subsidiary which
for any reason is unavailable for payment of dividends to the Company or any
other Restricted Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or write-up of
assets;
(i) any deferred or other credit representing any excess of the equity
in any Subsidiary at the date of acquisition thereof over the amount
invested in such Subsidiary;
(j) any gain arising from the acquisition of any Securities of the
Company or any Restricted Subsidiary; and
(k) any reversal of any contingency reserve, except to the extent that
provision for such contingency reserve shall have been made from income
arising during such period.
"Consolidated Net Tangible Assets" shall mean as of the date of any
determination thereof the total amount of all Tangible Assets of the Company
and its Restricted Subsidiaries after deducting all Restricted Investments and
all items which in accordance with generally accepted accounting principles
would be included on the liability side of a consolidated balance sheet, except
deferred income taxes, deferred investment tax credits, capital stock of any
class, surplus, and Funded Debt.
"Consolidated Tangible Net Worth" shall mean, as of the date of any
determination thereof, Consolidated Net Tangible Assets less all outstanding
Funded Debt, deferred income taxes, deferred investment tax credits and
Minority Interests, all determined in accordance with generally accepted
accounting principles consolidating the Company and its Restricted
Subsidiaries.
"Current Debt" as of the date of any determination thereof shall mean (i)
all Indebtedness for money borrowed other than Funded Debt, (ii) all
Indebtedness with respect to documentary letters of credit and bankers'
acceptances, and (iii) Guaranties of Current Debt of others. "Consolidated"
when used as a prefix to any Current Debt shall mean the aggregate amount of
all such Current Debt of the Company and its Restricted Subsidiaries on a
consolidated basis eliminating intercompany items.
"Default" shall mean any event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in [Section] 6.1.
"Fixed Charges" for any period shall mean on a consolidated basis the sum
of (i) all Rentals (other than Rentals on Capitalized Leases) payable during
such period by the
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The Timberland Company Note Agreement
Company and its Restricted Subsidiaries, and (ii) all Interest Charges during
such period on all Indebtedness (including the interest component of Rentals on
Capitalized Leases) of the Company and its Restricted Subsidiaries.
"Funded Debt" of any Person shall mean (i) all Indebtedness for borrowed
money or which has been incurred in connection with the acquisition of assets
in each case having a final maturity of one or more than one year from the date
of origin thereof (or which is renewable or extendible at the option of the
obligor for a period or periods of one or more than one year from the date of
origin, but excluding revolving lines of credit renewable or extendible at the
option of the obligor for a period or periods of one or more than one year from
the date of origin except to the extent such option shall have been exercised),
including all payments in respect thereof that are required to be made within
one year from the date of any determination of Funded Debt, whether or not
included in Consolidated Current Liabilities, (ii) all Capitalized Rentals, and
(iii) all Guaranties of Funded Debt of others. "Consolidated" when used as a
prefix to any Funded Debt shall mean the aggregate amount of all such Funded
Debt of the Company and its Restricted Subsidiaries on a consolidated basis
eliminating intercompany items.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent
or otherwise, by such Person: (i) to purchase such Indebtedness or obligation
or any property or assets constituting security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of such Indebtedness or
obligation, (y) to maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase or payment of
such Indebtedness or obligation, or (iii) to lease property or to purchase
Securities or other property or services primarily for the purpose of assuring
the owner of such Indebtedness or obligation of the ability of the primary
obligor to make payment of the Indebtedness or obligation, or (iv) otherwise to
assure the owner of the Indebtedness or obligation of the primary obligor
against loss in respect thereof. For the purposes of all computations made
under this Agreement, a Guaranty in respect of any Indebtedness for borrowed
money shall be deemed to be Indebtedness equal to the principal amount of such
Indebtedness for borrowed money which has been guaranteed, and a Guaranty in
respect of any other obligation or liability or any dividend shall be deemed to
be Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend.
"Indebtedness" of any Person shall mean and include all obligations of
such Person which in accordance with generally accepted accounting principles
shall be classified upon a balance sheet of such Person as liabilities of such
Person, and in any event shall include all (i) obligations of such Person for
borrowed money or which has been incurred in connection with the acquisition of
property or assets, (ii) obligations secured by any Lien upon property or
assets owned by such Person, even though such Person has not assumed or
become liable for the payment of such obligations, (iii) obligations created or
arising under
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The Timberland Company Note Agreement
any conditional sale or other title retention agreement with respect to property
acquired by such Person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property, and (iv) Capitalized Rentals under
any Capitalized Lease. For the purpose of computing the Indebtedness of any
Person, there shall be excluded any particular Indebtedness to the extent that,
upon or prior to the maturity thereof, there shall have been deposited with the
proper depository in trust the necessary funds (or evidences of such
Indebtedness, if permitted by the instrument creating such Indebtedness) for the
payment, redemption or satisfaction of such Indebtedness; and thereafter such
funds and evidences of Indebtedness so deposited shall not be included in any
computation of the assets of such Person.
"Interest Charges" for any period shall mean all interest and all
amortization of debt discount and expense on any particular Indebtedness for
which such calculations are being made. Computations of Interest Charges on a
pro forma basis for Indebtedness having a variable interest rate shall be
calculated at the rate in effect on the date of any determination.
"Lien" shall mean any mortgage, pledge, security interest, lien,
encumbrance or other charge of any kind on any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Make-Whole Amount" as at any date a payment thereof is due (the "payment
date") in connection with a payment or prepayment in respect of the Notes shall
mean the excess of (i) the present value as at the payment date of the
remaining principal and interest payments to become due in respect of that
portion of the principal amount of the Notes to be so paid or prepaid,
discounted semiannually at an annual rate which is equal to the Treasury Rate
plus 0.50% over (ii) the aggregate principal amount of the Notes then to be
paid or prepaid plus accrued interest on such principal amount. To the extent
that the Treasury Rate plus 0.50% at the time of determination of the
Make-Whole Amount is equal to or higher than 7.16%, the Make-Whole Amount is
zero. For purposes of any determination of the Make-Whole Amount:
(a) The applicable "Treasury Rate" means the mean of the yields to
maturity of customarily-issued United States Treasury obligations with a
constant maturity (as compiled by and published in the United States Federal
Reserve Bulletin H.15(519) or its successor publication for each of the two
weeks immediately preceding the payment date) most nearly equal to the
remaining Weighted Average Life to Maturity of the Notes as at the payment
date. If no maturity exactly corresponding to such remaining Weighted
Average Life to Maturity shall appear therein, yields for the two most
closely corresponding published maturities shall be calculated pursuant to
the foregoing sentence and the Treasury 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, the Treasury Rate in respect of such
determination date shall be calculated pursuant to the next preceding
sentence on the basis of the arithmetic mean of the arithmetic means 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
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The Timberland Company Note Agreement
preceding the payment date, for the actively traded U.S. Treasury security
or securities with a maturity or maturities most closely corresponding to
such 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.
(b) "Weighted Average Life to Maturity" with respect to the Notes means,
as at the payment date, the number of years obtained by dividing the then
Remaining Dollar-years of the Notes by the outstanding principal amount of
the Notes. The term "Remaining Dollar-years" of the Notes means the product
obtained by (i) multiplying (A) the amount of each then remaining required
principal repayment (including repayment at final maturity), by (B) the
number of years (calculated to the nearest one-twelfth) which will elapse
between the time of determination and the date such required repayment is
due, and (ii) totaling all the products obtained in the computations
described in clause (i).
"Minority Interests" shall mean any shares of stock of any class of a
Restricted Subsidiary (other than directors' qualifying shares as required by
law, and other than shares of the Class A Stock of The Outdoor Footwear Company
so long as the number of outstanding shares of such Class A Stock do not exceed
50,000 at any time and the certificate of incorporation of The Outdoor Footwear
Company is not amended after the date hereof to increase the rights of the
holders of Class A Stock in the event of a liquidation of The Outdoor Footwear
Company) that are not owned by the Company and/or one or more of its Restricted
Subsidiaries. Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary liquidating value
of such preferred stock, whichever is greater, and by valuing Minority Interests
constituting common stock at the book value of capital and surplus applicable
thereto adjusted, if necessary, to reflect any changes from the book value of
such common stock required by the foregoing method of valuing Minority Interests
in preferred stock.
"Net Income Available for Fixed 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), (ii) all provisions for any Federal,
state or other income taxes made by the Company and its Restricted Subsidiaries
during such period and (iii) Fixed Charges of the Company and its Restricted
Subsidiaries during such period.
"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), (ii) all provisions for any
Federal, state or other income taxes made by the Company and its Restricted
Subsidiaries during such period and (iii) Interest Charges during such period,
determined on a pro forma basis giving effect as of the beginning of such
period (x) to the disposition during such period of assets constituting a
substantial part of the assets of the Company and its Restricted Subsidiaries
taken as a whole, (y) to the acquisition or disposition during such period of
all or substantially all of the stock or assets of an entity or assets
consisting of a line of business of an entity, and (z) to the acquisition,
designation or disposition during such period of a Restricted Subsidiary;
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The Timberland Company Note Agreement
provided, however, that any such determination of the amount to be included in
Consolidated Net Income on a pro forma basis taking into account the earnings
of an entity, the stock or assets of which have been acquired by the Company or
a Restricted Subsidiary, shall include only such amounts as are based on the
actual historical financial results of such entity during such period,
determined in accordance with generally accepted accounting principles.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political
subdivision thereof.
"Pro Forma Interest Charges" for any period shall mean, as of the date of
any determination thereof, the maximum aggregate amount of Interest Charges
which would have become payable by the Company and its Restricted Subsidiaries
in such period determined on a pro forma basis giving effect as of the
beginning of such period to the incurrence of any Funded Debt (including
Capitalized Rentals) and the retirement of outstanding Funded Debt or
termination of any Capitalized Leases.
"Rentals" shall mean and include all fixed rents (including as such all
payments which the lessee is obligated to make to the lessor on termination of
the lease or surrender of the property) payable by the Company or a Restricted
Subsidiary, as lessee or sublessee under a lease of real or personal property,
but shall be exclusive of any amounts required to be paid by the Company or a
Restricted Subsidiary (whether or not designated as rents or additional rents)
on account of maintenance, repairs, insurance, taxes and similar charges.
Fixed rents under any so-called, "percentage leases" shall be computed solely
on the basis of the minimum rents, if any, required to be paid by the lessee
regardless of sales volume or gross revenues.
"Restricted Investments" shall mean all investments, loans and advances
existing on or made after the date of this Agreement of the Company and its
Restricted Subsidiaries other than investments, loans or advances permitted by
paragraphs (a) through (i), inclusive, of [Section] 5.17 hereof. The Company
and its Restricted Subsidiaries shall be deemed to have made a Restricted
Investment (i) to the extent of the equity of the Company and its Restricted
Subsidiaries in the net assets of a Restricted Subsidiary which has become an
Unrestricted Subsidiary on the date that the Restricted Subsidiary becomes an
Unrestricted Subsidiary and (ii) to the extent of the value of any non-cash
consideration received by the Company and its Restricted Subsidiaries in
connection with a sale of stock or Indebtedness permitted by [Section]
5.13(c)(3) hereof.
"Restricted Subsidiary" shall mean any Subsidiary which is designated as a
Restricted Subsidiary on Annex A of the Closing Certificate or any other
Subsidiary (i) which is organized under the laws of the United States or any
State thereof, Canada, Cayman Islands, the Dominican Republic, France, Puerto
Rico, the United Kingdom, West Germany, Australia, Austria, Belgium, Denmark,
Finland, Republic of Ireland, Italy, Luxembourg, Netherlands, New Zealand,
Norway, Portugal, Spain, Sweden, Switzerland, and U.S. Virgin Islands; (ii)
which conducts substantially all of its business and has substantially all of
its assets within the United States, Canada, the Dominican Republic, France,
Puerto Rico,
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The Timberland Company Note Agreement
the United Kingdom, West Germany, Australia, Austria, Belgium, Denmark, Finland,
Republic of Ireland, Italy, Luxembourg, Netherlands, New Zealand, Norway,
Portugal, Spain, Sweden, Switzerland, and U.S. Virgin Islands; (iii) of which
more than 75% (by number of votes) of the Voting Stock is owned by the Company
and/or one or more Restricted Subsidiaries; and (iv) which is designated a
Restricted Subsidiary at the time it first becomes a Subsidiary, provided, the
Board of Directors of the Company may designate any Unrestricted Subsidiary as a
Restricted Subsidiary but only if (i) after giving effect to such designation
the Company and its Restricted Subsidiaries could incur $1 of additional
Consolidated Funded Debt and (ii) at the time of such designation and after
giving effect thereto no Default or Event of Default shall have occurred and be
continuing. Any Subsidiary which is designated by the Board of Directors of the
Company as a Restricted Subsidiary after having been an Unrestricted Subsidiary
may not be redesignated an Unrestricted Subsidiary. The Company shall give
prompt notice to the Noteholders of designation of a Restricted Subsidiary.
"Security" shall have the same meaning as in Section 2(1) of the Securities
Act of 1933, as amended.
"Significant Subsidiary" shall mean any Subsidiary which meets any of the
following conditions:
(1) The Company's and its other Subsidiaries' investments in and
advances to the Subsidiary exceed 10 percent of the Consolidated Tangible
Net Worth of the Company and its Subsidiaries as of the end of the most
recently completed fiscal year; or
(2) The Company's and its other Subsidiaries' proportionate share of the
Consolidated Tangible Net Worth of the Subsidiary exceeds 10 percent of the
Consolidated Tangible Net Worth of the Company and its Subsidiaries as of
the end of the most recently completed fiscal year; or
(3) The Company's and its other Subsidiaries' equity in the income from
continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principle of the Subsidiary
exceeds 10 percent of such income of the Company and its Subsidiaries
consolidated for the most recently completed fiscal year.
"Specified Debt" shall mean, without duplication, any Indebtedness of
Restricted Subsidiaries which Indebtedness is permitted by [Section] 5.8(a)(5)
hereof and any Indebtedness of the Company secured by Liens permitted by
[Section] 5.10(j) hereof.
The term "subsidiary" shall mean, as to any particular parent corporation,
any corporation of which more than 50% (by number of votes) of the Voting Stock
shall be owned by such parent corporation and/or one or more corporations which
are themselves subsidiaries of such parent corporation. The term "Subsidiary"
shall mean a subsidiary of the Company.
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The Timberland Company Note Agreement
"Tangible Assets" shall mean as of the date of any determination thereof,
the total amount of all assets of the Company and its Restricted Subsidiaries
(less depreciation, depletion and other properly deductible valuation reserves)
after deducting good will, patents, trade names, trade marks, copyrights,
franchises, experimental expense, organization expense, unamortized debt
discount and expense, deferred assets other than prepaid insurance and prepaid
taxes, the excess of cost of shares acquired over book value of related assets
and such other assets as are properly classified as "intangible assets" in
accordance with generally accepted accounting principles.
"Total Debt" of the Company and its Restricted Subsidiaries as at any date
shall mean the sum of (i) Consolidated Funded Debt of the Company and its
Restricted Subsidiaries as at such date, plus (ii) the Average Outstanding
during the applicable Low Period. For purposes of this definition:
(a) "Average Outstanding" shall mean the average of the unpaid principal
amounts of Consolidated Current Debt of the Company and its Restricted
Subsidiaries outstanding at the close of business on each day within a
period of 30 consecutive days; and
(b) "Low Period" shall mean the period of 30 consecutive days for which
Average Outstanding is the lowest of any period of 30 consecutive days
during the period of 15 consecutive months ending with the date of
determination of Total Debt.
"Total Equity" as at any date shall mean stockholders' equity determined
in accordance with generally accepted accounting principles consolidating the
Company and its Restricted Subsidiaries.
"Unrestricted Subsidiary" shall mean any Subsidiary which is not a
Restricted Subsidiary; provided, that the Board of Directors may designate any
Restricted Subsidiary as an Unrestricted Subsidiary but only if (i) the
Subsidiary so designated shall then own no Funded Debt or capital stock of any
Restricted Subsidiary, (ii) after giving effect to such designation, the
Company and its Restricted Subsidiaries could issue $1 of additional
Consolidated Funded Debt and (iii) at the time of such designation and after
giving effect thereto no Default or Event of Default shall have occurred and be
continuing. Any Subsidiary which is designated by the Board of Directors of
the Company as an Unrestricted Subsidiary after having been a Restricted
Subsidiary may not be redesignated a Restricted Subsidiary. The Company shall
give prompt notice to the Noteholders of any designation of an Unrestricted
Subsidiary.
"Voting Stock" shall mean Securities of any class or classes, the holders
of which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
"Wholly-owned" when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares and, in the case of The Outdoor
Footwear Company, Class A
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The Timberland Company Note Agreement
Stock so long as such Class A Stock is excluded from the definition of "Minority
Interests") are owned by the Company and its Wholly-owned Subsidiaries.
Section 8.2. Accounting Principles. Where the character or amount of
any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in
accordance with generally accepted accounting principles, to the extent
applicable, except where such principles are inconsistent with the requirements
of this Agreement.
Section 8.3. Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
SECTION 9. MISCELLANEOUS.
Section 9.1. Registered Notes. The Company shall cause to be kept at
its principal office a register for the registration and transfer of the Notes
(hereinafter called the "Note Register"), and the Company will register or
transfer or cause to be registered or transferred, as hereinafter provided and
under such reasonable regulations as it may prescribe, any Note issued pursuant
to this Agreement.
At any time and from time to time the registered holder of any Note which
has been duly registered as hereinabove provided may transfer such Note upon
surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or its attorney duly authorized in writing.
The Person in whose name any registered Note shall be registered shall be
deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal, premium, if any, and
interest on any registered Note shall be made to or upon the written order of
such registered holder.
Section 9.2. Exchange of Notes. At any time, and from time to time,
upon not less than ten days' notice to that effect given by the holder of any
Note initially delivered or of any Note substituted therefor pursuant to
[Section] 9.1, this [Section] 9.2 or [Section] 9.3, and, upon surrender of such
Note at its office, the Company will deliver in exchange therefor, without
expense to the holder, except as set forth below, Notes for the same aggregate
principal amount as the then unpaid principal amount of the Note so surrendered
in the denomination of $100,000 or any amount in excess thereof as such holder
shall specify, dated as of the date to which interest has been paid on the Note
so surrendered or, if such surrender is prior to the payment of any interest
thereon, then dated as of the date of issue, payable to such Person or Persons,
or order, as may be designated by such holder, and otherwise of the same form
and tenor as the Notes so surrendered for exchange. The Company may require
the payment of
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The Timberland Company Note Agreement
a sum sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer.
Section 9.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon delivery of a
bond of indemnity in such form and amount as shall be reasonably satisfactory to
the Company, or in the event of such mutilation upon surrender and cancellation
of the Note, the Company will make and deliver without expense to the holder
thereof, a new Note, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Note. If the Purchaser or any subsequent institutional holder is the
owner of any such lost, stolen or destroyed Note, then the affidavit of an
authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of the Note at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and delivery of a
new Note other than the written agreement of such owner to indemnify the
Company.
Section 9.4. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to pay
directly all of your reasonable out-of-pocket expenses in connection with the
preparation, execution and delivery of this Agreement and the transactions
contemplated hereby, including but not limited to the reasonable charges and
disbursements of Chapman and Cutler, your special counsel, duplicating and
printing costs and charges for shipping the Notes, adequately insured to you at
your home office or at such other place as you may designate, and all such
expenses relating to any amendment, waivers or consents pursuant to the
provisions hereof. The Company also agrees that it will pay and save you
harmless against any and all liability with respect to stamp and other taxes
(other than transfer taxes or taxes on income or revenues), if any, which may be
payable or which may be determined to be payable in connection with the
execution and delivery of this Agreement or the Notes, whether or not any Notes
are then outstanding. The Company agrees to protect and indemnify you against
any liability for any and all brokerage fees and commissions payable or claimed
to be payable to any Person in connection with the transactions contemplated by
this Agreement. You hereby represent and warrant that you have not engaged any
investment banker or broker in connection with your purchase of the Notes.
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative. No
delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof,
or the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to [Section] 7 hereof, shall extend to or affect any
obligation or right not expressly waived or consented to.
Section 9.6. Notices. All communications provided for hereunder shall
be in writing and, if to you, delivered or mailed by registered or certified
mail, addressed to you at your address appearing on Schedule I to this
Agreement or such other address as you or
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The Timberland Company Note Agreement
the subsequent holder of any Note initially issued to you, may designate to the
Company in writing, and if to the Company, delivered or mailed by registered or
certified mail to the Company at 11 Merrill Industrial Drive, Hampton, New
Hampshire 03842-5050, Attention: Chief Financial Officer or to such other
address as the Company may in writing designate to you or to a subsequent holder
of the Note initially issued to you. Notice shall be effective upon the earlier
of (i) three business days after such notice is sent or (ii) actual receipt of
such notice.
Section 9.7. Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to your benefit
and to the benefit of your successors and assigns, including each successive
holder or holders of any Notes.
Section 9.8. Survival of Covenants and Representations. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of this Agreement and
the Notes.
Section 9.9. Severability. Should any part of this Agreement for any
reason be declared invalid, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in force and effect as
if this Agreement had been executed with the invalid portion thereof eliminated
and it is hereby declared the intention of the parties hereto that they would
have executed the remaining portion of this Agreement without including therein
any such part, parts, or portion which may, for any reason, be hereafter
declared invalid.
Section 9.10. Governing Law. This Agreement and the Notes issued and
sold hereunder shall be governed by and construed in accordance with Illinois
law.
Section 9.11. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
-34-
<PAGE> 39
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By /s/ JON C HEINY
-----------------------
Its Jon C. Heiny
Counsel
By /s/ JON M. DAVIDSON
-----------------------
Its Jon M. Davidson
Assistant Director-
Securities Investment
<PAGE> 40
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
GE CAPITAL ASSURANCE COMPANY TRUST
By /s/ William D. Koski
-----------------------
Its William D. Koski
Assistant Vice President
<PAGE> 41
7.16% Senior Notes due April 15, 2000
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
SUN LIFE ASSURANCE COMPANY OF CANADA
(U.S.)
By /s/ L. Brock Thomson
-----------------------
Its L. Brock Thomson
Treasurer
<PAGE> 42
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
NORTHERN LIFE INSURANCE COMPANY
By /s/ Mark S. Jordahl
-----------------------
Its Mark S. Jordahl
Assistant Treasurer
<PAGE> 43
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
NORTHWESTERN NATIONAL LIFE INSURANCE
COMPANY
By /s/ Mark S. Jordahl
-----------------------
Its Mark S. Jordahl
Authorized Representative
<PAGE> 44
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
THE NORTH ATLANTIC LIFE INSURANCE
COMPANY OF AMERICA
By /s/ Mark S. Jordahl
-----------------------
Its Mark S. Jordahl
Assistant Treasurer
<PAGE> 45
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
THE FRANKLIN LIFE INSURANCE COMPANY
By /s/ Daniel C. Leimbach
-----------------------
Its Daniel C. Leimbach
Vice President
By /s/ Elizabeth E. Arthur
-----------------------
Its Elizabeth E. Arthur
Assistant Secretary
<PAGE> 46
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
CENTURY LIFE OF AMERICA
By Century Investment Management Company
By /s/ Donald Heltner
-----------------------
Its Donald Heltner
Vice President
<PAGE> 47
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
CUNA MUTUAL INSURANCE SOCIETY
By Century Investment Management Company
By /s/ Donald Heltner
-----------------------
Its Donald Heltner
Vice President
<PAGE> 48
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
GUARANTEE MUTUAL LIFE COMPANY
By /s/ Steven A. Scanlan
-----------------------
Its Steven A. Scanlan
Senior Invesment Officer -
Securities
<PAGE> 49
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
TMG LIFE INSURANCE COMPANY
By: THE MUTUAL GROUP, its Agent
By /s/ Michael J. Carew
-----------------------
Name: Michael J. Carew
Title: Assistant Vice President
By /s/ Robert Lapointe
-----------------------
Name: Robert Lapointe
Title: Vice President
<PAGE> 50
SCHEDULE I
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY $20,000,000(1)
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Department-Securities Division
Regarding Bond No. 1-B-60072 (with respect to the $18,000,000 Note)
Regarding Bond No. 16-B-60072 (with respect to the $2,000,000 Note)
Telefacsimile: (515) 248-2490
Confirmation: (515) 248-3495
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "The
Timberland Company, 7.16% Senior Notes due April 15, 2000, PPN 887100 B* 5,
Bond No. 1-B-60072 (with respect to the $18,000,000 Note) and Bond No.
16-B-60072 (with respect to the $2,000,000 Note), principal, premium or
interest") to:
Norwest Bank Iowa, N.A.
7th and Walnut Streets
Des Moines, Iowa 50309
ABA No. 073 000 228
for credit to: Principal Mutual Life Insurance Company
Account No. 014752 (with respect to the $18,000,000 Note)
Separate Account No. 032395 (with respect to the $2,000,000 Note)
Notices
All notices concerning payment on or in respect of the Notes, to:
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0960
Attention: Investment Department, Accounting & Treasury
_____________________
(1) In two Notes denominated as follows: (i) $18,000,000 and (ii) $2,000,000.
I-1
<PAGE> 51
All notices and communications other than those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 42-012-7290
I-2
<PAGE> 52
SCHEDULE I
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
GE CAPITAL ASSURANCE COMPANY TRUST $10,000,000
c/o GNA Corporation
Two Union Square, Suite 5600
P.O. Box 490
Seattle, Washington 98111-0490
Attention: Dan Greenshields
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "The
Timberland Company, 7.16% Senior Notes due April 15, 2000, PPN 887100 B* 5,
principal, premium or interest") to:
Bankers Trust Company
16 Wall Street
New York, New York 10015
ABA 021001033
Attn: 99-911-145
Account No. 97834
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: SALKELD & CO
Taxpayer I.D. Number: 16-1202227
I-3
<PAGE> 53
SCHEDULE I
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
SUN LIFE ASSURANCE COMPANY OF $10,000,000(2)
CANADA (U.S.)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
Attention: Investment Department/Private Placements, SC [Section] 1303
Telecopier Number: (617) 431-7521
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "The
Timberland Company, 7.16% Senior Notes due April 15, 2000, PPN 887100 B* 5,
principal, premium or interest") to:
Chemical Bank (ABA [Section]021-000-128)
55 Water Street
New York, New York 10041
for credit to the account of:Sun Life Assurance Company of Canada (U.S.)
Account Number 323-023177 (with respect to the $8,000,000 Note)
Account Number 323-162592 (with respect to the $2,000,000 Note)
Notices
All notices of payment on or in respect of the Notes and written confirmation
of each such payment to:
Sun Life Assurance Company of Canada (U.S.)
Three Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
Attention: Manager, Securities Accounting SC No. 3327
All notices and communications other than those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 04-2461439
___________________________
(2) In two Notes denominated as follows: (i) $8,000,000 and (ii) $2,000,000.
I-4
<PAGE> 54
SCHEDULE I
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
NORTHERN LIFE INSURANCE COMPANY $5,500,000
c/o Washington Square Capital
100 Washington Square, Suite 800
Minneapolis, Minnesota 55401-2147
Attention: Securities Department
Telecopier Number: (612) 372-5368
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "The
Timberland Company, 7.16% Senior Notes due April 15, 2000, PPN 887100 B* 5,
principal, premium or interest") to:
First National Bank N.A./Mpls. (ABA No. 091000022)
601 2nd Avenue South
Attention: Securities Accounting
for credit to: Northern Life Insurance Company
Account Number 1602-3237-6105
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 41-1295933
I-5
<PAGE> 55
SCHEDULE I
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
NORTHWESTERN NATIONAL LIFE INSURANCE $2,000,000
COMPANY
c/o Washington Square Capital
100 Washington Square, Suite 800
Minneapolis, Minnesota 55401-2147
Attention: Securities Department
Telecopier Number: (612) 372-5368
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "The
Timberland Company, 7.16% Senior Notes due April 15, 2000, PPN 887100 B* 5,
principal, premium or interest") to:
First National Bank of Minneapolis (ABA No. 091000022)
601 2nd Avenue South
Minneapolis, Minnesota 55402
for credit to: Northwestern National Life Insurance Company
Account Number 1102-4001-4461
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 41-0451140
I-6
<PAGE> 56
SCHEDULE I
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
THE NORTH ATLANTIC LIFE INSURANCE $1,500,000
COMPANY OF AMERICA
c/o Washington Square Capital
100 Washington Square, Suite 800
Minneapolis, Minnesota 55401-2147
Attention: Securities Department
Telecopier Number: (612) 372-5368
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "The
Timberland Company, 7.16% Senior Notes due April 15, 2000, PPN 887100 B* 5,
principal, premium or interest") to:
Northern Trust Company (ABA No. 071-000-152)
for credit to: The North Atlantic Life Insurance Company
Account Number 5186041000
Notices
All notices and communications to be addresses as first provided above, except
notices of payments on or in respect of the Notes and written confirmation of
each such payment to be addressed Attention: Securities Operations.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 11-1983132
I-7
<PAGE> 57
SCHEDULE I
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
THE FRANKLIN LIFE INSURANCE COMPANY $5,000,000
Franklin Square
Springfield, Illinois 62713
Attention: Investment Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "The
Timberland Company, 7.16% Senior Notes due April 15, 2000, PPN 887100 B* 5,
principal, premium or interest") to:
Morgan Guaranty Trust Company of New York (ABA No. 0210-0023-8)
23 Wall Street
New York, New York 10015
Attention: Money Transfer Department
for credit to: The Franklin Life Insurance Company
Account Number 022-05-988
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 37-0281650
Institution Identification Number 36362
I-8
<PAGE> 58
SCHEDULE I
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
CENTURY LIFE OF AMERICA $3,000,000
c/o CUNA Mutual Insurance Group
Securities Management Department
5910 Mineral Point Road
Madison, Wisconsin 53705
Attention: Private Placements
Telecopier Number: (608) 238-2316
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "The
Timberland Company, 7.16% Senior Notes due April 15, 2000, PPN 887100 B* 5,
principal, premium or interest") to:
USTRUST NYC (ABA No. 021001318)
Account Number 473633
FBO Century Life of America
Income Collections Department
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of each such payment,
to be addressed as follows:
CUNA Mutual Insurance Group
Cash Management Department
P. O. Box 391
Madison, Wisconsin 53701
Attention: Kris Conway
Name of Nominee in which Notes are to be issued: Atwell & Co.
Taxpayer I.D. Number for Atwell: 13-6065575
I-9
<PAGE> 59
SCHEDULE I
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
CUNA MUTUAL INSURANCE SOCIETY $2,000,000
c/o CUNA Mutual Insurance Group
Securities Management Department
5910 Mineral Point Road
Madison, Wisconsin 53705
Attention: Private Placements
Telecopier Number: (608) 238-2316
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "The
Timberland Company, 7.16% Senior Notes due April 15, 2000, PPN 887100 B* 5,
principal, premium or interest") to:
USTRUST NYC (ABA No. 021001318)
Account Number 473633
FBO CUNA Mutual Insurance Group
Income Collections Department
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of each such payment,
to be addressed as follows:
CUNA Mutual Insurance Group
Cash Management Department
P. O. Box 391
Madison, Wisconsin 53701
Attention: Kris Conway
Name of Nominee in which Notes are to be issued: Atwell & Co.
Taxpayer I.D. Number for Atwell: 13-6065575
I-10
<PAGE> 60
SCHEDULE I
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
GUARANTEE MUTUAL LIFE COMPANY $3,000,000
One Guarantee Centre
8801 Indian Hills Drive
Omaha, Nebraska 68114
Attention: Investment Department
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "The
Timberland Company, 7.16% Senior Notes due April 15, 2000, PPN 887100 B* 5,
principal, premium or interest") to:
Bankers Trust Company
16 Wall Street
New York, New York 10015
(ABA No. 021 001 033)
for credit to: Guarantee Mutual Life Company
Account Number 50-035-201
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 47-017-9235
I-11
<PAGE> 61
SCHEDULE I
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
TMG LIFE INSURANCE COMPANY $3,000,000
401 North Executive Drive
Brookfield, Wisconsin 53008-0980
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "The
Timberland Company, 7.16% Senior Notes due April 15, 2000, PPN 887100 B* 5,
principal, premium or interest") to:
Federal Reserve Bank Minneapolis
Norwest Bank MN/Trust
ABA No. 091000019
Credit Account Number: 08-40-245
For credit to: TMG Life Universal A
Account Number 13075700
Contact: Michael Eiynck
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed to:
Lisa Harris
The Mutual Group (U.S.)
401 North Executive Drive
Brookfield, Wisconsin 53008-0980
Telephone Number: (414) 797-2305
Facsimile Number: (414) 797-3988
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 45-0208990
I-12
<PAGE> 62
THE TIMBERLAND COMPANY
7.16% Senior Note
Due April 15, 2000
PPN: 887100 B* 5
No. R-
_____________, 19__
THE TIMBERLAND COMPANY, a Delaware corporation (the "Company"), for value
received, hereby promises to pay to
or registered assigns
on the fifteenth day of April, 2000
the principal amount of
DOLLARS ($_______________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at
the rate of 7.16% per annum from the date hereof until maturity, payable
semiannually on the fifteenth of each April and October in each year,
commencing October 15, 1994, and at maturity. The Company agrees to pay
interest on overdue principal (including any overdue optional prepayment of
principal) and premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest, at the rate of 9.16% per annum after maturity,
whether by acceleration or otherwise, until paid. Both the principal hereof
and interest hereon are payable at the principal office of the Company in
Hampton, New Hampshire in coin or currency of the United States of America
which at the time of payment shall be legal tender for the payment of public
and private debts.
This Note is one of the 7.16% Senior Notes due April 15, 2000 (the
"Notes") of the Company in the aggregate principal amount of $65,000,000 issued
or to be issued under and pursuant to the terms and provisions of the separate
Note Agreements, each dated as of April 1, 1994 (the "Note Agreements"),
entered into by the Company with the original purchasers therein referred to.
This Note and the holder hereof are entitled equally and ratably with the
holders of all other Notes outstanding under the Note Agreements to all the
benefits and security provided for thereby or referred to therein. Reference
is hereby made to the Note Agreements for a statement of such rights and
benefits.
This Note and the other Notes outstanding under the Note Agreements may be
declared due prior to their expressed maturity dates, all in the events, on the
terms and in the manner and amounts as provided in the Note Agreements.
EXHIBIT A
(to Note Agreement)
<PAGE> 63
The Notes are not subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
THE TIMBERLAND COMPANY
By
--------------------------
Its
A-2
<PAGE> 64
THE TIMBERLAND COMPANY
CLOSING CERTIFICATE
<TABLE>
<S> <C>
Principal Mutual Life The North Atlantic Life Insurance
Insurance Company Company of America
Des Moines, Iowa c/o Washington Square Capital
Minneapolis, Minnesota
GE Capital Assurance Company Trust
c/o GNA Corporation The Franklin Life Insurance Company
Seattle, Washington Springfield, Illinois
Sun Life Assurance Company of Century Life of America
Canada (U.S.) Madison, Wisconsin
Wellesley Hills, Massachusetts
Cuna Mutual Life Insurance Society
Northern Life Insurance Company Madison, Wisconsin
c/o Washington Square Capital
Minneapolis, Minnesota Guarantee Mutual Life Company
Omaha, Nebraska
Northwestern National Life Insurance
Company TMG Life Insurance Company
c/o Washington Square Capital Brookfield, Wisconsin
Minneapolis, Minnesota
</TABLE>
Gentlemen:
This certificate is delivered to you in compliance with the requirements
of the separate Note Agreements, each dated as of April 1, 1994 (the
"Agreements"), entered into by the undersigned, The Timberland Company, a
Delaware corporation (the "Company"), with each of you, and as an inducement to
and as part of the consideration for your purchase on this date aggregating
$65,000,000 principal amount of the 7.16% Senior Notes due April 15, 2000 (the
"Notes") of the Company pursuant to the Agreements. The terms which are
capitalized herein shall have the same meanings as in the Agreements.
The Company represents and warrants to you as follows:
1. Subsidiaries. Annex A attached hereto states the name of
each of the Company's Subsidiaries, its jurisdiction of incorporation and
the percentage of its Voting Stock owned by the Company and/or its
Subsidiaries. The Company and each Subsidiary has good and marketable title
to all of the shares it purports to own of the stock of each Subsidiary,
free and clear in each case of any Lien. All such shares have been duly
issued and are fully paid and non-assessable.
EXHIBIT B
(to Note Agreement)
<PAGE> 65
2. Corporate Organization and Authority. The Company, and each
Subsidiary,
(a) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties and to carry on
its business as now conducted and as presently proposed to be conducted
except where the failure to have such licenses and permits would not
have a material adverse effect on the properties, business, prospects,
profits or condition (financial or otherwise) of the Company or of the
Company and its Subsidiaries, taken as a whole; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the
business transacted by it or the nature of the property owned or leased
by it makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified in a jurisdiction would not have
a material adverse effect on the properties, business, prospects,
profits or condition (financial or otherwise) of the Company or of the
Company and its Subsidiaries, taken as a whole.
3. Business and Property. You have heretofore been furnished with a
copy of the Private Placement Offering Memorandum dated March, 1994 (the
"Memorandum") prepared by J.P. Morgan Securities Inc., which generally sets
forth the business conducted and proposed to be conducted by the Company and
its Subsidiaries and the principal properties of the Company and its
Subsidiaries.
4. Financial Statements. (a) The consolidated balance sheets of the
Company and its Subsidiaries as of December 31 in each of the years 1989 to
1993 both inclusive, and the statements of income and stockholders' equity
and changes in financial position or cash flows for the fiscal years ended
on said dates accompanied by a report thereon containing an opinion
unqualified as to scope limitations imposed by the Company and otherwise
without qualification except as therein noted, by Arthur Andersen & Co. or
Deloitte & Touche, have been prepared in accordance with generally accepted
accounting principles consistently applied except as therein noted, are
correct and complete and present fairly the financial position of the
Company and its Subsidiaries as of such dates and the results of their
operations and changes in their financial position for such periods.
(b) Since December 31, 1993, there has been no change in the condition,
financial or otherwise, of the Company and its Subsidiaries as shown on the
consolidated balance sheet as of such date except changes in the ordinary
course of business, none of which individually or in the aggregate has been
materially adverse.
5. Indebtedness. Annex B attached hereto correctly describes all
Current Debt, Funded Debt and Capitalized Leases of the Company and its
Restricted
B-2
<PAGE> 66
Subsidiaries outstanding on the respective dates set forth therein (after
giving effect to the application of the proceeds of the Notes). There has
been no material change in the matters set forth in Annex B since the
respective dates set forth therein.
6. Full Disclosure. The financial statements referred to in paragraph
4 do not, nor does the Memorandum or any other written statement furnished
by the Company to you in connection with the negotiation of the sale of
the Notes, contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein
not misleading. There is no fact peculiar to the Company or its
Subsidiaries which the Company has not disclosed to you in writing which
materially affects adversely nor, so far as the Company can now foresee,
will materially affect adversely the properties, business, prospects,
profits or condition (financial or otherwise) of the Company and its
Subsidiaries other than the effects of general economic conditions, weather
conditions or perceptions of style. The Company has no knowledge of any
weather condition or perception of style which might materially affect
adversely the properties, business, prospects, profits or condition
(financial or otherwise) of the Company or of the Company and its
Subsidiaries, taken as a whole.
7. Pending Litigation. Except as disclosed in Form 10-K of the Company
for the year ended December 31, 1993 and the Memorandum, there are no
proceedings pending or, to the knowledge of the Company threatened, against
or affecting the Company or any Subsidiary in any court or before any
governmental authority or arbitration board or tribunal which involve the
possibility of materially and adversely affecting the properties, business,
profits or condition (financial or otherwise) of the Company and its
Subsidiaries. Neither the Company nor any Subsidiary is in default with
respect to any order of any court or governmental authority or arbitration
board or tribunal.
8. Title to Properties. The Company, and each Subsidiary, has good and
marketable title in fee simple (or its equivalent under applicable law) to
all the real property and has good title to all the other property it
purports to own, including that reflected in the most recent balance sheet
referred to in paragraph 4 except as sold or otherwise disposed of in the
ordinary course of business and except for Liens disclosed in notes to the
financial statements referred to in paragraph 4 hereof or otherwise
permitted by the Agreement and except where the failure to maintain such
title would not have a material adverse effect on the properties, business,
profits or condition (financial or otherwise) of the Company or of the
Company and its Subsidiaries, taken as a whole.
9. Patents and Trademarks. The Company and each Subsidiary owns or
possesses all the patents, trademarks, trade names, service marks,
copyright, licenses and rights with respect to the foregoing necessary for
the present and planned future conduct of its business, without any known
conflict with the rights of others, except where the failure to own or
possess such items would not have a material adverse
B-3
<PAGE> 67
effect on the properties, business, profits or condition (financial or
otherwise) of the Company or of the Company and its Subsidiaries, taken as
a whole.
10. Sale is Legal and Authorized. The sale of the Notes and compliance
by the Company with all of the provisions of the Agreement and the Notes -
(a) are within the corporate powers of the Company and have been
duly authorized by proper corporate action on the part of the Company;
and
(b) will not violate any provisions of any law or any order of
any court or governmental authority or agency and will not conflict
with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under the Articles of
Incorporation or By-laws of the Company or any indenture or other
agreement or instrument to which the Company is a party or by which it
may be bound or result in the imposition of any Liens on any property
of the Company.
11. No Defaults. No Default or Event of Default has occurred and is
continuing. The Company is not in default in the payment of principal or
interest on any Indebtedness for borrowed money in an aggregate principal
amount in excess of $100,000 and is not in default under any instrument or
instruments or agreements under and subject to which any Indebtedness for
borrowed money in an aggregate principal amount in excess of $100,000 has
been issued and no event has occurred and is continuing under the provisions
of any such instrument or agreement which with the lapse of time or the
giving of notice, or both, would constitute an event of default thereunder.
12. Governmental Consent. No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal or local, is
necessary in connection with the execution and delivery by the Company of
the Agreement or the Notes or compliance by the Company with any of the
provisions of the Agreement or the Notes.
13. Taxes. All tax returns required to be filed by the Company or any
Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees and other governmental charges upon the Company or any
Subsidiary or upon any of their respective properties, income or franchises,
which are shown to be due and payable in such returns have been paid. The
Company does not know of any proposed additional tax assessment against it
for which adequate provision has not been made on its accounts. The Federal
income tax liability of the Company and its Subsidiaries has been finally
determined by the Internal Revenue Service and satisfied for all taxable
years up to and including the taxable year ended December 31, 1985 and no
material controversy in respect of additional income taxes due since said
date is pending or to the knowledge of the Company threatened. The
provisions for taxes on the books of the Company and each Subsidiary are
adequate for all open years, and for its current fiscal period.
B-4
<PAGE> 68
14. Use of Proceeds. The net proceeds from the sale of the Notes will
be used to repay certain outstanding Indebtedness, to finance manufacturing
improvements and management information systems and to provide additional
working capital and other corporate purposes. None of the transactions
contemplated in the Agreements (including, without limitation thereof, the
use of proceeds from the issuance of the Notes) will violate or result in a
violation of Section 7 of the Securities Exchange Act of 1934, as amended,
or any regulation issued pursuant thereto, including, without limitation,
Regulations G, T and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II. Neither the Company nor any Subsidiary owns
or intends to carry or purchase any "margin stock" (within the meaning of
said Regulation G), with the proceeds of the Notes. None of the proceeds
from the sale of the Notes will be used to purchase, or refinance any
borrowing, the proceeds of which were used to purchase any "security" within
the meaning of the Securities Exchange Act of 1934, as amended.
15. Private Offering. Neither the Company, directly or indirectly, nor
any agent on its behalf has offered or will offer the Notes or has solicited
or will solicit an offer to acquire the Notes from or has otherwise
approached or negotiated or will approach or negotiate in respect of the
Notes with any Person other than you and not more than 25 other
institutional investors, each of whom was offered a portion of the Notes at
private sale for investment. Neither the Company, directly or indirectly,
nor any agent on its behalf has offered or will offer the Notes or any
similar Security to, or has solicited or will solicit an offer to acquire
the Notes or any similar Security from, any Person so as to bring the
issuance and sale of the Notes within the provisions of Section 5 of the
Securities Act of 1933, as amended.
16. Employee Retirement Income Security Act of 1974. The consummation
of the transactions provided for in the agreement and compliance by the
Company with the provisions thereof and the Notes issued thereunder
will not involve any prohibited transaction within the meaning of the
Employee Retirement Income Security Act of 1974 ("ERISA") or Section 4975
of the Internal Revenue Code. No "employee pension benefit plans", as
defined in ERISA ("Plans"), maintained by the Company or any Person which
is under common control with the Company within the meaning of Section
4001(b) of ERISA, nor any trusts created thereunder, have incurred any
"accumulated funding deficiency" as defined in Section 302 of ERISA nor
does the present value of all benefits vested under all Plans exceed, as of
December 31, 1988, the last annual valuation date, the value of the assets
of the Plans allocable to such vested benefits.
17. Compliance with Environmental Laws. The Company complies with all
applicable Federal, state, or local laws, statutes, rules, regulations or
ordinances relating to public health, safety or the environment, including,
without limitation, relating to releases, discharges, emissions or disposals
to air, water, land or ground water, to the withdrawal or use of ground
water, to the use, handling or disposal of polychlorinated biphenyls
(PCB's), asbestos or urea formaldehyde, to the treatment, storage, disposal
or management of hazardous substances (including, without
B-5
<PAGE> 69
limitation, petroleum, its derivatives, by-products or other hydrocarbons),
to exposure to toxic, hazardous or other controlled, prohibited or regulated
substances the failure to comply with which could have a material adverse
effect on the Company, its Subsidiaries, their businesses and properties,
taken as a whole. Except as disclosed in a letter of the Company
addressed to you and dated the date hereof, the Company does not know of any
liability of the Company or any Subsidiary under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C.
Section 9601 et seq.).
Dated:
THE TIMBERLAND COMPANY
By
--------------------------------
Its
<PAGE> 70
<TABLE>
SUBSIDIARIES OF THE COMPANY
1. RESTRICTED SUBSIDIARIES:
<CAPTION>
PERCENTAGE OF
VOTING STOCK
OWNED BY COMPANY
NAME OF JURISDICTION OF AND EACH OTHER
SUBSIDIARY INCORPORATION SUBSIDIARY
<S> <C> <C>
The Timberland World Trading Company Delaware 100%
The Timberland World Trading GmbH Germany 100%
The Outdoor Footwear Company Delaware 100%
The Timberland Finance Company Delaware 100%
Timberland S.A.R.L. France 100%
Timberland
Footwear & Clothing, Inc. Canada 100%
Timberland International, Inc. Delaware 100%
Timberland
(UK) Limited England 99.9%
Timberland Europe, Inc. (formerly
Timberland Precision
Instruments, Inc.) Delaware 100%
The Recreational Footwear Company Cayman Islands 100%
Timberland Manufacturing Company Delaware 100%
Timberland Retail, Inc. Delaware 100%
Timberland
Scandinavia, Inc. Delaware 100%
Component Footwear Dominicana, S.A. Dominican Republic 100%
The Recreational Footwear Dominican Republic 100%
Company (Dominicana), S.A.
Timberland Aviation, Inc. Delaware 100%
The Timberland Company of
Australia Pty, Ltd. Australia 100%
Timberland Direct Sales, Inc. Delaware 100%
Timberland
Espa[Section]a, S.A. Spain 99.98%
Timberland Footwear & Clothing
New Zealand Limited New Zealand 99%
Timberland GmbH Austria 100%
Timberland International Sales
Corporation U.S. Virgin Islands 100%
</TABLE>
<TABLE>
2. SUBSIDIARIES (OTHER THAN RESTRICTED SUBSIDIARIES):
<CAPTION>
PERCENTAGE OF VOTING STOCK
NAME OF JURISDICTION OF OWNED BY COMPANY AND
SUBSIDIARY INCORPORATION EACH OTHER SUBSIDIARY
<C> <S> <C>
None
</TABLE>
ANNEX A
(to Closing Certificate)
<PAGE> 71
<TABLE>
DESCRIPTION OF DEBT AND LEASES
1. Current Debt of the Company and its Restricted Subsidiaries
outstanding on April 15, 1994 (after giving effect to the application
of proceeds of the Notes) is as follows:
<CAPTION>
Effective Maturity Original Face Outstanding
Date Date Amount Liability
<S> <C> <C> <C> <C>
MONEY MARKET LINES
LIBOR (Bank Hapoalim) 3/21/94 4/20/94 $ 9,000,000 $ 9,000,000
LIBOR (Credito Italiano) 4/14/94 4/15/94 5,000,000 5,000,000
=========== ===========
$14,000,000 $14,000,000
MORGAN GUARANTY REVOLVING CREDIT AGREEMENT
LIBOR 3/17/94 4/18/94 $ 3,000,000 $ 3,000,000
LIBOR 3/23/94 4/22/94 5,000,000 5,000,000
LIBOR 3/24/94 4/25/94 5,000,000 5,000,000
=========== ===========
$13,000,000 $13,000,000
MISCELLANEOUS OTHER LIENS(3)*
Copy Machines, Computers,
Equipment and other Maximum
miscellaneous - - $ 3,000,000 $ -
=========== ===========
</TABLE>
____________________________
* Secured by lien
ANNEX B
(to Closing Certificate)
<PAGE> 72
<TABLE>
2. Funded Debt of the Company and its Restricted Subsidiaries
outstanding on February 25, 1994 is as follows:
<CAPTION>
Effective Maturity Original Face Outstanding
Date Date Amount Liability
<S> <C> <C> <C> <C>
PRIVATE PLACEMENT SENIOR NOTES
Principal Mutual Life Insurance
Company and other insurance companies 12/06/89 12/01/99 $35,000,000 $35,000,000
=========== ===========
CHASE MANHATTAN CREDIT AGREEMENT 11/23/93 5/15/99 $50,000,000 $50,000,000
=========== ===========
CAPITAL EQUIPMENT LEASES(4)*
BayBanks Financing & Leasing Co. Inc. 6/90 6/95 $ 2,096,332 $ 664,194
BayBanks Financing & Leasing Co. Inc. 10/90 11/95 456,507 177,756
BayBanks Financing & Leasing Co. Inc. 12/90 12/95 459,431 195,129
=========== ===========
$ 3,012,270 $ 1,037,079
INDUSTRIAL REVENUE BOND*
Shawmut Bank, N.A., Trustee 12/27/84 12/2014 $ 6,680,000 $ 5,345,000
</TABLE>
3. Capitalized Leases of the Company and its Restricted
Subsidiaries outstanding on February 25, 1994 are as follows:
-See Item 2 Above-
______________________________
* Secured by lien
-2-
<PAGE> 73
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of Chapman and Cutler, special counsel to the
Purchasers, called for by [Section] 4.1 of the Agreements, shall be dated the
Closing Date and addressed to the Purchasers, shall be satisfactory in form and
substance to the Purchasers and shall be to the effect that:
(1) The Company is a corporation, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power and the
corporate authority to execute and deliver the Agreements and to issue the
Notes.
(2) Each Agreement has been duly authorized by all necessary corporate
action on the part of the Company, has been duly executed and delivered by
the Company and constitutes the legal, valid and binding contract of the
Company enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
(3) The Notes have been duly authorized by all necessary corporate
action on the part of the Company, and the Notes being delivered on the
date hereof have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
(4) The issuance, sale and delivery of the Notes under the circumstances
contemplated by the Agreements do not, under existing law, require the
registration of the Notes under the Securities Act of 1933, as amended, or
the qualification of an indenture under the Trust Indenture Act of 1939, as
amended.
The opinion of Chapman and Cutler shall also state that the opinion of
Ropes & Gray is satisfactory in scope and form to Chapman and Cutler and that,
in their opinion, the Purchasers are justified in relying thereon.
In rendering the opinion set forth in paragraph 1 above, Chapman and
Cutler may rely, as to matters referred to in paragraph 1, solely upon an
examination of the Certificate of Incorporation certified by, and a certificate
of good standing of the Company from, the Secretary of State of the State of
Delaware, the By-laws of the Company and the General Corporation Law of the
State of Delaware. The opinion of Chapman and Cutler is limited to the laws of
the State of Illinois, the General Corporation Law of the State of Delaware and
the Federal laws of the United States.
With respect to matters of fact upon which such opinion is based,
Chapman and Cutler may rely on appropriate certificates of public officials and
officers of the Company and
EXHIBIT C
(to Note Agreement)
<PAGE> 74
upon representations of the Company and the Purchasers delivered in
connection with the issuance and sale of the Notes.
C-2
<PAGE> 75
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-2624
30 Kennedy Plaza (617) 951-7000 1001 Pennsylvania Avenue, N.W.
Providence, R.I. 02903 Suite 1200 South
(401) 455-4400 Telecopier: (617) 951-7050 Washington, D.C. 20004
Telecopier: (401) 455-4401 (202) 626-3900
Telecopier: (202) 626-3961
April 15, 1994
To Each of the Purchasers Named in
Schedule I to the Note Agreements
Referred to Below
Ladies and Gentlemen:
This opinion is being furnished to you pursuant to Section 4.1(b) of
the separate but identical (except for the name of the Purchaser and
information related thereto) Note Agreements dated as of April 1, 1994 (the
"Note Agreements"), each between The Timberland Company, a Delaware Corporation
(the "Company"), and the Purchaser named therein relating to the issuance and
sale by the Company of $65,000,000 aggregate principal amount of the Company's
7.16% Senior Notes due April 15, 2000 (the "Notes"). This opinion is being
delivered to you contemporaneously with the execution and delivery of the Note
Agreements and the Closing thereunder. Terms defined in the Note Agreements and
not otherwise defined herein are used herein with the meanings so defined.
We have acted as counsel to the Company in connection with the Note
Agreements and the transactions contemplated thereby and as such are familiar
with the proceedings taken by the Company in connection therewith. Please be
advised, however, that, although we represent the Company on a regular basis,
the scope of our representation does not include, and, except as specified
herein, we have not undertaken, any special factual investigation into the
business, properties, agreements or affairs of the Company and its subsidiaries
for purposes of rendering the opinions expressed in paragraphs 7 and 8 below.
We have anticipated in the preparation of the Note Agreements and have
examined copies, executed by the Company, of the Note Agreements and each of
the Notes delivered to the Purchasers on the date thereof. We have also
examined such certificates, documents and records, and have made such
examination of law, as we have deemed necessary to enable us to render the
opinions expressed below. In addition, we have examined and relied upon
representations and warranties contained in the Note Agreements and in
certificates, copies of which have
EXHIBIT D
(to Note Agreement)
<PAGE> 76
ROPES & GRAY
Purchasers Named -2- April 15, 1994
in Schedule I
been furnished to you and upon the covenants contained in the Note Agreements
as to the application of the proceeds of the loans made pursuant thereto.
The opinion expressed in clause (b) of paragraph 7 below assumes,
without investigation, that the transactions contemplated by the Note
Agreements will not result in a violation of financial ratios which are
contained in covenants.
We call your attention to the fact that each of the Note Agreements and
each Note provides that it is to be governed by and construed in accordance
with the internal laws of the State of Illinois, and we understand that you
are relying on the advice of your special counsel, Chapman and Cutler, with
respect to all matters of Illinois law. We are members of the bar of The
Commonwealth of Massachusetts, and we are not familiar with, or qualified to
express legal conclusions based upon, the laws of the State of Illinois. For
purposes of rendering the opinions expressed in paragraphs 5 and 6 below, we
have therefore assumed, with your permission, that the internal laws of the
State of Illinois are in all respects indentical to those of The Commonwealth
of Massachusetts.
The opinions expressed below are limited to matters governed by the
laws of the Commonwealth of Massachusetts, the General Corporation Law of the
State of Delaware and the federal laws of the United States. The opinions
expressed in paragraphs 2 and 4 concerning (i) the qualification and good
standing of the Company as foreign corporation under the laws of Massachusetts
and New Hampshire, (ii) the filing for qualification in Kentucky and (iii) the
qualification and good standing of The Outdoor Footwear Company, a Delaware
corporation ("TOFC"), under the laws of Puerto Rico are based solely upon
certificates or other certification of the Company as a foreign corporation
from officials of these jurisdictions, copies of which have been furnished to
you.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware with
corporate powers adequate for the execution, delivery and performance of the
Note Agreements and the issuance and sale of the Notes and for carrying on the
business now conducted by it.
2. The Company is duly qualified to do business as a foreign
corporation under the laws of Massachusetts and New Hampshire and has filed to
qualify to do business as a foreign corporation in Kentucky.
<PAGE> 77
ROPES & GRAY
Purchasers Named -3- April 15, 1994
in Schedule I
3. TOFC is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, with all corporate
powers adequate for carrying on the business now conducted by it.
4. TOFC is duly qualified as a foreign corporation in each
jurisdiction in which it owns or leases real property.
5. The Note Agreements have been duly authorized, executed and
delivered by the Company and (subject to the qualifications stated in the
penultimate paragraph hereof) are the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with their terms.
6. The issuance and sale of the Notes being delivered to the
Purchasers today and each of the Notes have been duly authorized, executed and
delivered by the Company and (subject to the qualifications stated in the
penultimate paragraph hereof) are the legal, valid and binding obligations of
the Company enforceable against the Company in accordance with their terms.
7. The exceution and delivery of the Note Agreements and the
issuance and sale of the Notes do not, and the performance by the Company of
the terms thereof will not, result in any violation of, be in conflict with,
constitute a default under, or result in the creation of a lien under, any term
or provision of: (a) its charter or bylaws or (b) any agreement, indenture or
other instrument identified in the Officer's Certificate attached hereto.
8. No approval, consent or withholding of objection on the part
of, or filing, registration or qualification with any Massachusetts or federal
government authority is required to be obtained or made by the Company in
connection with the execution and delivery by the Company of the Note
Agreements or the Notes, except for disclosure filings under the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and
other laws, rules and regulations which do not affect the enforceability of the
Note Agreements or the Notes against the Company.
9. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreements constitute exempt
transactions under the registration provisions of the Securities Act of 1993,
as amended, and do not under existing law require the registration of the
Notes under said Act or the qualification of an indenture in respect thereof
under the Trust Indenture Act of 1939, as amended. We express no opinion
<PAGE> 78
ROPES & GRAY
Purchasers Named -4- April 15, 1994
in Schedule I
regarding the applicability of such requirements to a resale by you of the
Notes.
Our opinions that the Note Agreements and the Notes are the legal,
valid and binding obligations of the Company, enforceable against the Company
in accordance with their terms are subject to (i) bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors and (ii) general principles of equity
regardless of whether applied in proceedings in equity or at law.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
<PAGE> 79
THE TIMBERLAND COMPANY
Officer's Certificate
---------------------
The undersigned, in his capacity as Chief Financial Officer of The
Timberland Company, a Delaware corporation (the "Company"), hereby certifies as
follows:
1. The Company owns or leases its headquarters and warehouses located
in New Hampshire and warehouses located in Kentucky and Massachusetts. The
Company does not own or lease any other real property in the States of the
United States of America, except for store and showroom locations in the
following States which represent less than 10% of the total assets and total
revenues annually of the Company:
California
District of Columbia
Georgia
Illinois
Maine
Massachusetts
New Hampshire
New York
Pennsylvania
Rhode Island
Tennessee
Texas
Vermont
2. The Outdoor Footwear Company leases real property only in the
Commonwealth of Puerto Rico.
3. The Recreational Footwear Compan (Dominicana), S.A. and Component
Footwear Dominicana, S.A. owns or leases real property only in the Dominican
Republic.
4. Timberland Manufacturing Company, Inc. owns or leases real property
only in North Carolina and Tennessee.
5. Each subsidiary of the Company, other than The Outdoor Footwear
Company, represents less than 10% of the Total assets and total revenues
annuallly of the Company.
6. The following is a list of all agreements, indentures or other
instruments to which the Company or its subsidiaries are a party or are
otherwise bound which prohibit or restrict the Company from incurring debt for
money borrowed:
<PAGE> 80
(i) Credit Agreement, dated as of May 13, 1993, among the
Timberland Company, Morgan Guaranty Trust Company of New York,
as Administrative Agent, and the Lenders as defined therein, as
amended.
(ii) Credit Agreement, dated as of November 15, 1993, among Chase
Manhattan Bank, for itself and as Agent, and Lenders as defined
therein, as amended.
(iii) Amended and Restated Letter of Credit and Reimbursement
Agreement, dated as of March 23, 1988, between The Timberland
Company and The First National Bank of Boston, as amended.
(iv) Note Agreements, dated as of September 30, 1989, among The
Timberland Company and Principal Mutual Life Insurance Company,
Northwestern National Life Insurance Company, Northern Life
Insurance Company, Beneficial Standard Life Insurance, Farm
Bureau Life Insurance Company, FB Annuity Company, Farm Bureau
Mutual Insurance Company of Michigan, Sun Life Assurance
Company of Canada, Sun Life Insurance and Annuity Company of
New York and Guarantee Mutual Life Company, as amended.
Correct and complete copies of each of the above have been previously
furnished to Ropes and Gray.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and the
seal of the Company.
/s/ Keith D. Monda
---------------------------
Keith D. Monda
Senior Vice President and
Chief Financial Officer
Dated: April 15, 1994
<PAGE> 81
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be executed
in any number of counterparts, each executed counterpart constituting an
original but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By /s/ JON C. HEINY
-------------------
Its Jon C. Heiny
Counsel
By /s/ JON M. DAVIDSON
-------------------
Its Jon M. Davidson
Assistant Director-
Securities Investment
<PAGE> 82
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
GE CAPITAL ASSURANCE COMPANY TRUST
By /s/ William D. Koski
-----------------------
Its William D. Koski
Assistant Vice President
<PAGE> 83
The Timberland Company Note Agreement
7.16% Senior Notes due April 15, 2000
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
SUN LIFE ASSURANCE COMPANY OF CANADA
(U.S.)
By /s/ L. Brock Thomson
-----------------------
Its L. Brock Thomson
Treasurer
<PAGE> 84
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
NORTHERN LIFE INSURANCE COMPANY
By /s/ Mark S. Jordahl
-----------------------
Its Mark S. Jordahl
Assistant Treasurer
<PAGE> 85
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
NORTHWESTERN NATIONAL LIFE INSURANCE
COMPANY
By /s/ Mark S. Jordahl
-----------------------
Its Mark S. Jordahl
Authorized Representative
<PAGE> 86
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
THE NORTH ATLANTIC LIFE INSURANCE
COMPANY OF AMERICA
By /s/ Mark S. Jordahl
-----------------------
Its Mark S. Jordahl
Assistant Treasurer
<PAGE> 87
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
THE FRANKLIN LIFE INSURANCE COMPANY
By /s/ Daniel C. Leimbach
-----------------------
Its Daniel C. Leimbach
Vice President
By /s/ Elizabeth E. Arthur
-----------------------
Its Elizabeth E. Arthur
Assistant Secretary
<PAGE> 88
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
CENTURY LIFE OF AMERICA
By Century Investment Management Company
By /s/ Donald Heltner
-----------------------
Its Donald Heltner
Vice President
<PAGE> 89
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
CUNA MUTUAL INSURANCE SOCIETY
By Century Investment Management Company
By /s/ Donald Heltner
-----------------------
Its Donald Heltner
Vice President
<PAGE> 90
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
GUARANTEE MUTUAL LIFE COMPANY
By /s/ Steven A. Scanlan
-----------------------
Its Steven A. Scanlan
Senior Invesment Officer -
Securities
<PAGE> 91
The Timberland Company Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-----------------------
Its Carden N. Welsh
Treasurer
Accepted as of April 1, 1994.
TMG LIFE INSURANCE COMPANY
By: THE MUTUAL GROUP, its Agent
By /s/ Michael J. Carew
-----------------------
Name: Michael J. Carew
Title: Assistant Vice President
By /s/ Robert Lapointe
-----------------------
Name: Robert Lapointe
Title: Vice President
<PAGE> 1
EXHIBIT 10.3
===============================================================================
The Timberland Company
Amended and Restated
Note Agreement
Dated as of April 1, 1994
Re: Note Agreements dated as of September 30, 1989
relating to the issue and sale of
$35,000,000 9.70% Senior Notes
due December 1, 1999
================================================================================
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
(Not a part of the Agreement)
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
ARTICLE I AMENDMENT AND RESTATEMENT OF THE ORIGINAL NOTE
AGREEMENTS..................................................... 2
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.................. 2
Section 1.1. Description of Notes.............................. 2
Section 1.2. Commitment, Closing Date.......................... 2
SECTION 2. PREPAYMENT OF NOTES.................................. 3
Section 2.1. Required Prepayments.............................. 3
Section 2.2. Optional Prepayments With Premium................. 3
Section 2.3. Prepayment on Failure of Holders to Give
Certain Consents.................................. 3
Section 2.4. Notice of Prepayments............................. 4
Section 2.5. Allocation of Prepayments......................... 4
Section 2.6. Direct Payment.................................... 4
SECTION 3. REPRESENTATIONS...................................... 5
Section 3.1. Representations of the Company.................... 5
Section 3.2. Representations of the Purchaser.................. 5
SECTION 4. CLOSING CONDITIONS................................... 6
Section 4.1. Conditions........................................ 6
Section 4.2. Waiver of Conditions.............................. 6
SECTION 5. COMPANY COVENANTS.................................... 7
Section 5.1. Corporate Existence, Etc.......................... 7
Section 5.2. Insurance......................................... 7
Section 5.3. Taxes, Claims for Labor and
Materials, Compliance with Laws................... 7
Section 5.4. Maintenance, Etc.................................. 8
Section 5.5. Nature of Business................................ 8
Section 5.6. Current Ratio..................................... 8
Section 5.7. Consolidated Tangible Net Worth................... 8
Section 5.8. Limitations on Indebtedness....................... 8
Section 5.9. Fixed Charges Coverage............................ 9
Section 5.10. Limitation on Liens............................... 9
Section 5.11. Restricted Payments............................... 11
Section 5.12. Sale and Leasebacks............................... 12
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
Section 5.13. Mergers, Consolidations and Sales of Assets....... 13
Section 5.14. Guaranties........................................ 16
Section 5.15. Repurchase of Notes............................... 16
Section 5.16. Transactions with Affiliates...................... 16
Section 5.17. Investments....................................... 16
Section 5.18. Termination of Pension Plans...................... 18
Section 5.19. Reports and Rights of Inspection.................. 18
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.............. 21
Section 6.1. Events of Default................................. 21
Section 6.2. Notice to Holders................................. 23
Section 6.3. Acceleration of Maturities........................ 23
Section 6.4. Rescission of Acceleration........................ 24
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS..................... 24
Section 7.1. Consent Required.................................. 24
Section 7.2. Effect of Amendment or Waiver..................... 25
SECTION 8. INTERPRETATION OF AGREEMENT.......................... 25
Section 8.1. Definitions....................................... 25
Section 8.2. Accounting Principles............................. 34
Section 8.3. Directly or Indirectly............................ 34
SECTION 9. MISCELLANEOUS........................................ 35
Section 9.1. Registered Notes.................................. 35
Section 9.2. Exchange of Notes................................. 35
Section 9.3. Loss, Theft, Etc. of Notes........................ 35
Section 9.4. Expenses, Stamp Tax Indemnity..................... 36
Section 9.5. Powers and Rights Not Waived;
Remedies Cumulative............................... 36
Section 9.6. Notices........................................... 36
Section 9.7. Successors and Assigns............................ 36
Section 9.8. Survival of Covenants and Representations......... 37
Section 9.9. Severability...................................... 37
Section 9.10. Governing Law..................................... 37
Section 9.11. Captions.......................................... 37
ARTICLE II AMENDMENTS TO EXHIBITS TO ORIGINAL NOTE AGREEMENTS............. 37
Section 2.1. Amendment to Exhibit A............................... 37
Section 2.2. Amendment to Exhibit B............................... 37
Section 2.3. Amendment to Exhibit E............................... 37
Section 2.4. Schedule I to the Original Note Agreement............ 37
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE III MISCELLANEOUS................................................ 38
Section 3.1. Ratification of Original Note Agreements;
Condition Precedent.................................. 38
Section 3.2. Counterparts......................................... 38
Section 3.3. Fees and Expenses.................................... 38
Section 3.4. References to Original Note Agreements............... 38
Section 3.5. Governing Law........................................ 38
Signatures................................................................ 39
ATTACHMENTS TO AMENDED
AND RESTATED NOTE AGREEMENT
Schedule I - List of Holders and Principal Amount of Notes Held
Schedule II - Name and Addresses of Purchasers of the Notes
Exhibit A - Form of 9.70% Senior Note due December 1, 1999
Exhibit B - Description of Debt and Leases
</TABLE>
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<PAGE> 5
THE TIMBERLAND COMPANY
11 MERRILL INDUSTRIAL DRIVE
HAMPTON, NEW HAMPSHIRE 03842-5050
AMENDED AND RESTATED NOTE AGREEMENT
Re: Note Agreements dated as of September 30, 1989
relating to the issue and sale of
$35,000,000 9.70% Senior Notes
Due December 1, 1999
Dated as of
April 1, 1994
To the Holder named In Schedule I
hereto which is a signatory of this
Agreement
Ladies and Gentlemen:
Reference is hereby made to (a) the separate Note Agreements dated as
of September 30, 1989 (the "1989 Note Agreements"), between The Timberland
Company, a Delaware corporation (the "Company"), and the Purchasers named
in Schedule I thereto (the "Holders") respectively, under and pursuant to
which $35,000,000 principal amount of the 9.70% Senior Notes of the Company
due December 1, 1999 (the "Notes") were originally issued, as amended by
those separate First Amendments dated September 15, 1993 (the "First
Amendments", which together with the 1989 Note Agreements are collectively
referred to herein as the "Original Note Agreements") between the Company
and the Holders and (b) the separate Note Agreements dated as of April 1,
1994 (the "1994 Note Agreements"), to be executed by, and to be between,
the Company and each Purchaser signatory thereto, respectively, under and
pursuant to which $65,000,000 aggregate principal amount of the 7.16%
Senior Notes of the Company due April 15, 2000 will be issued.
In connection with the execution and delivery of the 1994 Note
Agreements, the Company desires to amend and restate the Original Note
Agreements in their entirety to conform to the 1994 Note Agreements by
entering into separate counterparts of this Amended and Restated Note
Agreement (the "Second Amendment") with each of the Holders, respectively.
Pursuant to #7.1 of the Original Note Agreements, holders of at least 51%
in aggregate principal amount of the outstanding Notes must consent to all
such amendments. As you are the holder of the aggregate principal amount
of outstanding Notes set forth opposite your name on Schedule I hereto, the
Company hereby requests that you accept each of the amendments as set forth
below in the manner herein provided. The Company now wishes to amend and
restate the Original Note Agreements in the respects, but only in the
respects, hereinafter set forth, and, by your execution hereof, you hereby
agree to such amendments on the terms hereinafter set forth:
<PAGE> 6
ARTICLE I
AMENDMENT AND RESTATEMENT
OF THE ORIGINAL NOTE AGREEMENTS
Sections 1 through 9 of the Original Note Agreements shall be and are
hereby amended and restated in their entirety to read as follows:
"The undersigned, THE TIMBERLAND COMPANY, a Delaware corporation
(the "Company"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1. Description of Notes. The Company will authorize the
issue and sale of $35,000,000 aggregate principal amount of its 9.70%
Senior Notes (the "Notes") to be dated the date of issue, to bear
interest from such date at the rate of 9.70% per annum, payable
semiannually in arrears on the first day of each June and December in
each year (commencing June 1, 1990) and at maturity and to bear
interest on overdue principal (including any overdue required or
optional prepayment of principal) and premium, if any, and (to the
extent legally enforceable) on any overdue installment of interest at
the rate of 11.70% per annum after maturity, whether by acceleration
or otherwise, until paid, to be expressed to mature on December 1,
1999, and to be substantially in the form attached hereto as Exhibit
A. Interest on the Notes shall be computed on the basis of a 360-day
year of twelve 30-day months. The Notes are not subject to prepayment
or redemption at the option of the Company prior to their expressed
maturity dates except on the terms and conditions and in the amounts
and with the premium, if any, set forth in Section 2 of this Agreement.
The term "Notes" as used herein shall include each Note delivered
pursuant to this Agreement and the separate agreements with the other
purchasers named in Schedule I. You and the other purchasers named in
Schedule I are hereinafter sometimes referred to as the "Purchasers".
Section 1.2. Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and
warranties hereinafter set forth, the Company agrees to issue and sell
to you, and you agree to purchase from the Company, the aggregate
principal amount of the Notes set forth opposite your name in
Schedule I hereto, at a price of 100% of the principal amount thereof
on the Closing Date hereinafter mentioned.
Delivery of the Notes will be made at the offices of Chapman and Cutler,
111 West Monroe Street, Chicago, Illinois 60603, against payment therefor
in Federal Reserve or other funds current and immediately available at the
principal office of The First National Bank of Boston, Boston,
Massachusetts in the amount of the purchase price at 10:00 A.M., Chicago,
Illinois time, on December 8, 1989 or such earlier date as the Company
shall specify by not less than five business days' prior written notice to
you (the "Closing Date"). The Notes delivered to you on the Closing Date
will be delivered to you in the form of registered Notes for the full
amount of
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<PAGE> 7
your purchase (unless different denominations are specified by you),
registered in your name or in the name of such nominee as you may specify
and in substantially the form attached hereto as Exhibit A, all as you
may specify at any time prior to the date fixed for delivery.
SECTION 2. PREPAYMENT OF NOTES.
Section 2.1. Required Prepayments. (a) The Company agrees that
on December 1, in each year commencing December 1, 1995 and ending
December 1, 1998, both inclusive (herein called "Fixed Payment Dates"),
it will prepay and apply and there shall become due and payable the
sum of $7,000,000 on the principal indebtedness evidenced by the
Notes. No premium shall be payable in connection with any required
prepayment made pursuant to this [Section] 2.1.
(b) Any prepayment of the Notes pursuant to the provisions of
[Section] 2.2 shall be credited against the obligations of the Company to
make payment at maturity and the prepayments required on the Notes in
accordance with the terms of this [Section] 2.1 in the inverse order of
maturity. If and to the extent that any prepayment of the Notes pursuant
to the provisions of [Section]2.3 does not result in the prepayment of all
Notes, the prepayments required to be made pursuant to the provisions of
this [Section] 2.1 shall be reduced by an amount that bears the same
relationship to the amount of the prepayment required by this [Section] 2.1
immediately prior to such partial prepayment pursuant to [Section] 2.3 as
the amount of such partial prepayment pursuant to [Section] 2.3 bears to
the principal amount of Notes outstanding immediately preceding such
partial prepayment.
Section 2.2. Optional Prepayments With Premium. Upon compliance with
[Section] 2.4, 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 principal amount of $100,000) 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 with respect to such principal
amount then to be prepaid.
Section 2.3. Prepayment on Failure of Holders to Give Certain
Consents. In the event that (i) the Company shall have determined in
good faith to enter into a transaction which will result in a violation of
any the provisions of [Section] 5.13, (ii) the Company shall have
requested the holders of the Notes in writing (accompanied by a
reasonably detailed description of the proposed transaction) to consent to
such transaction, and (iii) the holders of more than 49% of the aggregate
unpaid principal amount of the Notes shall have failed to consent to such
transaction within 30 days from the date of such request, then and in such
event the Company may upon the consummation of such transaction, within
90 days after the expiration of such 30-day period, prepay all (but not
less than all) of the Notes held by such holders who have failed to
consent to such transaction. Any such prepayment shall be made by
payment of the principal amount of the Notes being prepaid, and accrued
interest thereon
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<PAGE> 8
to the date of such prepayment, together with a premium equal to the
Make-Whole Amount with respect to such principal amount then to be
prepaid.
Section 2.4. Notice of Prepayments. The Company will give notice of
any prepayment of the Notes (other than the prepayments required by
[Section] 2.1) to each holder thereof not less than 30 days nor more than
60 days before the date fixed for such optional prepayment specifying (i)
such date, (ii) the section of this Agreement under which the prepayment
is to be made, (iii) the principal amount of the holder's Notes to be
prepaid on such date, (iv) that a premium may be payable, (v) the date
when such premium will be calculated, and (vi) the accrued interest
applicable to the prepayment. Such notice of prepayment shall also
certify all facts 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 the premium, if any,
and accrued interest thereon shall become due and payable on the date of
consummation of the related transaction (in the case of any prepayment
pursuant to [Section] 2.3) or on the date specified in the notice given
pursuant to the first sentence of this [Section] 2.4 (in the case of any
other prepayment). Not later than the prepayment date the Company shall
provide each holder of a Note written notice of the amount of the premium
payable in connection with such prepayment, whether or not any premium is
payable, together with a reasonably detailed computation thereof.
Section 2.5. Allocation of Prepayments. All partial prepayments, other
than prepayments pursuant to [Section] 2.3, shall be applied on all
outstanding Notes ratably in accordance with the unpaid principal amounts
thereof.
Section 2.6. Direct Payment. Notwithstanding anything to the
contrary in this Agreement or the Notes, in the case of any Note owned
by the Purchaser or its nominee or owned by any other institutional
holder who has given written notice to the Company requesting that the
provisions of this Section shall apply, the Company will promptly and
punctually pay when due the principal thereof and premium, if any, and
interest thereon, without any presentment thereof directly to the
Purchaser or such subsequent holder at the address of the Purchaser
set forth in Schedule I or at such other address as the Purchaser or
such subsequent holder may from time to time designate in writing to
the Company or, if a bank account is designated for the Purchaser on
Schedule I hereto or in any written notice to the Company from the
Purchaser or any such subsequent holder, the Company will make such
payments in immediately available funds to such bank account, marked
for attention as indicated, or in such other manner or to such other
account of the Purchaser or such holder in any bank in the United
States as the Purchaser or any such subsequent holder may from time to
time direct in writing. No such notice shall be effective with
respect to any payment if such notice is given to the Company less
than 14 days before the date of such payment. The holder of any Notes
to which this Section applies agrees that in the event it shall sell
or transfer any such Notes (i) it will, prior to the delivery of such
Notes (unless it has already done so), make a notation thereon of all
principal, if any, prepaid on such Notes and will also note thereon
the date to which interest has been paid on such Notes, and (ii) it
will promptly notify the Company of the name and
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<PAGE> 9
address of the transferee of any Notes so transferred. With respect to
Notes to which this Section applies, the Company shall be entitled to
presume conclusively that the original or such subsequent institutional
holder as shall have requested the provisions hereof to apply to its Notes
remains the holder of such Notes until (y) the Company shall have received
notice from the transferor of the transfer of such Notes, and of the name
and address of the transferee, or (z) such Notes shall have been presented
to the Company as evidence of the transfer.
SECTION 3. REPRESENTATIONS.
Section 3.1. Representations of the Company. The Company
represents and warrants that all representations set forth in the form
of certificate attached hereto as Exhibit B are true and correct as of
the date hereof and are incorporated herein by reference with the same
force and effect as though herein set forth in full.
Section 3.2. Representations of the Purchaser. (a) Purchase for
Investment. You represent, and in entering into this Agreement the
Company understands, that you are acquiring the Notes for the purpose
of investment and not with a view to the resale or distribution
thereof, and that you have no present intention of selling,
negotiating or otherwise disposing of the Notes; provided that the
disposition of your property shall at all times be and remain within
your control.
(b) You represent and warrant that either:
(i) you are acquiring the Notes for your own account and with
your general corporate assets and not with the assets of any separate
account in which any employee benefit plan has any interest; or
(ii)(A)(1) you are an insurance company and a portion of the
funds to be used to make your investment hereunder constitutes plan
assets allocated to a separate account maintained by you, and
(2) the names of each employee benefit plan whose assets in
such account exceed five percent of the total assets or are expected
to exceed five percent of the total assets of such account as of the
date of such investment (for the purposes of this
[Section] 3.2(b)(ii)(A)(2), all employee benefit plans maintained by
the same employer or employee organization are deemed to be a single
plan) have been disclosed in writing to the Company; and
(B) the remaining portion of the funds used to purchase the
Notes does not constitute assets allocated to any separate account
maintained by you such that the application of such funds constitutes a
"prohibited transaction" under Section 406 of the Employee Retirement
Income Security Act of 1974, as amended.
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<PAGE> 10
(c) You acknowledge that the Notes have not been registered under the
Securities Act of 1933, as amended, and you understand that the Notes must
be held indefinitely unless they are subsequently registered under said
Securities Act or an exemption from such registration is available. You
have been advised that the Company does not contemplate registering, and is
not legally required to register, the Notes under said Securities Act.
SECTION 4. CLOSING CONDITIONS
Section 4.1. Conditions. Your obligation to purchase the Notes on
the Closing Date shall be subject to the performance by the Company of
its agreements hereunder which by the terms hereof are to be performed
at or prior to the time of delivery of the Notes and to the following
further conditions precedent:
(a) Closing Certificate. You shall have received a certificate
dated the Closing Date, signed by the President or a Vice President of
the Company substantially in the form attached hereto as Exhibit B, the
truth and accuracy of which shall be a condition to your obligation to
purchase the Notes proposed to be sold to you.
(b) Legal Opinions. You shall have received from Chapman and
Cutler, who are acting as your special counsel in this transaction, and
from Ropes & Gray, counsel for the Company, their respective opinions
dated the Closing Date, in form and substance satisfactory to you, and
covering the matters set forth in Exhibits C and D, respectively,
hereto.
(c) Related Transactions. The Company shall have consummated
the sale of the entire principal amount of the Notes scheduled to be
sold on the Closing Date pursuant to this Agreement and the other
agreements referred to in [Section] 1.3.
(d) Satisfactory Proceedings. All proceedings taken in
connection with the transactions contemplated by this Agreement, and
all documents necessary to the consummation thereof, shall be
satisfactory in form and substance to you and your special counsel, and
you shall have received a copy (executed or certified as may be
appropriate) of all legal documents or proceedings taken in connection
with the consummation of said transactions.
Section 4.2. Waiver of Conditions. If on the Closing Date the Company
fails to tender to you the Notes to be issued to you on such date or if the
conditions specified in [Section]4.1 have not been fulfilled, you may
thereupon elect to be relieved of all further obligations under this
Agreement. Without limiting the foregoing, if the conditions specified in
[Section] 4.1 have not been fulfilled, you may waive compliance by the
Company with any such condition to such extent as you may in your sole
discretion determine. Nothing in this [Section] 4.2 shall operate to
relieve the Company of any of its obligations hereunder or to waive any of
your rights against the Company.
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<PAGE> 11
SECTION 5. COMPANY COVENANTS.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
Section 5.1.Corporate Existence, Etc. The Company will preserve
and keep in force and effect, and will cause each Restricted
Subsidiary to preserve and keep in force and effect, its corporate
existence and all licenses and permits reasonably necessary to the
proper conduct of its business the absence of which might materially
and adversely affect the properties, business or condition of the
Company or of the Company and its Restricted Subsidiaries taken as a
whole, provided that the foregoing shall not prevent any transaction
permitted by [Section] 5.13.
Section 5.2. Insurance. The Company will maintain, and will cause
each Restricted Subsidiary to maintain, insurance coverage by
financially sound and reputable insurers accorded a rating by A.M.
Best Company, Inc. of A:XII or better at the time of the issuance of
any such policy and in such forms and amounts and against such risks
as are customary for corporations of established reputation engaged in
the same or a similar business and owning and operating similar
properties; provided, however, that if, during the term of any such
insurance policy, the rating accorded the insurer shall be less than
A:XII, the Company will, on the date of renewal of any such policy
(or, if such change in rating shall occur within 90 days prior to such
renewal date, within 90 days of the date of such change in rating),
obtain such insurance policy from an insurer so rated.
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with
Laws. The Company will promptly pay and discharge, and will cause each
Restricted Subsidiary promptly to pay and discharge, all lawful taxes,
assessments and governmental charges or levies imposed upon the Company
or such Restricted Subsidiary, respectively, or upon or in respect of all
or any part of the property or business of the Company or such Restricted
Subsidiary, all trade accounts payable in accordance with usual and
customary business terms, and all claims for work, labor or materials,
which if unpaid might become a Lien upon any property of the Company or
such Restricted Subsidiary not permitted by [Section] 5.10; provided the
Company or such Restricted Subsidiary shall not be required to pay any
such tax, assessment, charge, levy, account payable or claim if (i) the
validity, applicability or amount thereof is being contested in good
faith by appropriate actions or proceedings which will prevent the
forfeiture or sale of any property of the Company or such Restricted
Subsidiary or any material interference with the use thereof by the
Company or such Restricted Subsidiary if such forfeiture, sale or
interference might have a material adverse effect on the properties,
business or condition of the Company or of the Company and its Restricted
Subsidiaries taken as a whole, and (ii) the Company or such Restricted
Subsidiary shall set aside on its books, reserves deemed by it to be
adequate with respect thereto. The Company will promptly comply and will
cause each Restricted Subsidiary to comply with all laws, ordinances or
governmental rules and regulations to which it is subject, including
without limitation, the Occupational Safety and Health
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<PAGE> 12
Act of 1970, the Employee Retirement Income Security Act of 1974 and all
laws, ordinances, governmental rules and regulations relating to
environmental protection in all applicable jurisdictions, the violation
of which would materially and adversely affect the properties, business,
prospects, profits or condition of the Company and its Restricted
Subsidiaries or would result in any Lien upon any material property of the
Company or any Restricted Subsidiary.
Section 5.4. Maintenance, Etc. The Company will maintain,
preserve and keep, and will cause each Restricted Subsidiary to
maintain, preserve and keep, its properties which are used or useful
in the conduct of its business (whether owned in fee or a leasehold
interest) in good repair and working order and from time to time will
make all necessary and reasonable repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be
maintained, unless the failure to do so would not have a material
adverse effect on the properties, business or condition of the Company
or of the Company and its Restricted Subsidiaries taken as a whole.
Section 5.5. Nature of Business. Neither the Company nor any
Restricted Subsidiary will engage in any business if, as a result, the
general nature of the business, taken on a consolidated basis, which
would then be engaged in by the Company and its Restricted
Subsidiaries would be substantially changed from the general nature of
the business engaged in by the Company and its Restricted Subsidiaries
on the date of this Agreement.
Section 5.6. Current Ratio. The Company will at all times keep
and maintain Consolidated Current Assets at an amount not less than
125% of Consolidated Current Liabilities.
Section 5.7. Consolidated Tangible Net Worth. The Company will at
all times keep and maintain Consolidated Tangible Net Worth at an
amount not less than (i) for the fiscal quarter of the Company ending
June 30, 1994, the sum of $56,759,000 plus 25% of Consolidated Net
Income for the fiscal quarter of the Company ended March 31, 1994 (but
without deduction in the case of a deficit in Consolidated Net Income)
and (ii) for each fiscal quarter thereafter, the sum of (x) the amount
required to be maintained during the immediately preceding fiscal
quarter of the Company, and (y) an amount equal to 25% of Consolidated
Net Income for such preceding fiscal quarter (but without deduction in
the case of a deficit in Consolidated Net Income).
Section 5.8. Limitations on Indebtedness. (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) the Notes;
(2) Current Debt and Funded Debt of the Company and its
Restricted Subsidiaries outstanding as of the date of the Second
Amendments and reflected
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<PAGE> 13
in Annex B to Exhibit B attached hereto (including any amendment,
modification, or other change to the Current Debt and Funded Debt
described in such Annex B and which does not increase the principal
amount thereof);
(3) Current Debt or Funded Debt of the Company, provided that
at the time of incurrence thereof and after giving effect thereto and
to the application of the proceeds thereof:
(i) Total Debt will not exceed 175% of Total Equity, and
(ii) Net Income Available for Interest Charges for the four
immediately preceding fiscal quarters shall have been at least 200%
of Pro Forma Interest Charges for such period;
(4) Current Debt or Funded Debt of a Restricted Subsidiary to
the Company or to a Wholly-owned Restricted Subsidiary; and
(5) Current Debt or Funded Debt of a Restricted Subsidiary,
other than that permitted by [Section]5.8(a)(4), provided that at the
time of incurrence thereof and after giving effect thereto and to the
application of the proceeds thereof, (i) Specified Debt does not exceed
20% of Consolidated Tangible Net Worth, (ii) Total Debt does not exceed
175% of Total Equity and (iii) Net Income Available for Interest
Charges for the four immediately preceding fiscal quarters shall have
been at least 200% of Pro Forma Interest Charges for such period.
(b) Any corporation which becomes a Restricted Subsidiary after the
date hereof shall for all purposes of this [Section] 5.8 be deemed to have
created, assumed or incurred at the time it becomes a Restricted Subsidiary
all Funded Debt and Current Debt of such corporation existing immediately
after it becomes a Restricted Subsidiary.
Section 5.9. Fixed Charges Coverage. The Company will keep and
maintain Net Income Available for Fixed Charges for each period of
four consecutive fiscal quarters at an amount which is not less than
150% of Fixed Charges for such period.
Section 5.10. Limitation on Liens. The Company will not, and
will not permit any Restricted Subsidiary to, create or incur, or
suffer to be incurred or to exist, any Lien on its or their property
or assets, whether now owned or hereafter acquired, or upon any income
or profits therefrom, to secure any Indebtedness or transfer any
property for the purpose of subjecting the same to the payment of
obligations in priority to the payment of its or their general
creditors, or acquire or agree to acquire, or permit any Restricted
Subsidiary to acquire, any property or assets upon conditional sales
agreements or other title retention devices, except:
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<PAGE> 14
(a) Liens for property taxes and assessments or governmental
charges or Liens securing claims or demands of mechanics and material
men, provided that such claims or demands are being contested in a
manner permitted by [Section]5.3;
(b) Liens of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Company or a Restricted Subsidiary
shall at any time in good faith be prosecuting an appeal or proceeding
for a review and in respect of which a stay of execution pending such
appeal or proceeding for review shall have been secured;
(c) Liens incidental to the conduct of business or the
ownership of properties and assets (including warehousemen's and
attorneys' Liens and statutory landlords' Liens) and Liens to secure
the performance of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds or other Liens of like
general nature incurred in the ordinary course of business and not in
connection with the borrowing of money, provided in each case, the
obligation secured is not overdue or, if overdue, is being contested
in good faith by appropriate actions or proceedings;
(d) Liens securing Indebtedness of a Restricted Subsidiary to
the Company or to another Restricted Subsidiary;
(e) Liens on property of a Restricted Subsidiary which secure
Specified Debt of such Restricted Subsidiary, provided that all such
Specified Debt shall have been incurred within the applicable
limitations provided in [Section] 5.8;
(f) Liens (including Capitalized Leases) (i) existing as of the
date of the Second Amendments and reflected in Annex B to Exhibit B
attached hereto, securing Indebtedness of the Company or any Restricted
Subsidiary outstanding on such date and (ii) securing refundings,
refinancings, restructurings or replacements of Indebtedness secured by
Liens (including Capitalized Leases) permitted by clause (i) of this
[Section]5.10(f), provided that each such refunding, refinancing,
restructuring and replacement shall not exceed the total principal
amount of Indebtedness being refunded, refinanced, restructured or
replaced and such Indebtedness may not be secured by any additional
property of the Company and its Subsidiaries;
(g) Liens incurred after the date hereof (1) given to secure
the payment of the purchase price incurred in connection with the
acquisition of fixed assets useful and intended to be used in carrying
on the business of the Company or a Restricted Subsidiary, including
Liens existing on such fixed assets at the time of acquisition thereof
or at the time of acquisition by the Company or a Restricted Subsidiary
of any business entity then owning such fixed assets, whether or not
such existing Liens were given to secure the
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<PAGE> 15
payment of the purchase price of the fixed assets to which they attach
so long as they were not incurred, extended or renewed in contemplation
of such acquisition, provided that (i) the Lien shall attach solely to
the property acquired or purchased, (ii) at the time of acquisition of
such fixed assets, the aggregate amount remaining unpaid on all
Indebtedness secured by Liens on such fixed assets whether or not
assumed by the Company or a Restricted Subsidiary shall not exceed an
amount equal to 100% of the lesser of the total purchase price or fair
market value at the time of acquisition of such fixed assets (as
determined in good faith by the Board of Directors of the Company), and
(iii) all such Indebtedness shall have been incurred within the
applicable limitations provided in [Section]5.8 and (2) given to secure
refundings, refinancings, restructurings or replacements of
Indebtedness secured by Liens permitted by clause (1) of this
[Section] 5.10(g), provided that each such refunding, refinancing,
restructuring and replacement shall not exceed the total principal
amount of Indebtedness being refunded, refinanced, restructured or
replaced and such Indebtedness may not be secured by any additional
property of the Company and its Subsidiaries;
(h) Liens on documents and the underlying goods securing
obligations in respect of documentary letters of credit and bankers'
acceptances;
(i) Liens that may arise from the sale or transfer of
receivables pursuant to a Securitized Asset Transaction (as defined in
[Section] 5.13(d)(3));
(j) provided that no Default or Event of Default exists at the
time of creation thereof, other Liens on fixed assets (in addition to
those permitted by the foregoing provisions of this [Section] 5.10) if,
after giving effect thereto (and to the application of the proceeds
thereof), the aggregate amount of Specified Debt would not exceed 20%
of Consolidated Tangible Net Worth; and
(k) other Liens securing Funded Debt or Current Debt (in
addition to those permitted by the foregoing provisions of this
[Section] 5.10), provided that the Notes shall be equally and ratably
secured pursuant to agreements or instruments in form and substance
satisfactory to the Noteholders as evidenced by their prior written
consent thereto in accordance with the provisions of [Section] 7.1.
Section 5.11. Restricted Payments. The Company will not, except
as hereinafter provided:
(a) Declare any dividends, either in cash or property, on any
shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capital stock of the
Company); or
(b) Directly or indirectly, or through any Subsidiary,
purchase, redeem or retire any shares of its capital stock of any
class or any warrants,
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<PAGE> 16
rights or options to purchase or acquire any shares of its capital
stock, other than purchases, redemptions or retirements of its capital
stock in connection with any employee benefit plans to the extent that
the aggregate amount of such purchases, redemptions and retirements
during the fiscal year which includes the date of the purchase,
redemption or retirement in question does not exceed the sum of (1)
$100,000 plus (2) the proceeds from sales of shares of the Company's
capital stock in connection with employee benefit plans during such
fiscal year; or
(c) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock;
or
(d) make, or permit any Restricted Subsidiary to make, any
Restricted Investment;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options, and all
such other distributions and Restricted Investments being herein
collectively called "Restricted Payments"), if after giving effect
thereto the aggregate amount of Restricted Payments made during the
period from and after December 31, 1988 to and including the date of
the making of the Restricted Payment in question, would exceed the sum
of (i) $33,879,500 plus (ii) 50% of Consolidated Net Income for the
period from and after December 31, 1993, computed on a cumulative basis
for said entire period (or if such Consolidated Net Income is a
deficit figure, then minus 100% of such deficit), plus (iii) the
aggregate net cash proceeds to the Company during such period from the
sale of shares of its capital stock or warrants, rights or option to
purchase or acquire any shares of its capital stock (other than any
such sale in connection with employee benefit plans), plus (iv) the
aggregate amount of net proceeds received by the Company and its
Restricted Subsidiaries in connection with any sale or disposition of
Restricted Investments made during such period provided that for the
purposes of this [Section] 5.11 the amount of proceeds from the sale or
disposition of any Restricted Investment may not exceed the original
amount of such Restricted Investment.
The Company will not declare any dividend which constitutes a Restricted
Payment payable more than 60 days after the date of declaration thereof.
For the purposes of this [Section]5.11 the amount of any Restricted
Payment declared, paid or distributed in property of the Company shall be
deemed to be the greater of the book value or fair market value (as
determined in good faith by the Board of Directors of the Company) of such
property at the time of the making of the Restricted Payment in question.
Section 5.12. Sale and Leasebacks. The Company will not, and will
not permit any Restricted Subsidiary to, enter into any arrangement
whereby the Company or any Restricted Subsidiary shall sell or
transfer any property owned by the Company or any Restricted
Subsidiary to any Person other than the Company or a Restricted
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<PAGE> 17
Subsidiary and thereupon the Company or any Restricted Subsidiary
shall lease or intend to lease, as lessee, the same property unless
(i) such property was constructed or installed for the Company or such
Restricted Subsidiary and is sold and leased back to the Company or
such Restricted Subsidiary within 18 months after such construction or
installation, and (ii) such sale by the Company or such Restricted
Subsidiary and leaseback to the Company or such Restricted Subsidiary
would not violate the provisions of [Section] 5.8 hereof.
Section 5.13. Mergers, Consolidations and Sales of Assets. (a) The
Company will not, and will not permit any Restricted Subsidiary to (i)
consolidate with or be a party to a merger with any other corporation
or (ii) sell, lease or otherwise dispose of all or any substantial
part (as defined in paragraph (d) of this Section) of the assets of
the Company and its Restricted Subsidiaries, provided, however, that:
(1) any Restricted Subsidiary may merge or consolidate with or
into any other corporation so long as (i) in any merger or
consolidation involving the Company, the Company shall be the
surviving or continuing corporation and (ii) in any merger or
consolidation involving a corporation other than the Company, (x)
the survivor shall be a Restricted Subsidiary and the Minority
Interests in the surviving corporation, expressed as a percentage of
the net worth of such surviving corporation after giving effect to
such merger or consolidation, would not exceed the lesser of (I) 25%
and (II) 10% plus the Minority Interests in such Restricted
Subsidiary on the date of this Agreement or, if the Restricted
Subsidiary is acquired or designated after the date of this
Agreement, on the date of such acquisition or designation, and (y)
aggregate Tangible Minority Interests (as defined in paragraph (d)
of this Section) in all Restricted Subsidiaries after giving effect
to such merger or consolidation would not exceed 10% of Consolidated
Tangible Net Worth;
(2) the Company may consolidate or merge with any other
corporation if (i) the surviving or continuing corporation is a
corporation organized under the laws of any state of the United
States, (ii) at the time of such consolidation or merger and after
giving effect thereto no Default or Event of Default shall have
occurred and be continuing, and (iii) after giving effect to such
consolidation or merger the surviving corporation would be permitted
to incur at least $1.00 of additional Funded Debt under the
provisions of [Section] 5.8(a)(3);
(3) any Restricted Subsidiary may sell, lease or otherwise
dispose of all or any substantial part of its assets to the Company
or any Wholly-owned Restricted Subsidiary;
(4) the Company or any Restricted Subsidiary may sell, transfer
or otherwise dispose of any Restricted Investment and any shares of
stock in any Unrestricted Subsidiary; and
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<PAGE> 18
(5) a Restricted Subsidiary may consolidate or merge with any
other corporation in a transaction permitted under the provisions of
[Section] 5.13(c).
(b) The Company will not permit any Restricted Subsidiary to issue or
sell any shares of stock of any class (including as "stock" for the
purposes of this [Section]5.13, any warrants, rights or options to purchase
or otherwise acquire stock or other Securities exchangeable for or
convertible into stock) of such Restricted Subsidiary to any Person other
than the Company or a Wholly-owned Restricted Subsidiary, unless (i) such
issue or sale does not constitute a substantial part (as hereinafter
defined) of the assets of the Company and its Restricted Subsidiaries, and
(ii) to the extent that (x) the Minority Interests in such Restricted
Subsidiary, expressed as a percentage of the net worth of such Restricted
Subsidiary after giving effect to such issuance or sale would not exceed
the lesser of (I) 25% and (II) 10% plus the Minority Interests in such
Restricted Subsidiary on the date of this Agreement or, if such Restricted
Subsidiary is acquired or designated after the date of this Agreement, on
the date of such acquisition or designation, and (y) aggregate Tangible
Minority Interests in all Restricted Subsidiaries after giving effect to
such issuance or sale would not exceed 10% of Consolidated Tangible Net
Worth.
(c) The Company will not sell, transfer or otherwise dispose of
any shares of stock in any Restricted Subsidiary (except to qualify
directors) or any Indebtedness of any Restricted Subsidiary, and will
not permit any Restricted Subsidiary to sell, transfer or otherwise
dispose of (except to the Company or a Wholly-owned Restricted
Subsidiary) any shares of stock or any Indebtedness of any other
Restricted Subsidiary, unless:
(1) either (x) such sale, transfer or disposition is made
within the limitations of [Section]5.13(b), or (y) simultaneously
with such sale, transfer, or disposition, all shares of stock and
all Indebtedness (excluding any trade receivables) owed by such
Restricted Subsidiary at the time owned by the Company and by every
other Subsidiary shall be sold, transferred or disposed of as an
entirety;
(2) the Board of Directors of the Company shall have
determined, as evidenced by a resolution thereof, that such sale,
transfer or disposition is in the best interests of the Company;
(3) such stock and Indebtedness is sold, transferred or
otherwise disposed of to a Person, for consideration and on terms
reasonably deemed by the Board of Directors to be adequate and
satisfactory, provided that (i) the amount of any non-cash
consideration received by the Company or a Restricted Subsidiary
shall be determined in good faith by the Board of Directors of the
Company, as evidenced by a certificate of the president or any
vice president of the Company setting forth in reasonable detail
the basis of such determination and delivered to the Note
Purchasers, which determination shall, upon the written request of
the holder or holders of not less than 25% of the unpaid
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<PAGE> 19
principal amount of the Notes, be subject to verification by an
independent appraiser designated and compensated by the Company and
not objected to by such holders, and (ii) any non-cash
consideration will be deemed a Restricted Investment made by the
Company or such Restricted Subsidiary on the date of such sale,
transfer or disposition in the amount of such valuation;
(4) except in the case of transactions permitted by
[Section]5.13(b), the Restricted Subsidiary being disposed of shall
not have any continuing investment in the Company or any other
Restricted Subsidiary not being simultaneously disposed of; and
(5) such sale or other disposition does not involve a
substantial part (as hereinafter defined) of the assets of the
Company and its Restricted Subsidiaries.
(d) As used in this [Section]5.13:
(1) A sale, lease or other disposition of assets (other
than Restricted Investments and investments in Unrestricted
Subsidiaries) shall be deemed to be a "substantial part" of the
assets of the Company and its Restricted Subsidiaries only if the
book value of such assets when added to the book value of all other
assets sold, leased or otherwise disposed of by the Company and its
Restricted Subsidiaries (other than Securitized Asset Transactions
and other transactions in the ordinary course of business) during
the same fiscal year, exceeds 15% of the Consolidated Net Tangible
Assets of the Company and its Restricted Subsidiaries determined as
of the end of the immediately preceding fiscal year or contributed
more than 15% of Net Income Available for Interest Charges, during
the next preceding three fiscal years taken as a whole. Sales or
other realization on delinquent receivables shall not be included in
any computation of sales or other dispositions hereunder. Sales of
assets shall not be included in any computations under this
paragraph (d) to the extent that (x) the proceeds from such sale are
applied to prepay the Notes pursuant to [Section] 2.2 hereof, (y)
the proceeds from such sale are applied to the voluntary prepayment
of Funded Debt, or (z) the proceeds of such sale are applied, within
one year of such sale, to the purchase of other property useful and
to be used in the business of the Company and its Restricted
Subsidiaries and, pending such application, are maintained by the
Company or any Restricted Subsidiary in a separate segregated
account.
(2) The term "Tangible Minority Interests" shall mean, with
respect to any Restricted Subsidiary, the amount that bears the same
relationship to Minority Interests in such Subsidiary as the
Consolidated Tangible Net Worth of such Subsidiary bears to the net
worth of such Subsidiary. For purposes of this definition, the
"Consolidated Tangible Net Worth" of a Restricted Subsidiary shall
be determined for such Subsidiary and its Restricted Subsidiaries in
accordance with the definitions set forth in [Section] 8.1, mutatis
mutandis.
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<PAGE> 20
(3) "Securitized Asset Transaction" shall mean a sale or other
transfer by any of the Company and its Restricted Subsidiaries of
receivables which were produced in the ordinary course of business
and not contingent upon any performance or product guarantee on the
part of the Company or any Restricted Subsidiary, which sale or
transfer does not involve the creation of any recourse obligation in
respect thereof on the part of the Company or any Restricted
Subsidiary (other than matters of title to, and the character of,
the receivables so sold or transferred).
Section 5.14. Guaranties. The Company will not and will not
permit any Restricted Subsidiary to become or be liable in respect of
any Guaranty except Guaranties by the Company and its Restricted
Subsidiaries of the obligations of any Person so long as the Company
and/or the Restricted Subsidiary guaranteeing such obligation could
have incurred such obligation within the limits of this Agreement,
provided that such underlying obligation shall be deemed to have been
incurred by, and to be the continuing direct obligation of, the
guarantor for all purposes of this Agreement.
Section 5.15. Repurchase of Notes. Neither the Company nor any
Restricted Subsidiary or Affiliate, directly or indirectly, may
repurchase or make any offer to repurchase any Notes unless the offer
has been made to repurchase Notes, pro rata, from all holders of the
Notes at the same time and upon the same terms. In case the Company
repurchases any Notes, such Notes shall thereafter be canceled and no
Notes shall be issued in substitution therefor.
Section 5.16. Transactions with Affiliates. The Company will not,
and will not permit any Restricted Subsidiary to, enter into or be a
party to, any transaction or arrangement with any Affiliate (including
without limitation, the purchase from, sale to or exchange of property
with, or the rendering of any service by or for, any Affiliate),
except in the ordinary course of and pursuant to the reasonable
requirements of the Company's or such Restricted Subsidiary's business
and upon fair and reasonable terms (as determined in good faith by the
Board of Directors of the Company) no less favorable to the Company or
such Restricted Subsidiary than would obtain in a comparable
arm's-length transaction with a Person other than an Affiliate.
Section 5.17. Investments. The Company will not, and will not permit
any Restricted Subsidiary to, make any investments in or loans, advances or
extensions of credit to, any Person, except:
(a) investments, loans, advances and extensions of credit by
the Company and its Restricted Subsidiaries in a corporation which,
after giving effect to such investment, will be a Restricted
Subsidiary;
(b) investments in commercial paper maturing in 270 days or
less from the date of issuance which, at the time of acquisition by the
Company or any
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<PAGE> 21
Restricted Subsidiary, is accorded a rating of P-1 by Standard &
Poor's Corporation or a rating of A-1 by Moody's Investors Services,
Inc.; (c)investments in direct obligations issued or guaranteed by the
full faith and credit of the United States of America, maturing,
except in the case of investments made with security deposits of rental
customers, in twelve months or less from the date of acquisition
thereof;
(d) investments in certificates of deposit maturing within one
year from the date of origin or other obligations (including repurchase
agreements), issued by a bank or trust company organized under the laws
of the United States or any state thereof, having capital, surplus and
undivided profits aggregating at least $250,000,000 and a long term
deposit rating of A or better from either Standard & Poor's Corporation
or Moody's Investors Service, Inc.;
(e) loans or advances not exceeding $1,000,000 in the aggregate
in the usual and ordinary course of business to officers, directors and
employees of the Company and its Restricted Subsidiaries;
(f) Investments in money market preferred stock, which, at the
time of acquisition by the Company or any Restricted Subsidiary, is
accorded a rating of AA or better by Standard & Poor's Corporation or a
rating of Aa2 or better by Moody's Investors Services, Inc.;
(g) Investments in money market mutual funds having total
assets aggregating at least $1,000,000,000 or which invests primarily
in assets described in clauses (b), (c), (d) and (f) of this
[Section] 5.17;
(h) Investments in demand deposits and endorsements for
collection;
(i) Investments to the extent that the consideration therefor
consists of capital stock of the Company; and
(j) Restricted Investments, subject to the limitations of
[Section] 5.11.
In valuing any investments, loans and advances for the purpose of
applying the limitations set forth in this [Section] 5.17 and [Section]
5.11 such investments, loans and advances shall be taken at the original
cost thereof, without allowance for any subsequent write-offs or
appreciation or depreciation therein, but less any amount repaid or
recovered on account of capital or principal.
For purposes of this [Section] 5.17, at any time when a corporation
becomes a Restricted Subsidiary, all investments of such corporation at
such time shall be deemed to have been made by such corporation, as a
Restricted Subsidiary, at such time.
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<PAGE> 22
Section 5.18. Termination of Pension Plans. The Company will not
and will not permit any Subsidiary to permit any employee benefit plan
maintained by it to be terminated in a manner which could result in
the imposition of a Lien on any property of the Company or any
Subsidiary pursuant to Section 4068 of the Employee Retirement Income
Security Act of 1974, as amended, if the incurrence of such Lien would
not be permitted by [Section] 5.10.
Section 5.19. Reports and Rights of Inspection. The Company will keep,
and will cause each Subsidiary to keep, proper books of record and account
in which full and correct entries will be made of all dealings or
transactions of or in relation to the business and affairs of the Company
or such Subsidiary, in accordance with generally accepted accounting
principles consistently applied (except for changes disclosed in the
financial statements furnished to you pursuant to this [Section]5.19 and
concurred in by the independent public accountants referred to in
[Section] 5.19(b) hereof), and will furnish to you so long as you are the
holder of any Note and to each other institutional holder of the then
outstanding Notes (in duplicate if so specified below or otherwise
requested):
(a) Quarterly Statements. As soon as available and in any
event within 55 days after the end of each quarterly fiscal period
(except the last) of each fiscal year, duplicate copies of:
(1) consolidated and consolidating balance sheets of the
Company and its Restricted Subsidiaries and of the Company and
its consolidated Subsidiaries as of the close of such quarter
setting forth, in the case of such consolidated statements, in
comparative form the amount for the end of the preceding fiscal
year,
(2) consolidated and consolidating statements of income
of the Company and its Restricted Subsidiaries and of the
Company and its consolidated Subsidiaries for such quarterly
period, setting forth, in the case of such consolidated
statements, in comparative form the amount for the corresponding
period of the preceding fiscal year, and
(3) consolidated statements of cash flows of the Company
and its Restricted Subsidiaries and of the Company and its
consolidated Subsidiaries for the portion of the fiscal year
ending with such quarter, setting forth in comparative form the
amount for the corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and correct, by an
authorized financial officer of the Company, provided that so long as
the Company shall file a quarterly report on Form 10-Q or any similar
form with the Securities and Exchange Commission or any successor
agency which contains the information set forth in this paragraph (a),
the requirements of this paragraph (a) shall be satisfied by
forwarding Form 10-Q to the holders of the Notes within 55 days after
the end of such quarterly fiscal period but, in any event, within five
days of filing such Form 10-Q with the
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<PAGE> 23
Securities and Exchange Commission, and provided, further that so long as
the Unrestricted Subsidiaries of the Company taken as a whole do not
constitute a Significant Subsidiary, the Company shall not be required to
deliver to you financial statements of the Company and its Restricted
Subsidiaries referred to in paragraphs (1), (2) and (3) of this
[Section] 5.19(a);
(b) Annual Statements. As soon as available and in any event
within 110 days after the close of each fiscal year of the Company,
duplicate copies of:
(1) consolidated and consolidating balance sheets of the
Company and its Restricted Subsidiaries and of the Company and its
consolidated Subsidiaries as of the close of such fiscal year, and
(2) consolidated and consolidating statements of income and
stockholders' equity and cash flows of the Company and its
Restricted Subsidiaries and of the Company and its consolidated
Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consolidated figures for
the preceding fiscal year, all in reasonable detail and accompanied by an
opinion thereon of a firm of independent public accountants of recognized
national standing selected by the Company to the effect that the
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied (except for
changes in application in which such accountants concur) and present fairly
the financial condition of the companies reported on and that the
examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards and accordingly, includes such tests of the accounting records
and such other auditing procedures as were considered necessary in the
circumstances, provided that so long as the Company shall file an annual
report on Form 10-K or any similar form with the Securities and Exchange
Commission or any successor agency which contains the information set forth
in this paragraph (b), the requirements of this paragraph (b) shall be
satisfied by forwarding Form 10-K to the holders of the Notes within 110
days after the end of such fiscal year but, in any event, within five days
of filing such Form 10-K with the Securities and Exchange Commission, and
provided further that so long as the Unrestricted Subsidiaries of the
Company taken as a whole do not constitute a Significant Subsidiary, the
Company shall not be required to deliver to you financial statements of the
Company and its Restricted Subsidiaries referred to in paragraphs (1) and
(2) of this [Section] 5.19(b).
(c) Audit Reports. Promptly upon receipt thereof, one copy of
each interim or special audit made by independent accountants of the
books of the Company or any Restricted Subsidiary and any management
letter received from such accountants;
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<PAGE> 24
(d) SEC and Other Reports. Promptly upon their becoming
available, one copy of each financial statement, report, notice or
proxy statement sent by the Company to stockholders generally and of
each regular or periodic report, and any registration statement or
prospectus filed by the Company or any Subsidiary with any securities
exchange or the Securities and Exchange Commission or any successor
agency, and copies of any orders in any proceedings to which the
Company or any of its Subsidiaries is a party, issued by any
governmental agency, Federal or state, having jurisdiction over the
Company or any of its Subsidiaries;
(e) Requested Information. With reasonable promptness, such
other data and information as you or any such institutional holder may
reasonably request, provided, that with respect to any data and
information obtained by you as a result of any request pursuant to this
paragraph (e), you agree that, to the extent that such data and
information has not theretofore otherwise been disclosed by or as
authorized by the Company in such a manner as to render such data and
information no longer confidential, you will use reasonable efforts
(consistent with your established procedures) to reasonably maintain
(and cause persons referred to in (i) below to maintain) the
confidential nature of the data and information therein contained;
provided, that anything herein contained to the contrary
notwithstanding, you may, to the extent necessary, disclose or
disseminate such data and information to: (i) your employees, agents,
attorneys, and accountants who would ordinarily have access to such
data and information in the normal course of the performance of their
duties; (ii) such third parties as you may, in your discretion, deem
reasonably necessary or desirable in connection with or in response to
(x) compliance with any law, ordinance or governmental order,
regulation, rule, policy, subpoena, investigation, regulatory authority
request or request, or (y) any order, decree, judgment, subpoena,
notice of discovery or similar ruling or pleading issued, filed, served
or purported on its face to be issued, filed or served (A) by or under
authority of any court, tribunal, arbitration board of any governmental
or industry agency, commission, authority, board or similar entity or
(B) in connection with any proceeding, case or matter pending (or on
its face purported to be pending) before any court, tribunal,
arbitration board or any governmental agency, commission, authority,
board or similar entity; (iii) any prospective purchaser, securities
broker or dealer or investment banker in connection with the resale or
proposed resale by you of any portion of the Notes who shall agree in
writing to accept such information subject to the provisions of this
paragraph (e); (iv) any Person holding your debt Securities who shall
have requested to inspect such information subject to the provisions of
this paragraph (e); (v) the National Association of Insurance
Commissioners; and (vi) any entity utilizing such information to rate
or classify your debt or equity Securities or to report to the public
concerning the industry of which you are a part; and, provided further,
that you shall not be liable to the Company or any other Person for
damages for any failure by you, despite your reasonable efforts so to
do, to comply with the provisions of this paragraph (e).
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(f) Officers' Certificates. Within the periods provided in
paragraphs (a) and (b) above, a certificate of an authorized financial
officer of the Company stating that he has reviewed the provisions of
this Agreement and setting forth: (i) the information and computations
(in sufficient detail) required in order to establish whether the
Company was in compliance with the requirements of [Section] 5.5
through [Section] 5.18, inclusive, at the end of the period covered by
the financial statements then being furnished, and (ii) whether there
existed as of the date of such financial statements and whether, to the
best of his knowledge, there exists on the date of the certificate or
existed at any time during the period covered by such financial
statements any Default or Event of Default and, if any such condition
or event exists on the date of the certificate, specifying the nature
and period of existence thereof and the action the Company is taking
and proposes to take with respect thereto;
(g) Accountant's Certificates. Within the period provided in
paragraph (b) above, a certificate of the accountants who render an
opinion with respect to such financial statements, stating that they
have reviewed this Agreement and stating further, whether in making
their audit, such accountants have become aware of any Default or Event
of Default under any of the terms or provisions of [Section] 5.6
through [Section] 5.14, inclusive, [Section]5.17 or [Section] 5.18 of
this Agreement insofar as any such terms or provisions pertain to or
involve accounting matters or determinations, and if any such
condition or event then exists, specifying the nature and period of
existence thereof; and
(h) Unrestricted Subsidiaries. Within the respective periods
provided in paragraph (b) above, financial statements of the character
and for the dates and periods as in said paragraph (b) provided
covering Unrestricted Subsidiaries on a consolidated and consolidating
basis.
Without limiting the foregoing, the Company will permit you, so long as
you are the holder of any Note, and each institutional holder of the then
outstanding Notes (or such Persons as either you or such holder may
designate) to visit and inspect, under the Company's guidance, any of the
properties of the Company or any Subsidiary, to examine all their books of
account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts
with their respective officers, employees, and independent public
accountants (and by this provision the Company authorizes said accountants
to discuss with you the finances and affairs of the Company and its
Subsidiaries) all at such reasonable times and as often as may be
reasonably requested. The Company shall not be required to pay or
reimburse you or any such holder for expenses which you or any such holder
may incur in connection with any such visitation or inspection.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 6.1. Events of Default. Any one or more of the following
shall constitute an "Event of Default" as the term is used herein:
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(a) Default shall occur in the payment of interest on any Note
when the same shall have become due and such default shall continue for
more than five days; or
(b) Default shall occur in the making of any required
prepayment on any of the Notes as provided in [Section] 2.1; or
(c) Default shall occur in the making of any other payment of
the principal of any Note or the premium thereon at the expressed or
any accelerated maturity date or at any date fixed for prepayment; or
(d) Default shall be made in the payment of the principal of or
interest on any Indebtedness of the Company or any Restricted
Subsidiary for borrowed money in an aggregate principal amount in
excess of $1,000,000, as and when the same shall become due and payable
by the lapse of time, by declaration, by call for redemption or
otherwise, and such default shall continue beyond the period of grace,
if any, allowed with respect thereto; or
(e) Default or the happening of any event shall occur under any
indenture, agreement, or other instrument under which any Indebtedness
of the Company or any Restricted Subsidiary for borrowed money in an
aggregate principal amount in excess of $1,000,000 may be issued and
such default or event shall continue for a period of time sufficient to
permit the acceleration of the maturity of any Indebtedness of the
Company or any Restricted Subsidiary outstanding thereunder; or
(f) Default shall occur in the observance or performance of any
covenant or agreement contained in [Section]5.6 through [Section] 5.15,
inclusive, or [Section] 5.17 hereof; or
(g) Default shall occur in the observance or performance of any
other provision of this Agreement which is not remedied within 30 days
after notice thereof to the Company by the holder of any Note; or
(h) If any representation or warranty made by the Company
herein, or made by the Company in any statement or certificate
furnished by the Company in connection with the consummation of the
issuance and delivery of the Notes or furnished by the Company
pursuant hereto, is untrue in any material respect as of the date of
the issuance or making thereof; or
(i) The Company or any Significant Subsidiary which is a
Restricted Subsidiary becomes insolvent or bankrupt, is generally not
paying its debts as they become due or makes an assignment for the
benefit of creditors, or the Company or any Significant Subsidiary
which is a Restricted Subsidiary causes or suffers an order for relief
to be entered with respect to it under applicable Federal bankruptcy
law or applies for or consents to the appointment of a
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custodian, trustee or receiver for the Company or such Significant
Subsidiary which is a Restricted Subsidiary or for the major part
of the property of either; or
(j) A custodian, trustee or receiver is appointed for the
Company or any Significant Subsidiary which is a Restricted Subsidiary
or for the major part of the property of either and is not discharged
within 30 days after such appointment; or
(k) Final judgment or judgments for the payment of money
aggregating in excess of $100,000 is or are outstanding against the
Company or any Significant Subsidiary which is a Restricted Subsidiary
or against any property or assets of either and any one of such
judgments has remained unpaid, unvacated, unbonded or unstayed by
appeal or otherwise for a period of 30 days from the date of its entry;
or
(l) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or
against the Company or any Significant Subsidiary which is a Restricted
Subsidiary and, if instituted against the Company or any Significant
Subsidiary which is a Restricted Subsidiary, are consented to or are
not dismissed within 60 days after such institution.
Section 6.2. Notice to Holders. When any Event of Default described in
the foregoing [Section] 6.1 has occurred, or if the holder of any Note or
of any other evidence of Indebtedness of the Company gives any notice or
takes any other action with respect to a claimed default, the Company
agrees to give prompt notice of such event to all holders of the Notes then
outstanding, such notice to be in writing and sent by registered or
certified mail or by telegram.
Section 6.3. Acceleration of Maturities. When any Event of Default
described in paragraph (a), (b) or (c) of [Section]6.1 has happened and is
continuing, any holder of any Note may declare its Notes to be, and its
Notes shall thereupon become, forthwith due and payable, without any
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived. When any Event of Default described in paragraphs
(a) through (h), inclusive, and (k) of said [Section] 6.1 has happened and
is continuing, the holder or holders of 25% or more of the principal amount
of Notes at the time outstanding may, by notice in writing sent by
registered or certified mail to the Company, declare the entire principal
and all interest accrued on all Notes to be, and all Notes shall thereupon
become, forthwith due and payable, without any presentment, demand, protest
or other notice of any kind, all of which are hereby expressly waived.
When any Event of Default described in paragraphs (i), (j) and (l) of
[Section] 6.1 has occurred, then all outstanding Notes shall immediately
become due and payable without presentment, demand or notice of any kind.
Upon any or all Notes becoming due and payable as a result of any Event of
Default as aforesaid, the
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Company will forthwith pay to the holders of such Notes the entire
principal and interest accrued on such Notes and, with respect to a payment
made as a result of an Event of Default described in paragraph (a), (b),
(c) or (f) of [Section] 6.1, and to the extent permitted by law, liquidated
damages for the loss of the bargain evidenced hereby in an amount equal to
the Make-Whole Amount. No course of dealing on the part of any Noteholder
nor any delay or failure on the part of any Noteholder to exercise any
right shall operate as a waiver of such right or otherwise prejudice such
holder's rights, powers and remedies. The Company further agrees, to the
extent permitted by law, to pay to the holder or holders of the Notes all
costs and expenses incurred by them in the collection of any Notes upon any
default hereunder or thereon, including reasonable compensation to such
holder's or holders' attorneys for all services rendered in connection
therewith.
Section 6.4. Rescission of Acceleration. The provisions of [Section]
6.3 are subject to the condition that if the principal of and accrued
interest on all or any outstanding Notes have been declared immediately
due and payable by reason of the occurrence of any Event of Default
described in paragraphs (a) through (h), inclusive, and (k) of [Section]
6.1, the holders of 51% in aggregate principal amount of the Notes then
outstanding may, by written instrument filed with the Company, rescind and
annul such declaration and the consequences thereof, provided that at the
time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of
any monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other
sums payable under the Notes and under this Agreement (except any
principal, interest or premium on the Notes which has become due and
payable solely by reason of such declaration under [Section] 6.3)
shall have been duly paid; and
(c) each and every other Default and Event of Default shall
have been made good, cured or waived pursuant to [Section] 7.1;
and provided further, that no such rescission and annulment shall
extend to or affect any subsequent Default or Event of Default or
impair any right consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
Section 7.1. Consent Required. (a) Any term, covenant, agreement
or condition of this Agreement may, with the consent of the Company,
be amended or compliance therewith may be waived (either generally or
in a particular instance and either retroactively or prospectively),
if the Company shall have obtained the consent in writing of the
holders of at least 51% in aggregate principal amount of outstanding
Notes; provided that without the written consent of the holders of all
of the Notes then outstanding, no such waiver, modification,
alteration or amendment shall be effective (i) which will change the
time of payment (including any prepayment required by
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[Section] 2.1) of the principal of or the interest on any Note or change
the principal amount thereof or change the rate of interest thereon, or
(ii) which will change any of the provisions with respect to optional
prepayments, or (iii) which will change the percentage of holders of the
Notes required to consent to any such amendment, alteration or modification
or any of the provisions of this [Section] 7 or [Section] 6.
(b) So long as any outstanding Notes are owned by you, the
Company will not solicit, request or negotiate for or with respect to
any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each holder of the Notes (irrespective
of the amount of Notes then owned by it) shall be informed thereof by
the Company and shall be afforded the opportunity of considering the
same and shall be supplied by the Company with sufficient information
to enable it to make an informed decision with respect thereto.
Executed or true and correct copies of any waiver or consent effected
pursuant to the provisions of this [Section]7.1 shall be delivered by the
Company to each holder of outstanding Notes forthwith following the
date on which the same shall have been executed and delivered by the
holder or holders of the requisite percentage of outstanding Notes.
The Company will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder of the Notes as
consideration for or as an inducement to the entering into by any
holder of the Notes of any waiver or amendment of any of the terms and
provisions of this Agreement unless such remuneration is concurrently
paid, on the same terms, ratably to the holders of all of the Notes
then outstanding, provided however, that if any holder of Notes fails
to consent to a transaction which will result in a violation of
[Section] 5.13 hereof, and as a result of such failure the Notes of such
holder are prepaid pursuant to [Section] 2.3 hereof, such holder shall not
be entitled to any remuneration pursuant to this [Section] 7.1(b) in
connection with the requested consent to such transaction.
Section 7.2. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and
shall be binding upon them, upon each future holder of any Note and
upon the Company, whether or not such Note shall have been marked to
indicate such amendment or waiver. No such amendment or waiver shall
extend to or affect any obligation not expressly amended or waived or
impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 8.1. Definitions. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the
following meanings and the following definitions shall be equally
applicable to both the singular and plural forms of any of the terms
herein defined:
"Affiliate" shall mean any Person (other than a Restricted Subsidiary)
(i) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the
Company, (ii) which beneficially owns or holds 5% or more of any class of
the Voting Stock of the Company or (iii) 5% or
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more of the Voting Stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is beneficially
owned or held by the Company or a Subsidiary. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Capitalized Lease" shall mean any lease the obligation for Rentals with
respect to which is required to be capitalized on a balance sheet of the
lessee in accordance with generally accepted accounting principles.
"Capitalized Rentals" shall mean as of the date of any determination the
amount at which the aggregate Rentals due and to become due under all
Capitalized Leases under which the Company or any Restricted Subsidiary is
a lessee would be reflected as a liability on a consolidated balance sheet
of the Company and its Restricted Subsidiaries.
"Consolidated Current Assets" and "Consolidated Current Liabilities"
shall mean such assets and liabilities of the Company and its Restricted
Subsidiaries on a consolidated basis as shall be determined in accordance
with generally accepted accounting principles to constitute current assets
and current liabilities (including in current liabilities, in any event,
Guaranties of current liabilities of others), respectively. "Consolidated
Net Income" for any period shall mean the gross revenues of the Company and
its Restricted Subsidiaries for such period less all expenses and other
proper charges (including taxes on income), determined on a consolidated
basis in accordance with generally accepted accounting principles
consistently applied and after eliminating earnings or losses attributable
to outstanding Minority Interests, but excluding in any event:
(a) any gains or losses on the sale or other disposition of
investments or fixed or capital assets, to the extent any such gain or
loss constitutes an "extraordinary item" under generally accepted
accounting principles, and any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Restricted Subsidiary
accrued prior to the date it became a Restricted Subsidiary;
(d) net earnings and losses of any corporation (other than a
Restricted Subsidiary), substantially all the assets of which have been
acquired in any manner, realized by such other corporation prior to the
date of such acquisition;
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(e) net earnings and losses of any corporation (other than a
Restricted Subsidiary) with which the Company or a Restricted
Subsidiary shall have consolidated or which shall have merged into or
with the Company or a Restricted Subsidiary prior to the date of such
consolidation or merger;
(f) net earnings of any business entity (other than a
Restricted Subsidiary) in which the Company or any Restricted
Subsidiary has an ownership interest unless such net earnings shall
have actually been received by the Company or such Subsidiary in the
form of cash distributions;
(g) any portion of the net earnings of any Restricted
Subsidiary which for any reason is unavailable for payment of
dividends to the Company or any other Restricted Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or
write-up of assets;
(i) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the
amount invested in such Subsidiary;
(j) any gain arising from the acquisition of any Securities of
the Company or any Restricted Subsidiary; and
(k) any reversal of any contingency reserve, except to the
extent that provision for such contingency reserve shall have been
made from income arising during such period.
"Consolidated Net Tangible Assets" shall mean as of the date of any
determination thereof the total amount of all Tangible Assets of the
Company and its Restricted Subsidiaries after deducting all Restricted
Investments and all items which in accordance with generally accepted
accounting principles would be included on the liability side of a
consolidated balance sheet, except deferred income taxes, deferred
investment tax credits, capital stock of any class, surplus, and Funded
Debt.
"Consolidated Tangible Net Worth" shall mean, as of the date of any
determination thereof, Consolidated Net Tangible Assets less all
outstanding Funded Debt, deferred income taxes, deferred investment tax
credits and Minority Interests, all determined in accordance with generally
accepted accounting principles consolidating the Company and its Restricted
Subsidiaries.
"Current Debt" as of the date of any determination thereof shall mean
(i) all Indebtedness for money borrowed other than Funded Debt, (ii) all
Indebtedness with respect to documentary letters of credit and bankers'
acceptances, and (iii) Guaranties of Current Debt of others.
"Consolidated" when used as a prefix to any Current Debt
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shall mean the aggregate amount of all such Current Debt of the Company and
its Restricted Subsidiaries on a consolidated basis eliminating
intercompany items.
"Default" shall mean any event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute
an Event of Default as defined in [Section] 6.1.
"Fixed Charges" for any period shall mean on a consolidated basis the
sum of (i) all Rentals (other than Rentals on Capitalized Leases) payable
during such period by the Company and its Restricted Subsidiaries, and (ii)
all Interest Charges during such period on all Indebtedness (including the
interest component of Rentals on Capitalized Leases) of the Company and its
Restricted Subsidiaries.
"Funded Debt" of any Person shall mean (i) all Indebtedness for borrowed
money or which has been incurred in connection with the acquisition of
assets in each case having a final maturity of one or more than one year
from the date of origin thereof (or which is renewable or extendible at the
option of the obligor for a period or periods of one or more than one year
from the date of origin, but excluding revolving lines of credit renewable
or extendible at the option of the obligor for a period or periods of one
or more than one year from the date of origin except to the extent such
option shall have been exercised), including all payments in respect
thereof that are required to be made within one year from the date of any
determination of Funded Debt, whether or not included in Consolidated
Current Liabilities, (ii) all Capitalized Rentals, and (iii) all Guaranties
of Funded Debt of others. "Consolidated" when used as a prefix to any
Funded Debt shall mean the aggregate amount of all such Funded Debt of the
Company and its Restricted Subsidiaries on a consolidated basis eliminating
intercompany items.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments
for deposit or collection) of such Person guaranteeing, or in effect
guaranteeing, any Indebtedness, dividend or other obligation of any other
Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (i) to purchase
such Indebtedness or obligation or any property or assets constituting
security therefor, (ii) to advance or supply funds (x) for the purchase or
payment of such Indebtedness or obligation, (y) to maintain working capital
or other balance sheet condition or otherwise to advance or make available
funds for the purchase or payment of such Indebtedness or obligation, or
(iii) to lease property or to purchase Securities or other property or
services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make
payment of the Indebtedness or obligation, or (iv) otherwise to assure the
owner of the Indebtedness or obligation of the primary obligor against loss
in respect thereof. For the purposes of all computations made under this
Agreement, a Guaranty in respect of any Indebtedness for borrowed money
shall be deemed to be Indebtedness equal to the principal amount of such
Indebtedness for borrowed money which has been
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guaranteed, and a Guaranty in respect of any other obligation or liability
or any dividend shall be deemed to be Indebtedness equal to the maximum
aggregate amount of such obligation, liability or dividend.
"Indebtedness" of any Person shall mean and include all obligations of
such Person which in accordance with generally accepted accounting
principles shall be classified upon a balance sheet of such Person as
liabilities of such Person, and in any event shall include all (i)
obligations of such Person for borrowed money or which has been incurred in
connection with the acquisition of property or assets, (ii) obligations
secured by any Lien upon property or assets owned by such Person, even
though such Person has not assumed or become liable for the payment of such
obligations, (iii) obligations created or arising under any conditional
sale or other title retention agreement with respect to property acquired
by such Person,notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property, and (iv) Capitalized Rentals
under any Capitalized Lease. For the purpose of computing the Indebtedness
of any Person, there shall be excluded any particular Indebtedness to the
extent that, upon or prior to the maturity thereof, there shall have been
deposited with the proper depository in trust the necessary funds (or
evidences of such Indebtedness, if permitted by the instrument creating
such Indebtedness) for the payment, redemption or satisfaction of such
Indebtedness; and thereafter such funds and evidences of Indebtedness so
deposited shall not be included in any computation of the assets of such
Person.
"Interest Charges" for any period shall mean all interest and all
amortization of debt discount and expense on any particular Indebtedness
for which such calculations are being made. Computations of Interest
Charges on a pro forma basis for Indebtedness having a variable interest
rate shall be calculated at the rate in effect on the date of any
determination.
"Lien" shall mean any mortgage, pledge, security interest, lien,
encumbrance or other charge of any kind on any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Make-Whole Amount" as at any date a payment thereof is due (the
"payment date") in connection with a payment or prepayment in respect of
the Notes shall mean the excess of (i) the present value as at the payment
date of the remaining principal and interest payments to become due in
respect of that portion of the principal amount of the Notes to be so paid
or prepaid, discounted semiannually at an annual rate which is equal to the
Treasury Rate plus 0.50% over (ii) the aggregate principal amount of the
Notes then to be paid or prepaid plus accrued interest on such principal
amount. To the extent that the Treasury Rate plus 0.50% at the time of
determination of the Make-Whole Amount is equal to or higher than 9.70%,
the Make-Whole Amount is zero. For purposes of any determination of the
Make-Whole Amount:
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(a) The applicable "Treasury Rate" means the mean of the yields
to maturity of customarily-issued United States Treasury obligations
with a constant maturity (as compiled by and published in the United
States Federal Reserve Bulletin H.15(519) or its successor publication
for each of the two weeks immediately preceding the payment date) most
nearly equal to the remaining Weighted Average Life to Maturity of the
Notes as at the payment date. If no maturity exactly corresponding to
such remaining Weighted Average Life to Maturity shall appear therein,
yields for the two most closely corresponding published maturities
shall be calculated pursuant to the foregoing sentence and the Treasury
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, the Treasury Rate in respect of such determination date
shall be calculated pursuant to the next preceding sentence on the
basis of the arithmetic mean of the arithmetic means 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 such 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.
(b) "Weighted Average Life to Maturity" with respect to the
Notes means, as at the payment date, the number of years obtained by
dividing the then Remaining Dollar-years of the Notes by the
outstanding principal amount of the Notes. The term "Remaining
Dollar-years" of the Notes means the product obtained by (i)
multiplying (A) the amount of each then remaining required principal
repayment (including repayment at final maturity), by (B) the number
of years (calculated to the nearest one-twelfth) which will elapse
between the time of determination and the date such required
repayment is due, and (ii) totaling all the products obtained in the
computations described in clause (i).
"Minority Interests" shall mean any shares of stock of any class of a
Restricted Subsidiary (other than directors' qualifying shares as required
by law, and other than shares of the Class A Stock of The Outdoor Footwear
Company so long as the number of outstanding shares of such Class A Stock
do not exceed 50,000 at any time and the certificate of incorporation of
The Outdoor Footwear Company is not amended after the date hereof to
increase the rights of the holders of Class A Stock in the event of a
liquidation of The Outdoor Footwear Company) that are not owned by the
Company and/or one or more of its Restricted Subsidiaries. Minority
Interests shall be valued by valuing Minority Interests constituting
preferred stock at the voluntary or involuntary liquidating value of such
preferred stock, whichever is greater, and by valuing Minority Interests
constituting common stock at the book value of capital and surplus
applicable thereto adjusted, if necessary, to reflect any changes from the
book value of such common stock required by the foregoing method of valuing
Minority Interests in preferred stock.
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"Net Income Available for Fixed 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), (ii) all provisions for
any Federal, state or other income taxes made by the Company and its
Restricted Subsidiaries during such period and (iii) Fixed Charges of the
Company and its Restricted Subsidiaries during such period.
"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), (ii) all
provisions for any Federal, state or other income taxes made by the Company
and its Restricted Subsidiaries during such period and (iii) Interest
Charges during such period, determined on a pro forma basis giving effect
as of the beginning of such period (x) to the disposition during such
period of assets constituting a substantial part of the assets of the
Company and its Restricted Subsidiaries taken as a whole, (y) to the
acquisition or disposition during such period of all or substantially all
of the stock or assets of an entity or assets consisting of a line of
business of an entity, and (z) to the acquisition, designation or
disposition during such period of a Restricted Subsidiary; provided,
however, that any such determination of the amount to be included in
Consolidated Net Income on a pro forma basis taking into account the
earnings of an entity, the stock or assets of which have been acquired by
the Company or a Restricted Subsidiary, shall include only such amounts as
are based on the actual historical financial results of such entity during
such period, determined in accordance with generally accepted accounting
principles.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political
subdivision thereof.
"Pro Forma Interest Charges" for any period shall mean, as of the date
of any determination thereof, the maximum aggregate amount of Interest
Charges which would have become payable by the Company and its Restricted
Subsidiaries in such period determined on a pro forma basis giving effect
as of the beginning of such period to the incurrence of any Funded Debt
(including Capitalized Rentals) and the retirement of outstanding Funded
Debt or termination of any Capitalized Leases.
"Rentals" shall mean and include all fixed rents (including as such all
payments which the lessee is obligated to make to the lessor on termination
of the lease or surrender of the property) payable by the Company or a
Restricted Subsidiary, as lessee or sublessee under a lease of real or
personal property, but shall be exclusive of any amounts required to be
paid by the Company or a Restricted Subsidiary (whether or not designated
as rents or additional rents) on account of maintenance, repairs,
insurance, taxes and similar charges. Fixed rents under any so-called,
"percentage leases" shall be computed solely on the basis of the minimum
rents, if any, required to be paid by the lessee regardless of sales volume
or gross revenues.
-31-
<PAGE> 36
"Restricted Investments" shall mean all investments, loans and advances
existing on or made after the date of this Agreement of the Company and its
Restricted Subsidiaries other than investments, loans or advances permitted
by paragraphs (a) through (i), inclusive, of [Section]5.17 hereof. The
Company and its Restricted Subsidiaries shall be deemed to have made a
Restricted Investment (i) to the extent of the equity of the Company and
its Restricted Subsidiaries in the net assets of a Restricted Subsidiary
which has become an Unrestricted Subsidiary on the date that the Restricted
Subsidiary becomes an Unrestricted Subsidiary and (ii) to the extent of the
value of any non-cash consideration received by the Company and its
Restricted Subsidiaries in connection with a sale of stock or Indebtedness
permitted by [Section] 5.13(c)(3) hereof.
"Restricted Subsidiary" shall mean any Subsidiary which is designated as
a Restricted Subsidiary on Annex A of the Closing Certificate or any other
Subsidiary (i) which is organized under the laws of the United States or
any State thereof, Canada, Cayman Islands, the Dominican Republic, France,
Puerto Rico, the United Kingdom, West Germany, Australia, Austria, Belgium,
Denmark, Finland, Republic of Ireland, Italy, Luxembourg, Netherlands, New
Zealand, Norway, Portugal, Spain, Sweden, Switzerland, and U.S. Virgin
Islands; (ii) which conducts substantially all of its business and has
substantially all of its assets within the United States, Canada, the
Dominican Republic, France, Puerto Rico, the United Kingdom, West Germany,
Australia, Austria, Belgium, Denmark, Finland, Republic of Ireland, Italy,
Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden,
Switzerland, and U.S. Virgin Islands; (iii) of which more than 75% (by
number of votes) of the Voting Stock is owned by the Company and/or one or
more Restricted Subsidiaries; and (iv) which is designated a Restricted
Subsidiary at the time it first becomes a Subsidiary, provided, the Board
of Directors of the Company may designate any Unrestricted Subsidiary as a
Restricted Subsidiary but only if (i) after giving effect to such
designation the Company and its Restricted Subsidiaries could incur $1 of
additional Consolidated Funded Debt and (ii) at the time of such
designation and after giving effect thereto no Default or Event of Default
shall have occurred and be continuing. Any Subsidiary which is designated
by the Board of Directors of the Company as a Restricted Subsidiary after
having been an Unrestricted Subsidiary may not be redesignated an
Unrestricted Subsidiary. The Company shall give prompt notice to the
Noteholders of designation of a Restricted Subsidiary.
"Second Amendments" shall mean collectively, the separate Amended and
Restated Note Agreements dated as of April 1, 1994 between the Company and
the holders signatory thereto relating to the amending and restating of
this Agreement.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Significant Subsidiary" shall mean any Subsidiary which meets any of
the following conditions:
-32-
<PAGE> 37
(1) The Company's and its other Subsidiaries' investments in
and advances to the Subsidiary exceed 10 percent of the Consolidated
Tangible Net Worth of the Company and its Subsidiaries as of the end
of the most recently completed fiscal year; or
(2) The Company's and its other Subsidiaries' proportionate
share of the Consolidated Tangible Net Worth of the Subsidiary
exceeds 10 percent of the Consolidated Tangible Net Worth of the
Company and its Subsidiaries as of the end of the most recently
completed fiscal year; or
(3) The Company's and its other Subsidiaries' equity in the
income from continuing operations before income taxes, extraordinary
items and cumulative effect of a change in accounting principle of
the Subsidiary exceeds 10 percent of such income of the Company and
its Subsidiaries consolidated for the most recently completed fiscal
year.
"Specified Debt" shall mean, without duplication, any Indebtedness of
Restricted Subsidiaries which Indebtedness is permitted by
[Section] 5.8(a)(5) hereof and any Indebtedness of the Company secured by
Liens permitted by [Section] 5.10(j) hereof.
The term "subsidiary" shall mean, as to any particular parent
corporation, any corporation of which more than 50% (by number of votes) of
the Voting Stock shall be owned by such parent corporation and/or one or
more corporations which are themselves subsidiaries of such parent
corporation. The term "Subsidiary" shall mean a subsidiary of the Company.
"Tangible Assets" shall mean as of the date of any determination
thereof, the total amount of all assets of the Company and its Restricted
Subsidiaries (less depreciation, depletion and other properly deductible
valuation reserves) after deducting good will, patents, trade names, trade
marks, copyrights, franchises, experimental expense, organization expense,
unamortized debt discount and expense, deferred assets other than prepaid
insurance and prepaid taxes, the excess of cost of shares acquired over
book value of related assets and such other assets as are properly
classified as "intangible assets" in accordance with generally accepted
accounting principles.
"Total Debt" of the Company and its Restricted Subsidiaries as at any
date shall mean the sum of (i) Consolidated Funded Debt of the Company and
its Restricted Subsidiaries as at such date, plus (ii) the Average
Outstanding during the applicable Low Period. For purposes of this
definition:
(a) "Average Outstanding" shall mean the average of the unpaid
principal amounts of Consolidated Current Debt of the Company and its
Restricted Subsidiaries outstanding at the close of business on each
day within a period of 30 consecutive days; and
-33-
<PAGE> 38
(b) "Low Period" shall mean the period of 30 consecutive days
for which Average Outstanding is the lowest of any period of 30
consecutive days during the period of 15 consecutive months ending
with the date of determination of Total Debt.
"Total Equity" as at any date shall mean stockholders' equity determined
in accordance with generally accepted accounting principles consolidating
the Company and its Restricted Subsidiaries.
"Unrestricted Subsidiary" shall mean any Subsidiary which is not a
Restricted Subsidiary; provided, that the Board of Directors may designate
any Restricted Subsidiary as an Unrestricted Subsidiary but only if (i)
the Subsidiary so designated shall then own no Funded Debt or capital stock
of any Restricted Subsidiary, (ii) after giving effect to such designation,
the Company and its Restricted Subsidiaries could issue $1 of additional
Consolidated Funded Debt and (iii) at the time of such designation and
after giving effect thereto no Default or Event of Default shall have
occurred and be continuing. Any Subsidiary which is designated by the
Board of Directors of the Company as an Unrestricted Subsidiary after
having been a Restricted Subsidiary may not be redesignated a Restricted
Subsidiary. The Company shall give prompt notice to the Noteholders of any
designation of an Unrestricted Subsidiary.
"Voting Stock" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors (or Persons performing
similar functions).
"Wholly-owned" when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock
(except shares required as directors' qualifying shares and, in the case of
The Outdoor Footwear Company, Class A Stock so long as such Class A Stock
is excluded from the definition of "Minority Interests") are owned by the
Company and its Wholly-owned Subsidiaries.
Section 8.2. Accounting Principles. Where the character or amount
of any asset or liability or item of income or expense is required to
be determined or any consolidation or other accounting computation is
required to be made for the purposes of this Agreement, the same shall
be done in accordance with generally accepted accounting principles,
to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
Section 8.3. Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be applicable
whether the action in question is taken directly or indirectly by such
Person.
-34-
<PAGE> 39
SECTION 9. MISCELLANEOUS.
Section 9.1. Registered Notes. The Company shall cause to be kept
at its principal office a register for the registration and transfer
of the Notes (hereinafter called the "Note Register"), and the Company
will register or transfer or cause to be registered or transferred, as
hereinafter provided and under such reasonable regulations as it may
prescribe, any Note issued pursuant to this Agreement.
At any time and from time to time the registered holder of any Note
which has been duly registered as hereinabove provided may transfer such
Note upon surrender thereof at the principal office of the Company duly
endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of such Note or its attorney duly authorized in
writing.
The Person in whose name any registered Note shall be registered shall
be deemed and treated as the owner and holder thereof for all purposes of
this Agreement. Payment of or on account of the principal, premium, if
any, and interest on any registered Note shall be made to or upon the
written order of such registered holder.
Section 9.2. Exchange of Notes. At any time, and from time to time,
upon not less than ten days' notice to that effect given by the holder of
any Note initially delivered or of any Note substituted therefor pursuant
to [Section] 9.1, this [Section] 9.2 or [Section] 9.3, and, upon surrender
of such Note at its office, the Company will deliver in exchange therefor,
without expense to the holder, except as set forth below, Notes for the
same aggregate principal amount as the then unpaid principal amount of the
Note so surrendered, in the denomination of $100,000 or any amount in
excess thereof as such holder shall specify, dated as of the date to which
interest has been paid on the Note so surrendered or, if such surrender is
prior to the payment of any interest thereon, then dated as of the date of
issue, payable to such Person or Persons, or order, as may be designated by
such holder, and otherwise of the same form and tenor as the Notes so
surrendered for exchange. The Company may require the payment of a sum
sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer.
Section 9.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction
of any Note, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity in such form and amount as shall be
reasonably satisfactory to the Company, or in the event of such mutilation
upon surrender and cancellation of the Note, the Company will make and
deliver without expense to the holder thereof, a new Note, of like tenor,
in lieu of such lost, stolen, destroyed or mutilated Note. If the
Purchaser or any subsequent institutional holder is the owner of any such
lost, stolen or destroyed Note, then the affidavit of an authorized officer
of such owner, setting forth the fact of loss, theft or destruction and of
its ownership of the Note at the time of such loss, theft or destruction
shall be accepted as satisfactory evidence thereof and no further
-35-
<PAGE> 40
indemnity shall be required as a condition to the execution and
delivery of a new Note other than the written agreement of such owner
to indemnify the Company.
Section 9.4. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company
agrees to pay directly all of your reasonable out-of-pocket expenses
in connection with the preparation, execution and delivery of this
Agreement and the transactions contemplated hereby, including but not
limited to the reasonable charges and disbursements of Chapman and
Cutler, your special counsel, duplicating and printing costs and
charges for shipping the Notes, adequately insured to you at your home
office or at such other place as you may designate, and all such
expenses relating to any amendment, waivers or consents pursuant to
the provisions hereof. The Company also agrees that it will pay and
save you harmless against any and all liability with respect to stamp
and other taxes (other than transfer taxes or taxes on income or
revenues), if any, which may be payable or which may be determined to
be payable in connection with the execution and delivery of this
Agreement or the Notes, whether or not any Notes are then outstanding.
The Company agrees to protect and indemnify you against any liability
for any and all brokerage fees and commissions payable or claimed to
be payable to any Person in connection with the transactions
contemplated by this Agreement. You hereby represent and warrant that
you have not engaged any investment banker or broker in connection
with your purchase of the Notes.
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative.
No delay or failure on the part of the holder of any Note in the
exercise of any power or right shall operate as a waiver thereof; nor
shall any single or partial exercise of the same preclude any other or
further exercise thereof, or the exercise of any other power or right,
and the rights and remedies of the holder of any Note are cumulative
to and are not exclusive of any rights or remedies any such holder
would otherwise have, and no waiver or consent, given or extended
pursuant to [Section]7 hereof, shall extend to or affect any obligation or
right not expressly waived or consented to.
Section 9.6. Notices. All communications provided for hereunder
shall be in writing and, if to you, delivered or mailed by registered
or certified mail, addressed to you at your address appearing on
Schedule I to this Agreement or such other address as you or the
subsequent holder of any Note initially issued to you, may designate
to the Company in writing, and if to the Company, delivered or mailed
by registered or certified mail to the Company at 11 Merrill
Industrial Drive, Hampton, New Hampshire 03842-5050, Attention:
Chief Financial Officer or to such other address as the Company may in
writing designate to you or to a subsequent holder of the Note
initially issued to you. Notice shall be effective upon the earlier
of (i) three business days after such notice is sent or (ii) actual
receipt of such notice.
Section 9.7. Successors and Assigns. This Agreement shall be
binding upon the Company and its successors and assigns and shall
inure to your benefit and to the benefit of your successors and
assigns, including each successive holder or holders of any Notes.
-36-
<PAGE> 41
Section 9.8. Survival of Covenants and Representations. All
covenants, representations and warranties made by the Company herein
and in any certificates delivered pursuant hereto, whether or not in
connection with the Closing Date, shall survive the closing and the
delivery of this Agreement and the Notes.
Section 9.9. Severability. Should any part of this Agreement for
any reason be declared invalid, such decision shall not affect the
validity of any remaining portion, which remaining portion shall
remain in force and effect as if this Agreement had been executed with
the invalid portion thereof eliminated and it is hereby declared the
intention of the parties hereto that they would have executed the
remaining portion of this Agreement without including therein any such
part, parts, or portion which may, for any reason, be hereafter
declared invalid.
Section 9.10. Governing Law. This Agreement and the Notes issued
and sold hereunder shall be governed by and construed in accordance
with Illinois law.
Section 9.11. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall
not affect the meaning or construction of any of the provisions
hereof."
ARTICLE II
AMENDMENTS TO EXHIBITS TO
ORIGINAL NOTE AGREEMENTS
Section 2.1. Amendment to Exhibit A. Exhibit A to the Original Note
Agreements is hereby amended in its entirety so that the same shall henceforth
read as provided in Exhibit A attached hereto. You covenant and agree that
prior to transfer of any Note you will either (i) surrender the same to the
Company in exchange for a new Note of the same tenor and dated as provided in
Section 9.2 of the Original Note Agreements as amended and restated by this
Second Amendment but reflecting in the text thereof the modifications effected
by this [Section]2.1 or (ii) cause such Note to be endorsed with a legend
reflecting the modifications effected by this [Section] 2.1.
Section 2.2. Amendment to Exhibit B. Annex B to Exhibit B to the
Original Note Agreements is hereby amended in its entirety so that the same
shall henceforth read as provided in Exhibit B attached hereto.
Section 2.3. Amendment to Exhibit E. Exhibit E to the Original Note
Agreements is hereby deleted in its entirety.
Section 2.4. Schedule I to the Original Note Agreement. Schedule I to
the Original Note Agreements is hereby attached hereto as Schedule II.
-37-
<PAGE> 42
ARTICLE III
MISCELLANEOUS
Section 3.1. Ratification of Original Note Agreements; Condition
Precedent. Except as amended and restated herein, the terms and provisions of
the Original Note Agreements and the Notes are hereby ratified, confirmed and
approved in all respects. If the 1994 Note Agreements and the 7.16% Senior
Notes due April 15, 2000 are not executed and delivered as set forth above, this
Second Amendment shall be null and void.
Section 3.2. Counterparts. This Second Amendment may be executed in
any number of counterparts, each executed counterpart constituting an original
but altogether one and the same instrument.
Section 3.3. Fees and Expenses. The Company agrees to pay all
reasonable fees and expenses of you and your special counsel connected with the
preparation of this Second Amendment.
Section 3.4. References to Original Note Agreements. Any and all
notices, requests, certificates and any other instruments, including the Notes,
may refer to the Original Note Agreements or the Note Agreements dated as of
September 30, 1989 without making specific reference to this Second Amendment,
but nevertheless all such references shall be deemed to include this Second
Amendment unless the context shall otherwise require.
Section 3.5. Governing Law. This Second Amendment shall be construed
in accordance with and governed by the laws of the State of Illinois.
-38-
<PAGE> 43
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By /s/ Jon C. Heiny
-------------------------------
Its Jon C. Heiny
---------------------------
Counsel
By /s/ Jon M. Davidson
-------------------------------
Its Jon M. Davidson
---------------------------
Assistant Director Securities
Investment
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 44
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
NORTHWESTERN NATIONAL LIFE INSURANCE
COMPANY
By /s/ Mark S. Jordahl
-------------------------------
Its Mark S. Jordahl
---------------------------
Authorized Representative
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 45
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
NORTHERN LIFE INSURANCE COMPANY
By /s/ Mark S. Jordahl
-------------------------------
Its Mark S. Jordahl
---------------------------
Assistant Treasurer
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 46
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
BENEFICIAL STANDARD LIFE INSURANCE
COMPANY
By /s/
-------------------------------
Its
---------------------------
By
-------------------------------
Its
---------------------------
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 47
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
FARM BUREAU LIFE INSURANCE COMPANY
By /s/
-------------------------------
Its
---------------------------
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 48
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
FB ANNUITY COMPANY
By /s/
-------------------------------
Its
---------------------------
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 49
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
FARM BUREAU MUTUAL INSURANCE
COMPANY OF MICHIGAN
By /s/
-------------------------------
Its
---------------------------
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 50
The Timberland Company Second Amendment
9.70% Senior Notes due December 1, 1999
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
SUN LIFE ASSURANCE COMPANY OF CANADA
(U.S.)
By /s/ L. Brock Thomson
-------------------------------
Its L. Brock Thomson, Treasurer
---------------------------
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 51
The Timberland Company Second Amendment
9.70% Senior Notes due December 1, 1999
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
SUN LIFE INSURANCE AND ANNUITY
COMPANY OF NEW YORK
By /s/ L. Brock Thomson
-------------------------------
Its L. Brock Thomson, Treasurer
---------------------------
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 52
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
GUARANTEE MUTUAL LIFE COMPANY
By /s/ Steven A. Scanlan
-------------------------------
Its Steven A. Scanlan
---------------------------
Senior Investment Officer -
Securities
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 53
SCHEDULE I
PRINCIPAL
HOLDERS AMOUNT
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY $16,000,000
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Department
Securities Division
NORTHWESTERN NATIONAL LIFE INSURANCE $4,500,000
COMPANY
c/o Washington Square Capital, Inc.
Private Placement Servicing
100 Washington Square
Suite 800, Route 3070
Minneapolis, Minnesota 55401-2147
Attention: Kathy Gunderson
NORTHERN LIFE INSURANCE COMPANY $2,000,000
c/o Washington Square Capital, Inc.
Private Placement Servicing
100 Washington Square
Suite 800, Route 3070
Minneapolis, Minnesota 55401-2147
Attention: Kathy Gunderson
BENEFICIAL STANDARD LIFE INSURANCE COMPANY $3,000,000
c/o CONSECO, INC.
11825 N. Pennsylvania Street
Carmel, Indiana 46032
Attention: Nora Bamman
FARM BUREAU LIFE INSURANCE COMPANY $1,000,000
c/o Farm Bureau Insurance Group
Investment Division
7373 West Saginaw, P.O. Box 30400
Lansing, Michigan 48917
Attention: Steven Harkness, Portfolio Manager
<PAGE> 54
FB ANNUITY COMPANY $1,000,000
c/o Farm Bureau Insurance Group
Investment Division
7373 West Saginaw, P.O. Box 30400
Lansing, Michigan 48917
Attention: Steven Harkness, Portfolio Manager
FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN $500,000
c/o Farm Bureau Insurance Group
Investment Division
7373 West Saginaw, P.O. Box 30400
Lansing, Michigan 48917
Attention: Steven Harkness, Portfolio Manager
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) $4,000,000
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181-0001
Attention: Investment Department
Private Placement Section
SUN LIFE INSURANCE AND ANNUITY COMPANY OF $1,000,000
NEW YORK
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181-0001
Attention: Investment Department
Private Placement Section #1303
GUARANTEE MUTUAL LIFE COMPANY $2,000,000
1 Guarantee Center
8801 Indian Hills Drive
Omaha, Nebraska 68114
Attention: Investment Division
I-2
<PAGE> 55
SCHEDULE II
PRINCIPAL AMOUNT
NAME AND ADDRESSES OF NOTES TO BE
OF PURCHASERS PURCHASED
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY $16,000,000
711 High Street (Two Notes, No.
Des Moines, Iowa 50309 R-1 for $13,000,000
Attention: Investment Department, and No. R-2 for
Securities Division, $3,000,000)
Regarding Note No. R-1
or No. R-2
PAYMENTS
All payments on or in respect of the
Notes to be by bank wire transfer of
Federal or other immediately available
funds (identifying each payment as
"The Timberland Company, 9.70% Senior Note due
December 1, 1999, [in the case of Note No. R-1,
"Bond No. 1-B-22948" or in the case of Note
No. R-2, "Bond No. 16-B-22948"], principal or
interest") to:
Norwest Bank Des Moines, N.A.
Seventh and Walnut Streets
Des Moines, Iowa 50304
(a) in the case of payments on Note No. R-1:
for credit to Principal Mutual
Life Insurance Company's General
Account No. 014752
(b) in the case of payments on Note No. R-2:
for credit to Principal Mutual
Life Insurance Company's
Account No. 032395
<PAGE> 56
NOTICES
All notices and communications,
including notices with respect to
payments, and written confirmation of
each such payment, to be addressed as
first provided above.
Name of Nominee in which Notes are to be issued: None
II-2
<PAGE> 57
SCHEDULE II
PRINCIPAL AMOUNT
NAME AND ADDRESSES OF NOTES TO BE
OF PURCHASERS PURCHASED
NORTHWESTERN NATIONAL LIFE INSURANCE $3,500,000
Company
c/o Washington Square Capital, Inc.
1500 Northstar West
625 Marquette Avenue South
Minneapolis, Minnesota 55402
Attention: Robert Corrick
PAYMENTS
All payments on or in respect of the
Notes to be by bank wire transfer of
Federal or other immediately available
funds (identifying each payment as
"The Timberland Company, 9.70% Senior
Note due December 1, 1999, principal or
interest") to:
First National Bank of Minneapolis
120 South Sixth Street
Minneapolis, Minnesota
(ABA No. 091000022)
for credit to Northwestern National
Life Insurance Company's
Account No. 102-4001-446
NOTICES
All notices and communications, including
notices with respect to payments and written
confirmation of each such payment, to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
II-3
<PAGE> 58
SCHEDULE II
PRINCIPAL AMOUNT
NAME AND ADDRESSES OF NOTES TO BE
OF PURCHASERS PURCHASED
AMERICAN INVESTORS LIFE INSURANCE $3,000,000
COMPANY
415 Southwest 8th Avenue
Topeka, Kansas 66603
Attn: Lynn Hammes,
Vice President-Comptroller
PAYMENTS
All payments on or in respect of the
Notes to be by bank wire transfer of
Federal or other immediately available
funds (identifying each payment as
"The Timberland Company, 9.70% Senior
Note due December 1, 1999, principal or
interest") to:
Commerce Bank/Topeka
ABA No. 101100728
reference AIL Trust No. 567
Account No. 04-565-9
NOTICES
Only financial statements, compliance
certificates and notices of payments,
on or in respect of the Notes, and
written confirmation of each such payment
to be addressed as first provided above.
All other notices and communications,
including waiver requests and special
communications concerning the financial
condition of the Company, to:
II-4
<PAGE> 59
Washington Square Capital, Inc.
1500 Northstar West
625 Marquette Avenue South
Minneapolis, Minnesota 55402
Attention: Robert Corrick
Name of Nominee in which Notes are to be issued: AIL & Co.
II-5
<PAGE> 60
SCHEDULE II
PRINCIPAL AMOUNT
NAME AND ADDRESSES OF NOTES TO BE
OF PURCHASERS PURCHASED
BENEFICIAL STANDARD LIFE INSURANCE $3,000,000
COMPANY
5700 Wilshire Boulevard
Suite 307D
Los Angeles, California 90036
Attention: Donna M. Coogan
PAYMENTS
All payments on or in respect of the
Notes to be by bank wire transfer of
Federal or other immediately available
funds (identifying each payment as
"The Timberland Company, 9.70% Senior
Note due December 1, 1999, principal or
interest") to:
Security Pacific National Bank
(ABA No. 122000043)
SPSTC Business Services - Pasadena No. 0956
DDA No. 0014-043-543
Attention: Special Assets
reference Beneficial Standard Life
Insurance Company's
Account No. 337-201-970
NOTICES
Only financial statements, compliance
certificates and notices of payments,
on or in respect of the Notes, and
written confirmation of each such payment
to be addressed as first provided above.
All other notices and communications,
including waiver requests and special
communications concerning the financial
condition of the Company, to:
II-6
<PAGE> 61
Washington Square Capital, Inc.
1500 Northstar West
625 Marquette Avenue South
Minneapolis, Minnesota 55402
Attention: Robert Corrick
Name of Nominee in which Notes are to be issued: EBENCO
II-7
<PAGE> 62
SCHEDULE II
PRINCIPAL AMOUNT
NAME AND ADDRESSES OF NOTES TO BE
OF PURCHASERS PURCHASED
FARM BUREAU LIFE INSURANCE COMPANY $1,000,000
c/o Farm Bureau Insurance Group
Investment Division
7373 West Saginaw
P.O. Box 30400
Lansing, Michigan 48917
Attention: Steven Harkness, Portfolio Manager
PAYMENTS
All payments on or in respect of the
Notes to be by bank wire transfer of
Federal or other immediately available
funds (identifying each payment as
"The Timberland Company, 9.70% Senior
Note due December 1, 1999, principal or
interest") to:
MFRS/Detroit
No. 072000339, F/A/O: Farm Bureau Insurance
Attention: Sue Blanchette, Department 530
Trust Account, Income Unit
(Combine wire payment with other payments
to Farm Bureau group participants)
NOTICES
Only financial statements, compliance
certificates and notices of payments,
on or in respect of the Notes, and
written confirmation of each such payment
to be addressed as first provided above.
All other notices and communications,
including waiver requests and special
communications concerning the financial
condition of the Company, to:
II-8
<PAGE> 63
Washington Square Capital, Inc.
1500 Northstar West
625 Marquette Avenue South
Minneapolis, Minnesota 55402
Attention: Robert Corrick
Name of Nominee in which Notes are to be issued: None
II-9
<PAGE> 64
SCHEDULE II
PRINCIPAL AMOUNT
NAME AND ADDRESSES OF NOTES TO BE
OF PURCHASERS PURCHASED
FB ANNUITY COMPANY $1,000,00
c/o Farm Bureau Insurance Group
Investment Division
7373 West Saginaw
P.O. Box 30400
Lansing, Michigan 48917
Attention: Steven Harkness, Portfolio Manager
PAYMENTS
All payments on or in respect of the
Notes to be by bank wire transfer of
Federal or other immediately available
funds (identifying each payment as
"The Timberland Company, 9.70% Senior
Note due December 1, 1999, principal or
interest") to:
MFRS/Detroit
No. 072000339, F/A/O: Farm Bureau Insurance
Attention: Sue Blanchette, Department 530
Trust Account, Income Unit
(Combine wire payment with other payments
to Farm Bureau group participants)
NOTICES
Only financial statements, compliance
certificates and notices of payments,
on or in respect of the Notes, and
written confirmation of each such payment
to be addressed as first provided above.
All other notices and communications,
including waiver requests and special
communications concerning the financial
condition of the Company, to:
II-10
<PAGE> 65
Washington Square Capital, Inc.
1500 Northstar West
625 Marquette Avenue South
Minneapolis, Minnesota 55402
Attention: Robert Corrick
Name of Nominee in which Notes are to be issued: None
II-11
<PAGE> 66
SCHEDULE II
PRINCIPAL AMOUNT
NAME AND ADDRESSES OF NOTES TO BE
OF PURCHASERS PURCHASED
FARM BUREAU MUTUAL INSURANCE COMPANY $500,000
OF MICHIGAN
c/o Farm Bureau Insurance Group
Investment Division
7373 West Saginaw
P.O. Box 30400
Lansing, Michigan 48917
Attention: Steven Harkness, Portfolio Manager
PAYMENTS
All payments on or in respect of the
Notes to be by bank wire transfer of
Federal or other immediately available
funds (identifying each payment as
"The Timberland Company, 9.70% Senior
Note due December 1, 1999, principal or
interest") to:
MFRS/Detroit
No. 072000339, F/A/O: Farm Bureau Insurance
Attention: Sue Blanchette, Department 530
Trust Account, Income Unit
(Combine wire payment with other payments
to Farm Bureau group participants)
NOTICES
Only financial statements, compliance
certificates and notices of payments,
on or in respect of the Notes, and
written confirmation of each such payment
to be addressed as first provided above.
All other notices and communications,
including waiver requests and special
communications concerning the financial
condition of the Company, to:
II-12
<PAGE> 67
Washington Square Capital, Inc.
1500 Northstar West
625 Marquette Avenue South
Minneapolis, Minnesota 55402
Attention: Robert Corrick
Name of Nominee in which Notes are to be issued: None
II-13
<PAGE> 68
SCHEDULE II
PRINCIPAL AMOUNT
NAME AND ADDRESSES OF NOTES TO BE
OF PURCHASERS PURCHASED
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) $4,000,000
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
Attention: Investment Department
Private Placement SC [Section]1303
PAYMENTS
All payments on or in respect of the
Notes to be by bank wire transfer of
Federal or other immediately available
funds (identifying each payment as
"The Timberland Company, 9.70% Senior
Note due December 1, 1999, principal or
interest") to:
Chemical Bank (ABA No. 021-000-128)
55 Water Street
New York, New York 10041
for credit to Sun Life Assurance Company
of Canada (U.S.) Account No. 323-023177
NOTICES
All notices of payments, on or in respect
of the Notes and written confirmation of each
such payment to:
Sun Life Assurance Company of Canada (U.S.)
Three Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
Attention: Manager, Investment Accounting SC #3327
All notices and communications, other than
those with respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
II-14
<PAGE> 69
SCHEDULE II
PRINCIPAL AMOUNT
NAME AND ADDRESSES OF NOTES TO BE
OF PURCHASERS PURCHASED
SUN LIFE INSURANCE AND ANNUITY COMPANY $1,000,000
OF NEW YORK
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181-0001
Attention: Investment Department
Private Placement Section
PAYMENTS
All payments on or in respect of the
Notes to be by bank wire transfer of
Federal or other immediately available
funds (identifying each payment as
"The Timberland Company, 9.70% Senior
Note due December 1, 1999, principal or
interest") to:
Chemical Bank (ABA No. 021-000-128)
55 Water Street
New York, New York 10041
for credit to Sun Life Insurance and Annuity
Company of New York Account No. 322-022703
NOTICES
All notices of payments, on or in respect
of the Notes and written confirmation of each
such payment to:
Sun Life Insurance and Annuity Company of
New York
Three Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
Attention: Manager, Investment Accounting SC #3327
All notices and communications, other than
those with respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
II-15
<PAGE> 70
SCHEDULE II
PRINCIPAL AMOUNT
NAME AND ADDRESSES OF NOTES TO BE
OF PURCHASERS PURCHASED
GUARANTEE MUTUAL LIFE COMPANY $2,000,000
1 Guarantee Center
8801 Indian Hills Drive
Omaha, Nebraska 68114
Attention: Investment Division
PAYMENTS
All payments on or in respect of the
Notes to be by bank wire transfer of
Federal or other immediately available
funds (identifying each payment as
"The Timberland Company, 9.70% Senior
Note due December 1, 1999, principal or
interest") to:
Bankers Trust Company
New York, New York
for credit to Guarantee Mutual Life
Company's Account No. 50-035-201
NOTICES
All notices and communications, including
notices with respect to payments and written
confirmation of each such payment, to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
II-16
<PAGE> 71
THE TIMBERLAND COMPANY
9.70% Senior Note
Due December 1, 1999
PPN: 887100 A# 2
NO. R-
_____________, 19__
THE TIMBERLAND COMPANY, a Delaware corporation (the "Company"), for
value received, hereby promises to pay to
or registered assigns
on the first day of December, 1999
the principal amount of
DOLLARS ($_______________)
and to pay interest (computed on the basis of a 360-day year of twelve
30-day months) on the principal amount from time to time remaining unpaid
hereon at the rate of 9.70% per annum from the date hereof until maturity,
payable semiannually on the first of each June and December in each year
commencing June 1, 1990, and at maturity. The Company agrees to pay
interest on overdue principal (including any overdue required or optional
prepayment of principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest, at the rate of 11.70%
per annum after maturity, whether by acceleration or otherwise, until paid.
Both the principal hereof and interest hereon are payable at the principal
office of the Company in Hampton, New Hampshire in coin or currency of the
United States of America which at the time of payment shall be legal tender
for the payment of public and private debts.
This Note is one of the 9.70% Senior Notes due December 1, 1999 (the
"Notes") of the Company in the aggregate principal amount of $35,000,000
issued or to be issued under and pursuant to the terms and provisions of
the separate Note Agreements, each dated as of September 30, 1989 (the
"Original Note Agreements"), entered into by the Company with the
original purchaser therein referred to, each as amended and restated
pursuant to the separate Amended and Restated Note Agreements dated as of
April 1, 1994 entered into by the Company with the Holder therein referred
to (the Original Note Agreements as amended and restated by the Amended and
Restated Note Agreements being referred to herein as the "Note
Agreements"). This Note and the holder hereof are entitled equally and
ratably with the holders of all other Notes outstanding under the Note
Agreements to all the benefits and security provided for thereby or
referred to therein. Reference is hereby made to the Note Agreements for a
statement of such rights and benefits.
This Note and the other Notes outstanding under the Note Agreements
may be declared due prior to their expressed maturity dates and certain
prepayments are required to
EXHIBIT A
(to Second Amendment)
<PAGE> 72
be made thereon, all in the events, on the terms and in the manner and
amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in
the Note Agreements.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
note shall be made only to or upon the order in writing of the registered
holder.
THE TIMBERLAND COMPANY
By ___________________________
Its
A-2
<PAGE> 73
<TABLE>
DESCRIPTION OF DEBT AND LEASES
1. Current Debt of the Company and its Restricted Subsidiaries
outstanding on April 15, 1994 is as follows:
<CAPTION>
Effective Maturity Original Face Outstanding
Date Date Amount Liability
<S> <C> <C> <C> <C>
MONEY MARKET LINES
LIBOR (Bank Hapoalim) 3/21/94 4/20/94 $ 9,000,000 $ 9,000,000
LIBOR (Credito Italiano) 4/14/94 4/15/94 5,000,000 5,000,000
=========== ===========
$14,000,000 $14,000,000
MORGAN GUARANTY REVOLVING CREDIT AGREEMENT
LIBOR 3/17/94 4/18/94 $ 3,000,000 $ 3,000,000
LIBOR 3/23/94 4/22/94 5,000,000 5,000,000
LIBOR 3/24/94 4/25/94 5,000,000 5,000,000
=========== ===========
$13,000,000 $13,000,000
MISCELLANEOUS OTHER LIENS(1)*
Copy Machines, Computers,
Equipment and other Maximum
miscellaneous - - $ 3,000,000 $ -
=========== ===========
<FN>
_____________________________
* Secured by lien
</TABLE>
EXHIBIT B
(to Second Amendment)
<PAGE> 74
<TABLE>
2. Funded Debt of the Company and its Restricted Subsidiaries outstanding
on February 25, 1994 is as follows:
<CAPTION>
Effective Maturity Original Face Outstanding
Date Date Amount Liability
<S> <C> <C> <C> <C>
PRIVATE PLACEMENT SENIOR NOTES
Principal Mutual Life Insurance
Company and other insurance companies 12/06/89 12/01/99 $35,000,000 $35,000,000
=========== ===========
CHASE MANHATTAN CREDIT AGREEMENT 11/23/93 5/15/99 $50,000,000 $50,000,000
=========== ===========
CAPITAL EQUIPMENT LEASES(2)*
BayBanks Financing & Leasing Co. Inc. 6/90 6/95 $ 2,096,332 $ 664,194
BayBanks Financing & Leasing Co. Inc. 10/90 11/95 456,507 177,756
BayBanks Financing & Leasing Co. Inc. 12/90 12/95 459,431 195,129
=========== ===========
$ 3,012,270 $ 1,037,079
INDUSTRIAL REVENUE BOND*
Shawmut Bank, N.A., Trustee 12/27/84 12/2014 $ 6,680,000 $ 5,345,000
</TABLE>
3. Capitalized Leases of the Company and its Restricted Subsidiaries
outstanding on February 25, 1994 are as follows:
-See Item 2 Above-
[FN]
_________________________
* Secured by lien
B-2
<PAGE> 75
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By /s/ Jon C. Heiny
-------------------------------
Its Jon C. Heiny
---------------------------
Counsel
By /s/ Jon M. Davidson
-------------------------------
Its Jon M. Davidson
---------------------------
Assistant Director Securities
Investment
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 76
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
NORTHWESTERN NATIONAL LIFE INSURANCE
COMPANY
By /s/ Mark S. Jordahl
-------------------------------
Its Mark S. Jordahl
---------------------------
Authorized Representative
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 77
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
NORTHERN LIFE INSURANCE COMPANY
By /s/ Mark S. Jordahl
-------------------------------
Its Mark S. Jordahl
---------------------------
Assistant Treasurer
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 78
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
BENEFICIAL STANDARD LIFE INSURANCE
COMPANY
By /s/
-------------------------------
Its
---------------------------
By
-------------------------------
Its
---------------------------
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 79
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
FARM BUREAU LIFE INSURANCE COMPANY
By /s/
-------------------------------
Its
---------------------------
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 80
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
FB ANNUITY COMPANY
By /s/
-------------------------------
Its
---------------------------
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 81
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
FARM BUREAU MUTUAL INSURANCE
COMPANY OF MICHIGAN
By /s/
-------------------------------
Its
---------------------------
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 82
The Timberland Company Second Amendment
9.70% Senior Notes due December 1, 1999
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
SUN LIFE ASSURANCE COMPANY OF CANADA
(U.S.)
By /s/ L. Brock Thomson
-------------------------------
Its L. Brock Thomson, Treasurer
---------------------------
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 83
The Timberland Company Second Amendment
9.70% Senior Notes due December 1, 1999
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
SUN LIFE INSURANCE AND ANNUITY
COMPANY OF NEW YORK
By /s/ L. Brock Thomson
-------------------------------
Its L. Brock Thomson, Treasurer
---------------------------
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 84
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15, 1994
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------------
Its Carden N. Welsh
---------------------------
Treasurer
Accepted as of April 1, 1994
GUARANTEE MUTUAL LIFE COMPANY
By /s/ Steven A. Scanlan
-------------------------------
Its Steven A. Scanlan
---------------------------
Senior Investment Officer -
Securities
Holding the unpaid principal amount of
the Notes set out opposite its name
in Schedule I hereto
<PAGE> 1
EXHIBIT 10.4
EXECUTION COPY
--------------
$125,000,000
CREDIT AGREEMENT
dated as of
May 4, 1994
among
The Timberland Company
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE> 2
<TABLE>
TABLE OF CONTENTS*
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions . . . . . . . . . . . . . 1
1.02 Accounting Terms and Determinations . 20
1.03 Types of Borrowings . . . . . . . . . 20
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend . . . . . . . . . 21
2.02 Notice of Committed Borrowings . . . . 21
2.03 Money Market Borrowings . . . . . . . 22
2.04 Notice to Banks; Funding of Loans . . 25
2.05 Notes . . . . . . . . . . . . . . . . 26
2.06 Maturity of Loans . . . . . . . . . . 27
2.07 Method of Electing Interest Rates . . 27
2.08 Interest Rates . . . . . . . . . . . . 29
2.09 Facility Fees . . . . . . . . . . . . 33
2.10 Mandatory Termination or
Reduction of Commitments . . . . . . 33
2.11 Optional Termination or
Reduction of Commitments . . . . . . 34
2.12 Optional Prepayments . . . . . . . . . 34
2.13 Mandatory Prepayments . . . . . . . . 34
2.14 General Provisions as to Payments . . 35
2.15 Funding Losses . . . . . . . . . . . . 36
2.16 Computation of Interest and Fees . . . 36
2.17 Judgment Currency . . . . . . . . . . 37
2.18 Foreign Subsidiary Costs . . . . . . . 37
ARTICLE III
CONDITIONS
SECTION 3.01 Closing . . . . . . . . . . . . . . . 38
3.02 Borrowings . . . . . . . . . . . . . . 39
3.03 First Borrowing by Each
Eligible Subsidiary . . . . . . . . 39
<FN>
__________________________
*The Table of Contents is not a part of this Agreement.
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
SECTION 4.01 Corporate Existence and Power . . . . 40
4.02 Corporate and Governmental
Authorization; No Contravention . . 40
4.03 Binding Effect . . . . . . . . . . . . 41
4.04 Financial Information . . . . . . . . 41
4.05 Litigation . . . . . . . . . . . . . . 41
4.06 Compliance with ERISA . . . . . . . . 41
4.07 Environmental Matters . . . . . . . . 42
4.08 Taxes . . . . . . . . . . . . . . . . 42
4.09 Subsidiaries . . . . . . . . . . . . . 42
4.10 Not an Investment Company . . . . . . 43
4.11 Full Disclosure . . . . . . . . . . . 43
ARTICLE V
COVENANTS
SECTION 5.01 Information . . . . . . . . . . . . . 43
5.02 Payment of Obligations . . . . . . . . 46
5.03 Maintenance of Property; Insurance . . 47
5.04 Conduct of Business and
Maintenance of Existence . . . . . . 47
5.05 Compliance with Laws . . . . . . . . . 47
5.06 Inspection of Property,
Books and Records . . . . . . . . . 48
5.07 Fixed Charge Coverage Ratio . . . . . 48
5.08 Debt . . . . . . . . . . . . . . . . . 48
5.09 Minimum Consolidated Tangible
Net Worth . . . . . . . . . . . . . 49
5.10 Restricted Payments . . . . . . . . . 50
5.11 Investments . . . . . . . . . . . . . 50
5.12 Maintenance of Ownership of
Subsidiaries . . . . . . . . . . . . 51
5.13 Negative Pledge . . . . . . . . . . . 51
5.14 Consolidations, Mergers and
Sales of Assets . . . . . . . . . . 52
5.15 Restrictions on Prepayments of and
Amendments to Certain Debt . . . . . 52
5.16 Transactions With Affiliates . . . . . 53
5.17 Use of Proceeds . . . . . . . . . . . 54
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default . . . . . . . . . . 54
6.02 Notice of Default . . . . . . . . . . 57
ARTICLE VII
THE Agent
SECTION 7.01 Appointment and Authorization . . . . 57
7.02 Agent and Affiliates. . . . . . . . . 57
7.03 Action by Agent . . . . . . . . . . . 58
7.04 Consultation with Experts . . . . . . 58
7.05 Liability of Agent . . . . . . . . . . 58
7.06 Indemnification . . . . . . . . . . . 58
7.07 Credit Decision . . . . . . . . . . . 59
7.08 Successor Agent . . . . . . . . . . . 59
7.09 Agent's Fee . . . . . . . . . . . . . 59
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01 Basis for Determining Interest
Rate Inadequate or Unfair . . . . . 60
8.02 Illegality . . . . . . . . . . . . . . 60
8.03 Increased Cost and Reduced Return . . 61
8.04 Taxes . . . . . . . . . . . . . . . . 63
8.05 Base Rate Loans Substituted for
Affected Fixed Rate Loans . . . . . 65
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF ELIGIBLE SUBSIDIARIES
SECTION 9.01 Corporate Existence and Power . . . . . 66
9.02 Corporate and Governmental
Authorization; Contravention . . . . 66
9.03 Binding Effect . . . . . . . . . . . . 66
9.04 Taxes . . . . . . . . . . . . . . . . . 66
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE X
GUARANTY
SECTION 10.01 The Guaranty . . . . . . . . . . . . . 67
10.02 Guaranty Unconditional . . . . . . . . 67
10.03 Discharge Only Upon Payment
In Full; Reinstatement in
Certain Circumstances . . . . . . . 68
10.04 Waiver by the Company . . . . . . . . 68
10.05 Waiver of Subrogation . . . . . . . . 68
10.06 Stay of Acceleration . . . . . . . . . 69
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Notices . . . . . . . . . . . . . . . 69
11.02 No Waivers . . . . . . . . . . . . . . 69
11.03 Expenses; Documentary Taxes;
Indemnification . . . . . . . . . . 70
11.04 Sharing of Set-Offs . . . . . . . . . 70
11.05 Amendments and Waivers . . . . . . . . 71
11.06 Successors and Assigns . . . . . . . . 71
11.07 Collateral . . . . . . . . . . . . . . 73
11.08 Confidentiality . . . . . . . . . . . 73
11.09 Governing Law; Submission to
Jurisdiction . . . . . . . . . . . . 74
11.10 Counterparts; Integration;
Effectiveness . . . . . . . . . . . 74
11.11 WAIVER OF JURY TRIAL . . . . . . . . . 74
</TABLE>
iv
<PAGE> 6
Schedule I - Existing Debt and Liens
Schedule II - Subsidiaries
Schedule III - Approved Foreign Distributors
Exhibit A - Note
Exhibit B - Notice of Committed Borrowing
Exhibit C - Money Market Quote Invitation
Exhibit D - Money Market Quote
Exhibit E - Opinion of Counsel for the Company
Exhibit F - Opinion of Special Counsel for the
Agent
Exhibit G - Form of Election to Participate
Exhibit H - Form of Election to Terminate
Exhibit I - Opinion of Counsel for the Borrower
Exhibit J - Form of Assignment and Assumption Agreement
v
<PAGE> 7
CREDIT AGREEMENT
AGREEMENT dated as of May 4, 1994 among THE TIMBERLAND COMPANY, the
BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent.
WHEREAS, the Company wishes to be able to borrow or cause eligible
subsidiaries to borrow under its guaranty up to $125,000,000 on a revolving
credit basis; and
WHEREAS, the Banks are willing to make such loans on the terms and
conditions set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS . The following terms, as used herein,
have the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Additional Permitted Long-Term Debt" means Permitted Long-Term Debt
other than (i) the first $25,000,000 aggregate principal amount of Permitted
Long- Term Debt incurred by the Company and its Subsidiaries after the date
hereof and (ii) any refinancings, extensions or renewals thereof or of
Permitted Long-Term Debt outstanding on the date hereof.
"Adjusted CD Rate" has the meaning set forth in Section 2.08(b).
"Adjusted Interbank Offered Rate" has the meaning set forth in Section
2.08(c).
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in
<PAGE> 8
the form prepared by the Agent and submitted to the Agent (with a copy to
the Company) duly completed by such Bank.
"Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Company (a "Controlling Person") or
(ii) any Person (other than the Company or a Subsidiary) which is controlled by
or is under common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agent" means Morgan Guaranty Trust Company of New York in its capacity
as agent for the Banks hereunder, and its successors in such capacity.
"Applicable Certificate" means, for any day, the certificate that, as
of the date two days prior to such day, was most recently required to be
delivered pursuant to Section 5.01(e).
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of
its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of
its Money Market Loans, its Money Market Lending Office.
"Applicable Percentage" means (i) for any day on or prior to July 1,
1994, 100%, (ii) for any day after July 1, 1994 and on or prior to December 31,
1994, 95%, (iii) for any day after December 31, 1994 and on or prior to
September 29, 1995, 85% and (iv) for any day after September 29, 1995, 75%.
"April 1994 Private Placement Debt" means Debt in respect of the
Company's 7.16% Senior Unsecured Notes due April 2000 issued in April 1994.
"Assessment Rate" has the meaning set forth in Section 2.08(b).
"Assignee" has the meaning set forth in Section 11.06(c).
"Available Amount" means, on any day, the lesser of (i) the aggregate
amount of the Commitments on such day and (ii) the Borrowing Base for such day.
2
<PAGE> 9
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 11.06(c), and their
respective successors.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"Base Rate Loan" means (i) a Committed Loan which bears interest at a
rate determined on the basis of the Base Rate pursuant to the applicable Notice
of Committed Borrowing or Notice of Interest Rate Election or the provisions of
Article VIII or (ii) an overdue amount which was a Base Rate Loan immediately
before it became overdue.
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer
Plan and which is maintained or otherwise contributed to by any member of the
ERISA Group.
"Borrower" means the Company or any Eligible Subsidiary, as the context
may require, and their respective successors, and "Borrowers" means all of the
foregoing.
"Borrowing" has the meaning set forth in Section 1.03.
"Borrowing Base" means, for any day, an amount equal to (i) 85% of the
aggregate amount of Eligible Receivables set forth in the Applicable
Certificate for such day plus (ii) if such day is in the period, if any,
designated by the Company by not less than two days prior notice to the Agent,
of two consecutive Borrowing Base Periods in the period of six consecutive
Borrowing Base Periods beginning in March and ending in September of each year,
inclusive, 20% of the Footwear Inventory Component set forth in the Applicable
Certificate for such day less (iii) the sum of (A) the aggregate principal
amount of Permitted Long-Term Debt incurred on or after the Effective Date and
outstanding on such day, to the extent that such aggregate principal amount
exceeds $25,000,000 and (B) the aggregate principal amount of Permitted Short-
Term Debt outstanding on such day.
"Borrowing Base Period" means a period beginning on the second day
after the Company is required to deliver a certificate pursuant to Section
5.01(e) in any month and ending on the day after the Company is so required to
3
<PAGE> 10
deliver such a certificate in the succeeding calendar month.
"Calculation Period" means, with respect to any day, the period of four
consecutive fiscal quarters of the Company ending on the last day of the most
recently ended fiscal quarter of the Company as to which the Company shall have
delivered a certificate pursuant to Section 5.01(c).
"CD Base Rate" has the meaning set forth in Section 2.08(b).
"CD Loan" means (i) a Committed Loan which bears interest at a CD Rate
pursuant to the applicable Notice of Committed Borrowing or Notice of Interest
Rate Election or (ii) an overdue amount which was a CD Loan immediately before
it became overdue.
"CD Margin" has the meaning set forth in Section 2.08(b).
"CD Rate" means a rate of interest determined pursuant to Section
2.08(b) on the basis of an Adjusted CD Rate.
"CD Reference Banks" means ABN AMRO Bank N.V., The First National Bank
of Boston and Morgan Guaranty Trust Company of New York.
"Chase Credit Agreement" means the Credit Agreement dated as of
November 15, 1993 among the Company, the banks listed on the signature pages
thereof and The Chase Manhattan Bank, N.A., as agent for such banks, as the
same may, subject to Section 5.15, be amended, modified or supplemented from
time to time.
"Closing Date" means the date on or after the Effective Date on which
the Agent shall have received the documents specified in or pursuant to Section
3.01.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature pages hereof, as such amount
may be reduced from time to time pursuant to Sections 2.10 and 2.11.
"Committed Loan" means a loan made by a Bank pursuant to Section 2.01;
PROVIDED that, if any such loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term "Committed
Loan" shall refer to the combined principal amount resulting from such
combination or to each of the
4
<PAGE> 11
separate principal amounts resulting from each such subdivision, as the
case may be.
"Company" means The Timberland Company, a Delaware corporation, and its
successors.
"Company's 1993 Form 10-K" means the Company's annual report on Form
10-K for 1993 as filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934.
"Consolidated Debt" means at any date the Debt of the Company and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated EBITR" means, for any period, the sum of (i) consolidated
net income of the Company and its Consolidated Subsidiaries for such period
plus (ii) to the extent deducted in determining such consolidated net income,
the sum of (A) Consolidated Interest Expense, (B) Consolidated Rental Expense
and (C) consolidated taxes of the Company and its Consolidated Subsidiaries for
such period.
"Consolidated Interest Expense" means, for any period, the interest
expense of the Company and its Consolidated Subsidiaries determined on a
consolidated basis for such period.
"Consolidated Net Worth" means at any date the consolidated
stockholders' equity of the Company and its Consolidated Subsidiaries (without
giving effect to any write-ups or write-downs resulting from foreign currency
translations after December 31, 1993) as of such date.
"Consolidated Rental Expense" means, for any period, the rental expense
of the Company and its Consolidated Subsidiaries (other than with respect to
capital leases) determined on a consolidated basis for such period.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Company in
its consolidated financial statements if such statements were prepared as of
such date.
"Consolidated Tangible Net Worth" means at any date Consolidated Net
Worth less the consolidated Intangible Assets of the Company and its
Consolidated Subsidiaries, all determined as of such date. For purposes of
this definition "Intangible Assets" means the amount (to the extent reflected
in determining such
5
<PAGE> 12
Consolidated Net Worth) of (i) all write-ups (other than write-ups of assets of
a going concern business made within twelve months after the acquisition of
such business) subsequent to December 31, 1993 in the book value of any asset
owned by the Company or a Consolidated Subsidiary, (ii) all Investments in
unconsolidated Subsidiaries and all equity investments in Persons which are not
Subsidiaries and (iii) all unamortized debt discount and expense, unamortized
deferred charges, goodwill, patents, trademarks, service marks, trade names,
anticipated future benefit of tax loss carry-forwards, copyrights, organization
or developmental expenses and other intangible assets.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v)
all non-contingent obligations (and, for purposes of Section 5.13 and the
definitions of Material Debt and Material Financial Obligations, all contingent
obligations) of such Person to reimburse or prepay any bank or other Person in
respect of amounts paid under a letter of credit, banker's acceptance or
similar instrument, whether drawn or undrawn, (vi) all Debt of others secured
by a Lien on any asset of such Person, whether or not such Debt is assumed by
such Person, and (vii) all Debt of others Guaranteed by such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to
any of the foregoing transactions) or any combination of the foregoing
transactions.
6
<PAGE> 13
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City or Boston are authorized
by law to close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Company and the Agent; PROVIDED that any Bank may so designate
separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references herein to the
Domestic Lending Office of such Bank shall be deemed to refer to either or both
of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in Section
2.08(b).
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 11.10.
"Election to Participate" means an Election to Participate
substantially in the form of Exhibit G hereto.
"Election to Terminate" means an Election to Terminate substantially in
the form of Exhibit H hereto.
"Eligible Receivables" means, at any date, the aggregate of the unpaid
portions at such date of assets ("Receivables") which were or would have been
included as accounts receivable on the consolidated balance sheet referred to
in Section 4.04(a), net of any credits, rebates, offsets or other adjustments
to such Receivables owed to any of the account debtors from which such
Receivables are due and also net of any commissions payable to third parties
which are adjustments to such Receivables, and excluding the following
(determined without duplication):
(a) any Receivable as to which there is any unresolved
dispute with the account debtor (including any offset or counterclaim
by the account debtor), but only to the extent of such dispute,
(b) (i) any Receivable which, at the date of the original
issuance of the invoice
7
<PAGE> 14
therefor, was payable more than 90 days (or, in the case of a
Receivable that represents the purchase price of boots sold by the
Company or any of its Subsidiaries, 270 days) from such date or (ii)
any Receivable which remains unpaid more than 60 days after the due
date for payment specified at the time of the original issuance of the
invoice therefor, and
(c) unless in any of the following cases the relevant account
debtor has previously been approved by the Required Banks (through the
Agent) as an eligible account debtor for purposes of this Agreement,
all Receivables due from any account debtor (i) which is a distributor
organized outside the United States of America or whose principal
place of business is located outside the United States of America,
unless (A) such Receivable is insured under policies of insurance
issued by insurance companies with an A.M. Best policyholders ratings
of not less than B+, but only to the extent of such insurance and less
any deductible or similar amount, (B) to the extent, but only to the
extent, such Receivable is fully backed by a letter of credit, in form
and substance satisfactory to the Required Banks and issued by (1) a
Bank, (2) a bank or other Person the long-term senior unsecured debt
of which is rated A or higher by Standard & Poor's Corporation or A or
higher by Moody's Investor Service, Inc. and is not rated lower than A
by Standard & Poor's Corporation or A by Moody's Investor Service,
Inc., or (3) a bank or other Person that is reasonably satisfactory to
the Required Banks or (C) such distributor is listed on Schedule III
hereto, (ii) which is a Subsidiary or Affiliate, (iii) which is the
subject of bankruptcy, insolvency or similar proceedings, (iv) which
the Required Banks (through the Agent) have notified the Company does
not have a satisfactory credit standing (as reasonably determined in
good faith by the Required Banks), or (v) that, at the time such
Receivable arose, was not in compliance with the credit guidelines,
standards and procedures of the Company as in effect on the date
hereof.
"Eligible Subsidiary" means any Wholly-Owned Consolidated Subsidiary of
the Company as to which an Election to Participate shall have been delivered to
the Agent and as to which an Election to Terminate shall not have been
delivered to the Agent. Each such Election to
8
<PAGE> 15
Participate and Election to Terminate shall be duly executed on behalf of such
Wholly-Owned Consolidated Subsidiary and the Company in such number of copies
as the Agent may request. The delivery of an Election to Terminate shall
not affect any obligation of an Eligible Subsidiary theretofore incurred. The
Agent shall promptly give notice to the Banks of the receipt of any Election to
Participate or Election to Terminate.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment, including, without limitation,
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Company, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Company and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of
9
<PAGE> 16
Interest Rate Election or (ii) an overdue amount which was a Euro-Dollar
Loan immediately before it became overdue.
"Euro-Dollar Margin" has the meaning set forth in Section 2.08(c).
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.08(c) on the basis of an Adjusted Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal London offices of ABN
AMRO Bank N.V., The First National Bank of Boston and Morgan Guaranty Trust
Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.08(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Credit Agreement" means the Credit Agreement dated as of May
13, 1993 among the Company, the banks listed on the signature pages thereof and
Morgan Guaranty Trust Company of New York, as Administrative Agent, as the same
shall have been amended, modified or supplemented as of the date hereof.
"Factorable Receivables" means Receivables of the Company and its
Subsidiaries (i) that are produced in the ordinary course of business, (ii)
that are not contingent upon any further performance, or any product guarantee,
by the Company or any of its Subsidiaries, (iii) arising from sales of
inventory outside the United States and (iv) the account debtors with respect
to which have their principal places of business outside the United States of
America.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day; provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty Trust Company
10
<PAGE> 17
of New York on such day on such transactions as determined by the Agent.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (i)
Consolidated EBITR for such period to (ii) the sum of (A) Consolidated Interest
Expense for such period, (B) Consolidated Rental Expense for such period and
(C) dividends on preferred stock of the Company and its Consolidated
Subsidiaries for such period (other than any such dividends paid to the Company
or its Consolidated Subsidiaries).
"Fixed Rate Loans" means CD Loans, Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01(a)) or any combination of the foregoing.
"Footwear Inventory Component" means, at any date, the aggregate amount
of footwear inventories at such date that (i) are current or next season
inventories (determined on a basis consistent with the Company's existing
inventory accounting system) and (ii) were or would have been identified as
finished goods in the notes to the consolidated financial statements referred
to in Section 4.04(a).
"Group of Loans" means at any time a group of Committed Loans to the
same Borrower consisting of (i) all such Committed Loans which are Base Rate
Loans at such time or (ii) all such Committed Loans which are Fixed Rate Loans
having the same Interest Period at such time; PROVIDED that, if a Committed
Loan of any particular Bank is converted to or made as a Base Rate Loan
pursuant to Section 8.02 or 8.05, such Loan shall be included in the same Group
or Groups of Loans from time to time as it would have been in if it had not
been so converted or made.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in
any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect
11
<PAGE> 18
thereof (in whole or in part); PROVIDED that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydro-carbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 11.03.
"Interbank Offered Rate" has the meaning set forth in Section 2.08(c).
"Interest Period" means: (1) with respect to each Euro-Dollar Loan, a
period commencing on the date of borrowing specified in the applicable Notice
of Committed Borrowing or on the date specified in the applicable Notice of
Interest Rate Election and ending one, two, three or six months thereafter, as
the Borrower may elect in the applicable notice; PROVIDED that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
(2) with respect to each CD Loan, a period commencing on the date of borrowing
specified in the applicable Notice of Committed Borrowing or on the date
specified in the applicable Notice of Interest Rate Election and ending 30,
12
<PAGE> 19
60 or 90 days thereafter, as the Borrower may elect in the applicable
notice; PROVIDED that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on
a day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would other- wise end after the
Termination Date shall end on the Termination Date;
(3) with respect to each Money Market LIBOR Loan, the period commencing on the
date of borrowing specified in the applicable Notice of Money Market Borrowing
and ending such whole number of months thereafter (or periods of not less than
seven days, if available) as the Borrower may elect in accordance with Section
2.03; PROVIDED that:
(a) any Interest Period which would other- wise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Euro- Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would other- wise end after the
Termination Date shall end on the Termination Date; and
(4) with respect to each Money Market Absolute Rate Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Money Market Borrowing and ending such number of days thereafter (but not less
than seven days) as the Borrower may elect in accordance with Section 2.03;
PROVIDED that:
(a) any Interest Period which would other- wise end on a day
which is not a Euro-Dollar
13
<PAGE> 20
Business Day shall be extended to the next succeeding Euro-Dollar
Business Day; and
(b) any Interest Period which would other- wise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise.
"LIBOR Auction" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the Interbank Offered Rate pursuant to
Section 2.03.
"Level I Status" exists on any date if (i) the Fixed Charge Coverage
Ratio for the Calculation Period with respect to such date is greater than 3.5
to 1.0 and (ii) the Leverage Ratio as of the last day of each fiscal quarter
included in the Calculation Period with respect to such date is less than 0.75
to 1.0.
"Level II Status" exists on any date if (i) Level I Status does not
exist, (ii) the Fixed Charge Coverage Ratio for the Calculation Period with
respect to such date is greater than 3.2 to 1.0 and (iii) the Leverage Ratio as
of the last day of each fiscal quarter included in the Calculation Period with
respect to such date is less than 0.85 to 1.0.
"Level III Status" exists on any date if neither Level I Status nor
Level II Status exists.
"Leverage Ratio" means, for any date, the ratio of (i) Consolidated
Debt on such date to (ii) Consolidated Net Worth on such date.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, the
Company or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
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"Loan" means a Domestic Loan, a Euro-Dollar Loan or a Money Market Loan
and "Loans" means Domestic Loans, Euro-Dollar Loans or Money Market Loans or
any combination of the foregoing.
"Material Debt" means Debt (other than the Loans) of the Company and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal amount exceeding $1,000,000.
"Material Financial Obligations" means a principal or face amount of
Debt and/or payment obligations in respect of Derivatives Obligations of the
Company and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, exceeding in the aggregate $2,500,000 (or, in the
case of foreign exchange transactions, $5,000,000).
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $500,000.
"Money Market Absolute Rate" has the meaning set forth in Section
2.03(c).
"Money Market Absolute Rate Loan" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the Company
and the Agent; PROVIDED that any Bank may from time to time by notice to the
Company and the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate
Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of such Bank shall be deemed to refer to either or both
of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank pursuant to
a LIBOR Auction (including such a loan bearing interest at the Base Rate
pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section 2.03(c).
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<PAGE> 22
"Money Market Quote" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"Note Agreement" has the meaning set forth in Section 5.15.
"Notes" means promissory notes of a Borrower, substantially in the form
of Exhibit A hereto, evidencing the obligation of such Borrower to repay the
Loans made by it, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as defined
in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section
2.03(d)).
"Notice of Interest Rate Election" has the meaning set forth in Section
2.07(a).
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 11.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Factoring Transaction" means any sale or other transfer by
the Company or any of its Subsidiaries of Factorable Receivables, which sale or
transfer does not involve the creation of any recourse obligation in respect
thereof on the part of the Company or any of its Subsidiaries (other than with
respect to matters of title to, and the character (other than the
collectability) of, the Factorable Receivables so sold or transferred);
PROVIDED that the aggregate principal amount of Factorable Receivables that
may be sold or transferred pursuant to such sales or transfers during any
fiscal year of the Company may not exceed $15,000,000.
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<PAGE> 23
"Permitted Long-Term Debt" means (i) Debt outstanding under the Chase
Credit Agreement and (ii) Debt (other than Debt permitted under Section
5.08(b)) of the Company or any of its Subsidiaries that (A) does not mature or
have any required sinking fund or other required payments of principal (other
than (1) principal and interest on a standard mortgage basis for mortgages with
terms, at the time such mortgages are entered into, of greater than 15 years
and (2) the principal component of rental payments with respect to not more
than $5,000,000 of capitalized leases, the terms of which are not, at the time
such leases are entered into, less than five years), any mandatory redemptions
or redemptions at the option of the holder thereof or any required increases in
the rate of interest payable with respect thereto, in any such case prior to
the first anniversary of the Termination Date or (B) consists of conventional
construction loans incurred to finance the construction of real property
improvements of the Company and its Subsidiaries.
"Permitted Short-Term Debt" means Debt (other than Loans or Debt
permitted under Section 5.08(h)) of the Company or any of its Subsidiaries
having a maturity, at the time such Debt is incurred, of not more than one year
from the date such Debt is incurred.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for employees of any Person
which was at such time a member of the ERISA Group.
"Prime Rate" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Quarterly Date" means the last Euro-Dollar Business Day of each March,
June, September and December.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may
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require, and "Reference Bank" means any one of such Reference Banks.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having more than 50% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing more than 50% of the aggregate unpaid
principal amount of the Loans.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Company's capital stock (except dividends payable solely in
shares of its capital stock) or (ii) any payment (other than payments for the
repurchase of shares of the Company's common stock from employees or former
employees of the Company or any of its Subsidiaries pursuant to the 1987
Employee Stock Purchase Plan, the 1991 Employee Stock Purchase Plan or the 1987
Employee Stock Option Plan, in each case as in effect on the date hereof (or
any successor plans with substantially similar provisions), in an aggregate
amount not to exceed the proceeds received by the Company after the date hereof
of sales of shares of the Company's common stock to employees of the Company
and its Subsidiaries) on account of the purchase, redemption, retirement or
acquisition of (a) any shares of the Company's capital stock or (b) any option,
warrant or other right to acquire shares of the Company's capital stock.
"Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person;
unless otherwise specified, "Subsidiary" means a Subsidiary of the Company.
"Swartz Family" means Sidney W. Swartz, his estate, his spouse, his
lineal descendants, trusts established for his, her or their benefit, the
Swartz Family Charitable Trust and The Sidney W. Swartz 1982 Family Trust.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors
Service, Inc. and not rated lower than A-1 by Standard & Poor's Corporation or
P-1 by Moody's
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Investors Service, Inc., (iii) time deposits with, including certificates of
deposit issued by, (x) any office located in the United States of (A) any bank
or trust company which is organized under the laws of the United States or any
state thereof and has capital, surplus and undivided profits aggregating at
least $100,000,000 or (B) any Bank or (y) in the case of Investments made by
a Subsidiary of the Company whose principal place of business is located
outside the United States, any office located outside the United States of (A)
any bank or trust company the long-term unsecured senior debt of which is rated
AA or higher by Standard & Poor's Corporation or Aa or higher by Moody's
Investors Service, Inc. and is not rated lower than AA by Standard & Poor's
Corporation or Aa by Moody's Investors Service, Inc. or (B) any Bank, (iv)
money market funds which invest only in securities described in clauses (i),
(ii) and (iii)(x) above or (v) repurchase agreements with respect to securities
described in clause (i) above entered into with an office of a bank or trust
company meeting the criteria specified in clause (iii) above; PROVIDED in
each case that such Investment matures within one year from the date of
acquisition thereof by the Company or a Subsidiary.
"Termination Date" means May 30, 1996 or, if such day is not a
Euro-Dollar Business Day, the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in which case
the Termination Date shall be the next preceding Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed
by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), but only to the extent that
such excess represents a potential liability of a member of the ERISA Group to
the PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"Wholly-Owned Subsidiary" means any Consolidated Subsidiary all of the
shares of capital stock or other ownership interests of which (except
directors' qualifying shares and, in the case of The Outdoor Footwear Company,
shares of non-voting common stock of The Outdoor Footwear
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Company issued to employees thereof under arrangements consistent with past
practice) are at the time directly or indirectly owned by the Company.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS . Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred in by the Company's
independent public accountants) with the most recent audited consolidated
financial statements of the Company and its Consolidated Subsidiaries delivered
to the Banks; PROVIDED that, if the Company notifies the Agent that the
Company wishes to amend any covenant in Article V to eliminate the effect of
any change in generally accepted accounting principles on the operation of such
covenant (or if the Agent notifies the Company that the Required Banks wish to
amend Article V for such purpose), then the Company's compliance with such
covenant shall be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in generally
accepted accounting principles became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Company
and the Required Banks.
SECTION 1.03. TYPES OF BORROWINGS . The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to a single Borrower
pursuant to Article II on the same date, all of which Loans are of the same
type (subject to Article VIII) and, except in the case of Base Rate Loans, have
the same Interest Period or initial Interest Period. Borrowings are classified
for purposes of this Agreement either by reference to the pricing of Loans
comprising such Borrowing ( E.G. , a "Euro-Dollar Borrowing" is a Borrowing
comprised of Euro-Dollar Loans) or by reference to the provisions of Article II
under which participation therein is determined ( I.E ., a "Committed
Borrowing" is a Borrowing under Section 2.01 in which all Banks participate in
proportion to their Commitments, while a "Money Market Borrowing" is a
Borrowing under Section 2.03 in which the Bank participants are determined on
the basis of their bids in accordance therewith).
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ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS TO LEND. Each Bank severally agrees, on
the terms and conditions set forth in this Agreement, to make loans to the
Company or any Eligible Subsidiary pursuant to this Section from time to time
before the Termination Date in amounts such that the aggregate principal amount
of Committed Loans by such Bank outstanding shall not exceed the amount of its
Commitment. Each Borrowing under this Section shall be in an aggregate
principal amount of (i) $500,000 or any larger multiple of $100,000, in the
case of a Base Rate Borrowing, and (ii) $1,000,000 or any larger multiple of
$100,000, in the case of a Fixed Rate Borrowing (except that any such Borrowing
may be in the aggregate amount available in accordance with Section 3.02(c))
and shall be made from the several Banks ratably in proportion to their
respective Commitments. Within the foregoing limits, a Borrower may borrow
under this Section, prepay Loans to the extent permitted by Section 2.12, and
reborrow at any time before the Termination Date under this Section. The
Commitments shall terminate on the Termination Date.
SECTION 2.02. NOTICE OF COMMITTED BORROWINGS. The applicable Borrower
shall give the Agent notice, substantially in the form of Exhibit B hereto (a
"Notice of Committed Borrowing"), not later than 11:30 A.M. (New York City
time) on (x) the date of each Base Rate Borrowing, (y) the second Domestic
Business Day before each CD Borrowing and (z) the third Euro-Dollar Business
Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to bear
interest initially at the Base Rate, at a CD Rate or at a Euro-Dollar
Rate, and
(iv) in the case of a Fixed Rate Borrowing, the duration of
the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
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SECTION 2.03. MONEY MARKET BORROWINGS.
(a) THE MONEY MARKET OPTION. In addition to Committed Borrowings
pursuant to Section 2.01, any Borrower may, as set forth in this Section,
request the Banks prior to the Termination Date to make offers to make Money
Market Loans to the Borrower. The Banks may, but shall have no obligation to,
make such offers and the Borrower may, but shall have no obligation to, accept
any such offers in the manner set forth in this Section.
(b) INVITATION FOR MONEY MARKET QUOTES. When a Borrower wishes to
request offers to make Money Market Loans under this Section, it shall transmit
to the Banks by telex or facsimile transmission an Invitation for Money Market
Quotes substantially in the form of Exhibit C hereto so as to be received no
later than 11:00 A.M. (New York City time) on (x) the fourth Euro-Dollar
Business Day prior to the date of Borrowing proposed therein, in the case of a
LIBOR Auction or (y) the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Company and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Invitation for Money Market Quotes for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$1,000,000 or a larger multiple of $100,000, PROVIDED that the sum of
(A) the aggregate principal amount of all Money Market Loans
outstanding and (B) the aggregate principal amount of all Permitted
Short-Term Debt outstanding shall at no time exceed $35,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth
a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than
one Interest Period in a single Invitation
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for Money Market Quotes. No Invitation for Money Market Quotes shall be given
within five Euro-Dollar Business Days (or such other number of days as
the Company and the Agent may agree) of any other Invitation for Money Market
Quotes.
(c) SUBMISSION AND CONTENTS OF MONEY MARKET QUOTES. (i) Each Bank
may submit a Money Market Quote containing an offer or offers to make Money
Market Loans in response to any Invitation for Money Market Quotes. Each Money
Market Quote must comply with the requirements of this subsection (c) and must
be submitted to the Borrower by telex or facsimile transmission at its offices
specified in or pursuant to Section 11.01 not later than (x) 2:00 P.M. (New York
City time) on the third Euro- Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) 9:15 A.M. (New York City time)
on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or,
in either case, such other time or date as the Company and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Invitation for Money Market Quotes for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective). Subject to Articles III
and VI, any Money Market Quote so made shall be irrevocable except with the
written consent of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing, which shall be the proposed
date of Borrowing set forth in the corresponding Invitation for Money
Market Quotes,
(B) the principal amount of the Money Market Loan for which
each such offer is being made, which principal amount (w) may be
greater than or less than the Commitment of the quoting Bank, (x) must
be $500,000 or a larger multiple of $100,000, (y) may not exceed the
principal amount of Money Market Loans for which offers were requested
and (z) may be subject to an aggregate limitation as to the principal
amount of Money Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or below
the applicable Interbank Offered Rate (the "Money Market Margin")
offered for each such Money Market Loan, expressed as a
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percentage (specified to the nearest 1/10,000 of 1%) to be added to
or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000 of 1%) (the
"Money Market Absolute Rate") offered for each such Money Market Loan,
and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related
Invitation for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D hereto or
does not specify all of the information required by subsection (c)(ii),
(B) contains qualifying, conditional or similar language,
(C) proposes terms other than or in addition to those set forth
in the applicable Invitation for Money Market Quotes, or
(D) arrives after the time set forth in subsection (c)(i).
(d) ACCEPTANCE AND NOTICE BY BORROWER. Not later than 11:00 A.M. (New
York City time) on (x) the third Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction, or (y) the proposed date of
Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Company and the Agent shall have mutually agreed and
shall have notified the Banks not later than the date of the Invitation for
Money Market Quotes for the first LIBOR Auction or Absolute Rate Auction for
which such change is to be effective), the Borrower shall notify each Bank from
which it has received a Money Market Quote of its acceptance or non-acceptance
of the offers contained in such Money Market Quote; PROVIDED that if the
Borrower shall have failed to give such notice to any such Bank with respect to
any Money Market Quote at or prior to such time, the offers contained in such
Money Market Quote shall be deemed to have been rejected by such Borrower. In
the case of acceptance, such notice (a "Notice of Money
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<PAGE> 31
Market Borrowing"), a copy of which shall be sent by telex or telecopy to
the Agent, shall specify the aggregate principal amount of offers for each
Interest Period that are accepted from each Bank. The Borrower may accept any
Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Invitation for Money Market Quotes,
(ii) the principal amount of each Money Market Borrowing must
be $1,000,000 or a larger multiple of $100,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the
case may be,
(iv) immediately after the making of the Money Market Loans to
be made pursuant to all accepted Money Market Quotes, the sum of (A)
the aggregate principal amount of all Money Market Loans outstanding
and (B) the aggregate principal amount of all Permitted Short-Term Debt
outstanding shall not exceed $35,000,000, and
(v) the Borrower may not accept any offer that is described in
subsection (c)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(e) ALLOCATION BY BORROWER. If offers are made by two or more Banks
with the same Money Market Margins or Money Market Absolute Rates, as the case
may be, for a greater aggregate principal amount than the amount in respect of
which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted shall
be allocated by the Borrower among such Banks as nearly as possible (in
multiples of $100,000, as the Borrower may deem appropriate) in proportion to
the aggregate principal amounts of such offers.
SECTION 2.04. NOTICE TO BANKS; FUNDING OF LOANS.
(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's share, if any, of
such
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Borrowing and such Notice of Borrowing shall not thereafter be revocable
by the Borrower.
(b) Not later than 1:30 P.M. (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address specified in or pursuant to Section 11.01.
Unless the Agent determines that any applicable condition specified in Article
III has not been satisfied, the Agent will make the funds so received from the
Banks available to the Borrower at the Agent's aforesaid address.
(c) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsection (b) of this Section 2.04 and the Agent may, in
reliance upon such assumption, make available to the applicable Borrower on such
date a corresponding amount. If and to the extent that such Bank shall not have
so made such share available to the Agent, such Bank and the applicable Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the applicable Borrower until the date such amount is repaid
to the Agent, at (i) in the case of the applicable Borrower, a rate per annum
equal to the higher of the Federal Funds Rate and the interest rate applicable
thereto pursuant to Section 2.08 and (ii) in the case of such Bank, the Federal
Funds Rate. If such Bank shall repay to the Agent such corresponding amount,
such amount so repaid shall constitute such Bank's Loan included in such
Borrowing for purposes of this Agreement.
SECTION 2.05. NOTES. (a) The Loans of each Bank to each Borrower
shall be evidenced by a single Note of such Borrower payable to the order of
such Bank for the account of its Applicable Lending Office in an amount equal to
the aggregate unpaid principal amount of such Bank's Loans to such Borrower.
(b) Each Bank may, by notice to a Borrower and the Agent, request that
its Loans of a particular type to such Borrower be evidenced by a separate Note
of such Borrower in an amount equal to the aggregate unpaid principal amount of
such Loans. Each such Note shall be in substantially the form of Exhibit A
hereto with appropriate modifications to reflect the fact that it evidences
solely Loans of the relevant type. Each
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reference in this Agreement to a "Note" or the "Notes" of such Bank shall be
deemed to refer to and include any or all of such Notes, as the context may
require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(a) or
3.03(a), the Agent shall forward such Note to such Bank. Each Bank shall record
the date, amount and type of each Loan made by it to each Borrower and the date
and amount of each payment of principal made with respect thereto, and may, if
such Bank so elects in connection with any transfer or enforcement of its Note
of any Borrower, endorse on the schedule forming a part thereof appropriate
notations to evidence the foregoing information with respect to each such Loan
to such Borrower then outstanding; PROVIDED that the failure of any Bank to
make any such recordation or endorsement shall not affect the obligations of any
Borrower hereunder or under the Notes. Each Bank is hereby irrevocably
authorized by each Borrower so to endorse its Notes and to attach to and make a
part of any Note a continuation of any such schedule as and when required.
SECTION 2.06. MATURITY OF LOANS. (a) Each Committed Loan shall
mature, and the principal amount thereof shall be due and payable, on the
Termination Date.
(b) Each Money Market Loan included in any Money Market Borrowing shall
mature, and the principal amount thereof shall be due and payable, on the last
day of the Interest Period applicable to such Borrowing.
SECTION 2.07. METHOD OF ELECTING INTEREST RATES. (a) The Loans
included in each Committed Borrowing shall bear interest initially at the type
of rate specified by the applicable Borrower in the applicable Notice of
Borrowing. Thereafter, the applicable Borrower may from time to time elect to
change or continue the type of interest rate borne by each Group of Loans
(subject in each case to the provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the applicable Borrower
may elect to convert such Loans to CD Loans as of any Domestic Business
Day or to Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the applicable Borrower may
elect to convert such Loans to Base Rate Loans or Euro-Dollar Loans or
elect to continue such Loans as CD Loans for an additional Interest
Period, in each case effective on the last day of the then current
Interest Period applicable to such Loans; and
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(iii) if such Loans are Euro-Dollar Loans, the applicable
Borrower may elect to convert such Loans to Base Rate Loans or CD Loans
or elect to continue such Loans as Euro-Dollar Loans for an additional
Interest Period, in each case effective on the last day of the then
current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent at least three Euro-Dollar Business Days before the
conversion or continuation selected in such Notice is to be effective (unless
all of the relevant Loans are to be converted to or continued as Domestic Loans,
in which case such Notice shall be delivered to the Agent at least two Domestic
Business Days before such conversion or continuation is to be effective). A
Notice of Interest Rate Election may, if it so specifies, apply to only a
portion of the aggregate principal amount of the relevant Group of Loans;
PROVIDED that (i) such portion is allocated ratably among the Loans comprising
such Group, (ii) the portion to which such Notice applies, and the remaining
portion to which it does not apply, are (x) in the case of any portion that is
to be converted to or continued as Fixed Rate Loans, at least $1,000,000 and (y)
in the case of any portion that is to be converted to or continued as Base Rate
Loans, at least $500,000 and (iii) no more than one of such portions is other
than a multiple of $100,000.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
Notice applies;
(ii) the date on which the conversion or continuation selected
in such Notice is to be effective, which shall comply with the
applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and if, after such conversion, such Loans are to
be Fixed Rate Loans, the duration of the initial Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or
Euro-Dollar Loans for an additional Interest Period, the duration of
such additional Interest Period.
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Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
applicable Borrower pursuant to subsection (a) above, the Agent shall promptly
notify each Bank of the contents thereof and such Notice shall not thereafter be
revocable by the Company or the applicable Borrower. If the applicable Borrower
fails to deliver a timely Notice of Interest Rate Election to the Agent for any
Group of Fixed Rate Loans, such Loans shall be converted into Base Rate Loans on
the last day of the then current Interest Period applicable thereto.
SECTION 2.08. INTEREST RATES. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable quarterly in arrears on each
Quarterly Date and, with respect to the principal amount of any Base Rate Loan
converted to a Fixed Rate Loan, on each date a Base Rate Loan is so converted.
Any overdue principal of or interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 2% plus the Base Rate for such day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the CD Margin for such day plus the
Adjusted CD Rate applicable to such Interest Period; PROVIDED that if any CD
Loan shall, as a result of clause (2)(b) of the definition of Interest Period,
have an Interest Period of less than 30 days, such CD Loan shall bear interest
during such Interest Period at the rate applicable to Base Rate Loans during
such period. Such interest shall be payable for each Interest Period on the
last day thereof. Any overdue principal of or interest on any CD Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the sum of 2% plus the higher of (i) the sum of the CD Margin for such
day plus the Adjusted CD Rate applicable to such Loan at the date such payment
was due and (ii) the rate applicable to Base Rate Loans for such day.
"CD Margin" means, for any day, (i) if Level I Status exists on such
day, 5/8 of 1%, (ii) if Level II Status exists on such day, 3/4 of 1% and (iii)
if Level III Status exists on such day, 7/8 of 1%.
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The "Adjusted CD Rate" applicable to any Interest Period means a rate
per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the rate of
interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation, any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate in effect
on such day which is payable by a member of the Bank Insurance Fund classified
as adequately capitalized and within supervisory subgroup "A" (or a comparable
successor assessment risk classification) within the meaning of 12 C.F.R. #
327.3(d) (or any successor provision) to the Federal Deposit Insurance
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Corporation (or any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the United States. The
Adjusted CD Rate shall be adjusted automatically on and as of the effective
date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for
such day plus the Adjusted Interbank Offered Rate applicable to such Interest
Period. Such interest shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof.
"Euro-Dollar Margin" means, for any day, (i) if Level I Status exists on
such day, 1/2 of 1%, (ii) if Level II Status exists on such day, 5/8 of 1% and
(iii) if Level III Status exists on such day, 3/4 of 1%.
The "Adjusted Interbank Offered Rate" applicable to any Interest Period
means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "Interbank Offered Rate" applicable to any Interest Period means the
average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which deposits in dollars are offered to each of
the Euro-Dollar Reference Banks in the London or, in the case of any Reference
Bank that does not accept interbank deposits in London, New York interbank
market at approximately 11:00 A.M. (London or New York time, as the case may be)
two Euro-Dollar Business Days before the first day of such Interest Period in an
amount approximately equal to the principal amount of the Euro-Dollar Loan of
such Euro-Dollar Reference Bank to which such Interest Period is to apply and
for a period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by
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reference to which the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents). The Adjusted
Interbank Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve Percentage.
(d) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the higher of (i) the Euro-Dollar Margin
for such day plus the quotient obtained (rounded upward, if necessary, to the
next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates per annum at
which one day (or, if such amount due remains unpaid more than three Euro-Dollar
Business Days, then for such other period of time not longer than six months as
the Agent may select) deposits in dollars in an amount approximately equal to
such overdue payment due to each of the Euro-Dollar Reference Banks are offered
to such Euro-Dollar Reference Bank in the London or, in the case of any
Reference Bank that does not accept interbank deposits in London, New York
interbank market for the applicable period determined as provided above by (y)
1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances
described in clause (a) or (b) of Section 8.01 shall exist, the rate applicable
to Base Rate Loans for such day) and (ii) the sum of the Euro-Dollar Margin for
such day plus the Adjusted Interbank Offered Rate applicable to such Loan at the
date such payment was due.
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the Interbank
Offered Rate for such Interest Period (determined in accordance with Section
2.08(c) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof. Any overdue
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principal of or interest on any Money Market Loan shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the sum of 2%
plus the Base Rate for such day.
(f) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks by facsimile transmission, telex or cable of each rate of
interest so determined, and its determination thereof shall be conclusive in the
absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.01 shall apply.
SECTION 2.09. FACILITY FEES. The Company shall pay to the Agent for
the account of the Banks ratably in proportion to their Commitments (or, for any
day on or after the date upon which the Commitments shall have terminated in
their entirety, in proportion to the daily average of the aggregate outstanding
principal amount of their Loans) a facility fee at the rate of 3/8 of 1% per
annum. Such facility fee shall accrue (i) from and including the Effective Date
to but excluding the Termination Date (or earlier date of termination of the
Commitments in their entirety), on the daily average aggregate amount of the
Commitments (whether used or unused) and (ii) from and including such
Termination Date or earlier date of termination to but excluding the date the
Loans shall be repaid in their entirety, on the daily average of the aggregate
outstanding principal amount of the Loans. Accrued fees under this Section
shall be payable quarterly on each Quarterly Date and upon the date of
termination of the Commitments in their entirety and, if later, the date the
Loans shall be repaid in their entirety.
SECTION 2.10. MANDATORY TERMINATION OR REDUCTION OF COMMITMENTS. (a)
The Commitments shall terminate in their entirety on the Termination Date.
(b) Upon the incurrence by the Company or any of its Subsidiaries of any
Additional Permitted Long-Term Debt, the Commitments of the several Banks shall
be reduced ratably by an aggregate amount equal to the
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aggregate principal amount of the Additional Permitted Long-Term Debt so
incurred.
SECTION 2.11. OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS. The
Company may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at such
time, or (ii) ratably reduce the Commitments from time to time by an aggregate
amount of at least $5,000,000 so long as, immediately after any such reduction
the aggregate principal amount of Loans outstanding shall not exceed the
Available Amount.
SECTION 2.12. OPTIONAL PREPAYMENTS. (a) Subject in the case of any
Fixed Rate Borrowing to Section 2.15, any Borrower may, upon notice to the Agent
(i) not later than 11:30 A.M. (New York City time) on the date of prepayment, in
the case of a Group of Base Rate Loans of such Borrower (or any Money Market
Borrowing of such Borrower bearing interest at the Base Rate pursuant to Section
8.01(a)), (ii) at least two Domestic Business Days prior to the date of
prepayment, in the case of a Group of CD Loans of such Borrower and (iii) at
least three Euro- Dollar Business Days prior to the date of prepayment, in the
case of a Group of Euro-Dollar Loans of such Borrower, prepay a Group of Loans
of such Borrower in whole at any time, or from time to time in part in amounts
aggregating (x) $500,000 or any larger multiple of $100,000, in the case of a
Group of Base Rate Loans or such a Money Market Borrowing or (y) $1,000,000 or a
larger multiple of $100,000, in the case of a Group of CD Loans or Euro- Dollar
Loans, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several Banks included in such
Group or Borrowing.
(b) Except as provided in subsection (a) above, Section 2.13 or Article
VI or VIII, no Borrower may prepay all or any portion of the principal amount of
any Money Market Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share, if any, of such prepayment and such notice shall not
thereafter be revocable by the applicable Borrower.
SECTION 2.13. MANDATORY PREPAYMENTS. (a) If the aggregate principal
amount of Loans outstanding on any day shall exceed the Available Amount for
such day, the Borrowers shall prepay Committed Loans (and, if, but only
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if, after all Committed Loans shall have been prepaid, the aggregate principal
amount of Loans outstanding shall continue to exceed such Available Amount,
Money Market Loans), together with accrued interest thereon, to the extent
necessary to cause the aggregate principal amount of Loans outstanding
immediately after such prepayment to be less than or equal to such Available
Amount.
(b) Each prepayment of Loans required by this Section 2.13 shall be
made with respect to such Group or Groups of Loans and (subject to the
limitations set forth in subsection (a) above) such Money Market Borrowing or
Borrowings as the Borrowers may specify by notice to the Agent at or before the
time of such prepayment and shall be applied to prepay Loans comprising each
such Group of Loans or Loans comprising each such Money Market Borrowing pro
rata; PROVIDED that (i) subject to the limitations set forth in subsection (a)
above, the Borrowers shall specify Groups of Loans and Money Market Borrowings
for prepayment so as to minimize the amounts payable by the Borrowers pursuant
to Section 2.15 with respect to such prepayment and (ii) if no such timely
specification is given by the Borrowers, such prepayment shall be allocated
first to Base Rate Loans, if any, second to such Group or Groups of Fixed Rate
Loans as the Agent may determine, until all such Groups of Fixed Rate Loans
shall have been repaid in full, and third to such Money Market Borrowing or
Borrowings as the Agent may determine.
SECTION 2.14. GENERAL PROVISIONS AS TO PAYMENTS. (a) The Borrowers
shall make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 12:00 Noon (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the Agent
at its address referred to in Section 11.01. The Agent will promptly distribute
to each Bank its ratable share of each such payment received by the Agent for
the account of the Banks. Whenever any payment of principal of, or interest on,
the Domestic Loans or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next
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succeeding Euro-Dollar Business Day. If the date for any payment of principal
is extended by operation of law or otherwise, interest thereon shall be payable
for such extended time.
(b) Unless the Agent shall have received notice from a Borrower prior
to the date on which any payment is due from such Borrower to the Banks
hereunder that such Borrower will not make such payment in full, the Agent may
assume that such Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent that such Borrower shall not have so made such
payment, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Agent, at the Federal Funds Rate.
SECTION 2.15. FUNDING LOSSES. If a Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a Base Rate Loan (pursuant to Article II, VI or VIII or otherwise)
on any day other than the last day of an Interest Period applicable thereto, or
the last day of an applicable period fixed pursuant to Section 2.08(d), or if a
Borrower fails to borrow or prepay any Fixed Rate Loans after notice has been
given to any Bank in accordance with Section 2.04(a) or 2.12(b), the Company
shall reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any such loss incurred in
obtaining, liquidating or employing deposits from third parties, but excluding
loss of margin for the period after any such payment or conversion or failure to
borrow or prepay, PROVIDED that such Bank shall have delivered to the Company a
certificate as to the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
SECTION 2.16. COMPUTATION OF INTEREST AND FEES. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
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SECTION 2.17. JUDGMENT CURRENCY. If for the purpose of obtaining
judgment in any court it is necessary to convert a sum due from any Borrower
hereunder or under any of the Notes in United States dollars ("dollars") into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Agent could purchase dollars with
such other currency at the Agent's New York office on the Domestic Business Day
preceding that on which final judgment is given. The obligations of each
Borrower in respect of any sum due to any Bank or the Agent hereunder or under
any Note shall, notwithstanding any judgment in a currency other than dollars,
be discharged only to the extent that on the Domestic Business Day following
receipt by such Bank or the Agent (as the case may be) of any sum adjudged to be
so due in such other currency such Bank or the Agent (as the case may be) may in
accordance with normal banking procedures purchase dollars with such other
currency; if the amount of dollars so purchased is less than the sum originally
due to such Bank or the Agent, as the case may be, in dollars, each Borrower
agrees, to the fullest extent that it may effectively do so, as a separate
obligation and notwithstanding any such judgment, to indemnify such Bank or the
Agent, as the case may be, against such deficiency, and if the amount of dollars
so purchased exceeds (a) the sum originally due to any Bank or the Agent, as the
case may be, and (b) any amounts shared with other Banks as a result of
allocations of such excess as a disproportionate payment to such Bank under
Section 11.04, such Bank or the Agent, as the case may be, agrees to remit such
excess to the appropriate Borrower.
SECTION 2.18. FOREIGN SUBSIDIARY COSTS. (a) If the cost to any Bank
of making or maintaining any Loan to an Eligible Subsidiary is increased, or the
amount of any sum received or receivable by any Bank (or its Applicable Lending
Office) is reduced by an amount deemed by such Bank to be material, by reason of
the fact that such Eligible Subsidiary is incorporated in, or conducts business
in, a jurisdiction outside the United States of America, the Company shall
indemnify such Bank for such increased cost or reduction within 15 days after
demand by such Bank (with a copy to the Agent). A certificate of such Bank
claiming compensation under this subsection (a) and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error.
(b) Each Bank will promptly notify the Company and the Agent of any
event of which it has knowledge that will entitle such Bank to additional
interest or payments pursuant to subsection (a) and will designate a different
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Applicable Lending Office, if, in the judgment of such Bank, such designation
will avoid the need for, or reduce the amount of, such compensation and will not
be otherwise disadvantageous to such Bank.
ARTICLE III
CONDITIONS
SECTION 3.01. CLOSING. The closing hereunder shall occur upon receipt
by the Agent of the following, each dated the Closing Date unless otherwise
indicated:
(a) a duly executed Note of the Company for the account of each Bank
dated on or before the Closing Date complying with the provisions of Section
2.05;
(b) an opinion of Ropes & Gray, counsel for the Company, substantially
in the form of Exhibit E hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required Banks may reasonably
request;
(c) an opinion of Davis Polk & Wardwell, special counsel for the Agent,
substantially in the form of Exhibit F hereto and covering such additional
matters relating to the transactions contemplated hereby as the Required Banks
may reasonably request;
(d) evidence satisfactory to the Agent that all "Loans" and
"Acceptances" (in each case as defined in the Existing Credit Agreement)
outstanding under the Existing Credit Agreement and all other amounts payable by
the Company or any "Borrower" (as so defined) thereunder shall have been paid in
full and that the Commitments (as so defined) thereunder shall have been
terminated in their entirety;
(e) evidence satisfactory to the Required Banks that the Chase Credit
Agreement shall have been amended, in a manner satisfactory in form and
substance to the Agent and the Required Banks, so as to permit the Company and
the Eligible Subsidiaries to enter into this Agreement and to borrow hereunder,
and to modify the covenants, events of default and other terms and conditions of
the Chase Credit Agreement in a manner satisfactory to the Required Banks; and
(f) all documents the Agent may reasonably request relating to the
existence of the Company, the corporate authority for and the validity of this
Agreement
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and the Notes, and any other matters relevant hereto, all in form and
substance satisfactory to the Agent.
The Agent shall promptly notify the Company and the Banks of the Closing
Date, and such notice shall be conclusive and binding on all parties hereto.
SECTION 3.02. BORROWINGS. The obligation of any Bank to make a Loan
on the occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) the fact that the Closing Date shall have occurred on or
prior to June 30, 1994;
(b) receipt by the Agent of a Notice of Borrowing as required
by Section 2.02 or 2.03, as the case may be;
(c) the fact that, immediately before and after such Borrowing,
the aggregate outstanding principal amount of the Loans shall not
exceed the Available Amount;
(d) the fact that, immediately before and after such Borrowing,
no Default shall have occurred and be continuing; and
(e) the fact that the representations and warranties of the
Borrowers contained in this Agreement shall be true on and as of the
date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrowers on the date of such Borrowing as to the facts
specified in clauses (c), (d) and (e) of this Section.
SECTION 3.03. FIRST BORROWING BY EACH ELIGIBLE SUBSIDIARY. The
obligation of each Bank to make a Loan on the occasion of the first Borrowing by
each Eligible Subsidiary is subject to the satisfaction of the following further
conditions:
(a) receipt by the Agent for the account of each Bank of a duly
executed Note of such Eligible Subsidiary dated on or before the date
of such Borrowing complying with the provisions of Section 2.05;
(b) receipt by the Agent of an opinion of counsel for such
Eligible Subsidiary acceptable to the Agent, substantially in the form
of
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Exhibit I hereto and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may
reasonably request; and
(c) receipt by the Agent of all documents which it may
reasonably request relating to the existence of such Eligible
Subsidiary, the corporate authority for and the validity of the
Election to Participate of such Eligible Subsidiary, this Agreement and
the Notes of such Eligible Subsidiary, and any other matters relevant
thereto, all in form and substance satisfactory to the Agent.
The opinion referred to in clause (b) above shall be dated no more than
five Euro-Dollar Business Days before the date of the first Borrowing by such
Eligible Subsidiary hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants that:
SECTION 4.01. CORPORATE EXISTENCE AND POWER. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the Company of this
Agreement and its Notes are within the Company's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official (other
than disclosure, if any, thereof, and filing, if any, of a copy hereof with the
Securities and Exchange Commission, required by the Securities Act of 1933 or
the Securities Exchange Act of 1934, in each case as amended) and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Company or
of any agreement, judgment, injunction, order, decree or other instrument
binding upon the Company or result in the
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creation or imposition of any Lien on any asset of the Company or any of its
Subsidiaries.
SECTION 4.03. BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of the Company and its Notes, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
the Company.
SECTION 4.04. FINANCIAL INFORMATION.
(a) The consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of December 31, 1993 and the related consolidated statements of
operations, changes in stockholders' equity and cash flow for the fiscal year
then ended, reported on by Deloitte & Touche and set forth in the Company's 1993
Form 10-K, a copy of which has been delivered to each of the Banks, fairly
presented, in conformity with generally accepted accounting principles, the
consolidated financial position of the Company and its Consolidated Subsidiaries
as of such date and their consolidated results of operations and cash flows for
such fiscal year.
(b) Since December 31, 1993 there has been no material adverse change
in the business, financial position or results of operations of the Company and
its Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. LITIGATION. There is no action, suit or proceeding
pending against, or to the knowledge of the Company threatened against or
affecting, the Company or any of its Subsidiaries before any court or arbitrator
or any governmental body, agency or official in which there is a reasonable
possibility of an adverse decision which could materially adversely affect the
business, consolidated financial position or consolidated results of operations
of the Company and its Consolidated Subsidiaries, considered as a whole, or
which in any manner draws into question the validity of this Agreement or the
Notes.
SECTION 4.06. COMPLIANCE WITH ERISA. Each member of the ERISA Group
has fulfilled its obligations under the minimum funding standards of ERISA and
the Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the currently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect
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of any Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security under ERISA or the Internal Revenue Code
or (iii) incurred any liability under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. ENVIRONMENTAL MATTERS . In the ordinary course of its
business, the Company conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Company and its
Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, the Company has reasonably concluded that such associated
liabilities and costs, including the costs of compliance with Environmental
Laws, are unlikely to have a material adverse effect on the business, financial
condition, results of operations or prospects of the Company and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.08. TAXES. United States Federal income tax returns of the
Company and its Subsidiaries have been closed through the fiscal year ended
December 31, 1989. The Company and its Subsidiaries have filed all United
States Federal income tax returns and all other material tax returns which are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Company or any Subsidiary,
except for any such taxes being diligently contested in good faith by
appropriate proceedings. The charges, accruals and reserves on the books of the
Company and its Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Company, adequate.
SECTION 4.09. SUBSIDIARIES. Each of the Company's Subsidiaries is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of
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organization, and has all corporate or other powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.10. NOT AN INVESTMENT COMPANY. The Company is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.11. FULL DISCLOSURE. All information heretofore furnished
by the Company to the Agent or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Company to the Agent or any Bank will be,
true and accurate in all material respects on the date as of which such
information is stated or certified. The Company has disclosed to the Banks in
writing any and all facts, other than general economic conditions, which
materially and adversely affect or may affect (to the extent the Company can now
reasonably foresee) the business, operations or financial condition of the
Company and its Consolidated Subsidiaries, considered as a whole, or the ability
of the Company to perform its obligations under this Agreement and the Notes.
ARTICLE V
COVENANTS
The Company agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. INFORMATION. The Company will deliver to each of the
Banks:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Company, consolidated and
consolidating balance sheets of the Company and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
consolidated and consolidating statements of operations and
consolidated statements of changes in stockholders' equity and cash
flows for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, (x) in the case of the
consolidated statements, all reported on in a manner acceptable to the
Securities and Exchange
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Commission by Deloitte & Touche or other independent public
accountants of nationally recognized standing, and (y) in the case of
the consolidating statements, all certified as to fairness of
presentation, generally accepted accounting principles and
consistency by the chief financial officer or the chief accounting
officer of the Company;
(b) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Company, consolidated and consolidating balance sheets of the Company
and its Consolidated Subsidiaries as of the end of such quarter and the
related consolidated and consolidating statements of operations and
consolidated statements of changes in stockholders' equity and cash
flows for such quarter and for the portion of the Company's fiscal year
ended at the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding quarter and the
corresponding portion of the Company's previous fiscal year, all
certified (subject to normal year-end adjustments and the non-inclusion
of notes permitted by the applicable regulations of the Securities and
Exchange Commission to be excluded from quarterly reports filed on Form
10-Q) as to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the chief
accounting officer of the Company;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the chief financial officer, treasurer or the chief accounting officer
of the Company (i) setting forth in reasonable detail the calculations
required to establish whether the Company was in compliance with the
requirements of Sections 5.07 through 5.11, inclusive, and Sections
5.13 and 5.15 on the date of such financial statements, (ii) setting
forth in reasonable detail the calculations of the Borrowing Base and
the Available Amount as of the date of such financial statements and
whether the Company is thereby required to take or cause to be taken
any action to comply with Section 2.13 and (iii) stating whether any
Default exists on the date of such certificate and, if any Default then
exists, setting forth the details thereof and
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the action which the Company is taking or proposes to take with
respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a certificate of the firm
of independent public accountants which reported on such statements (i)
whether anything has come to their attention to cause them to believe
that any Default existed on the date of such statements and (ii)
confirming the calculations set forth in the officer's certificate
delivered simultaneously therewith pursuant to clause (c) above;
(e) within 21 days after the end of each monthly accounting
period of the Company, a certificate of the chief financial officer,
treasurer or the chief accounting officer of the Company setting forth
calculations in reasonable detail of the Company's best estimate of the
Borrowing Base and the Available Amount as of the end of such month and
whether the Company is required to take or cause to be taken any action
to comply with Section 2.13;
(f) within five days after any officer of the Company obtains
knowledge of any Default, if such Default is then continuing, a
certificate of the chief financial officer or the chief accounting
officer of the Company setting forth the details thereof and the action
which the Company is taking or proposes to take with respect thereto;
(g) promptly upon the mailing thereof to the shareholders of
the Company generally, copies of all financial statements, reports and
proxy statements so mailed;
(h) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which the Company shall
have filed with the Securities and Exchange Commission;
(i) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a
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termination of such Plan under Title IV of ERISA, or knows that the
plan administrator of any Plan has given or is required to give notice
of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii)
receives notice of complete or partial withdrawal liability under Title
IV of ERISA or notice that any Multiemployer Plan is in reorganization,
is insolvent or has been terminated, a copy of such notice; (iii)
receives notice from the PBGC under Title IV of ERISA of an intent to
terminate, impose liability (other than for premiums under Section 4007
of ERISA) in respect of, or appoint a trustee to administer any Plan, a
copy of such notice; (iv) applies for a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code, a copy of such
application; (v) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and other information
filed with the PBGC; (vi) gives notice of withdrawal from any Plan
pursuant to Section 4063 of ERISA, a copy of such notice; or (vii)
fails to make any payment or contribution to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement or makes any amendment to
any Plan or Benefit Arrangement which has resulted or could result in
the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting
officer of the Company setting forth details as to such occurrence and
action, if any, which the Company or applicable member of the ERISA
Group is required or proposes to take; and
(j) from time to time such additional information regarding the
financial position or business of the Company and its Subsidiaries as
the Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. PAYMENT OF OBLIGATIONS. The Company will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity or in accordance with customary trade practices, all their respective
material obligations and liabilities, including, without limitation, tax
liabilities, except where the same may be contested in good faith by appropriate
proceedings, and will maintain, and will cause each Subsidiary to maintain, in
accordance with generally
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accepted accounting principles, appropriate reserves for the accrual of any of
the same.
SECTION 5.03. MAINTENANCE OF PROPERTY; INSURANCE. (a) The Company
will maintain, and will cause each Subsidiary to maintain, all property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted.
(b) The Company will, and will cause each of its Subsidiaries to,
maintain (either in the name of the Company or in such Subsidiary's own name)
with financially sound and responsible insurance companies, insurance on all
their respective properties in at least such amounts and against at least such
risks (and with such risk retention) as are (i) insured against under the
policies of insurance of the Company and its Subsidiaries set forth on the
schedule previously provided by the Company to the Banks or (ii) usually insured
against in the same general area by companies of established repute engaged in
the same or a similar business; and will furnish to the Banks, upon request from
the Agent, information presented in reasonable detail as to the insurance so
carried.
SECTION 5.04. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The
Company will continue, and will cause each Subsidiary to continue, to engage in
business of the same general type as now conducted by the Company and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and
will cause each Subsidiary to preserve, renew and keep in full force and effect
their respective corporate existence and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business; PROVIDED
that nothing in this Section 5.04 shall prohibit (i) the merger or consolidation
of a Subsidiary with or into another Person if the corporation surviving such
consolidation or merger is a Wholly-Owned Subsidiary or the merger of a
Subsidiary into the Company if, in each case, after giving effect thereto, no
Default shall have occurred and be continuing, (ii) the termination of the
corporate existence of any Subsidiary if such termination is not materially
disadvantageous to the Banks and the Company in good faith determines that such
termination is in the best interest of the Company or (iii) a sale of capital
stock of a Subsidiary permitted under Section 5.12(ii).
SECTION 5.05. COMPLIANCE WITH LAWS. The Company will comply, and
cause each Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations and requirements of governmental
authorities (including, without limitation, Environmental Laws and ERISA and the
rules and regulations
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thereunder) except where the necessity of compliance therewith is contested in
good faith by appropriate proceedings.
SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS. The Company
will keep, and will cause each Subsidiary to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities; and will permit,
and will cause each Subsidiary to permit, representatives of any Bank at such
Bank's expense to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, all at such reasonable
times, upon reasonable notice and as often as may reasonably be desired.
SECTION 5.07. FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage
Ratio for any period of four consecutive fiscal quarters will not be less than
(a) 2.0 to 1.0 for any such period ending on or prior to September 30, 1994 and
(ii) 2.25 to 1.0 for any such period ending thereafter.
SECTION 5.08. DEBT. The Company will not, and will not permit any of
its Subsidiaries to, incur or at any time be liable with respect to any Debt
except:
(a) Debt outstanding under this Agreement and the Notes,
PROVIDED
that the aggregate outstanding principal amount of all Loans
to Eligible Subsidiaries shall at no time exceed $20,000,000;
(b) Debt of the Company outstanding on May 13, 1993 and
identified on Schedule I and extensions, renewals and refinancings
thereof, PROVIDED that no such extension, renewal or refinancing shall
increase the principal amount of such Debt, shorten the maturity
thereof or accelerate the amortization thereof;
(c) Debt of any of the Company's Subsidiaries owing to the
Company or any of its Wholly-Owned Subsidiaries permitted by Section
5.11;
(d) Debt of the Company owing to Wholly-Owned Subsidiaries of
the Company;
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(e) Guarantees by the Company or any of its Subsidiaries of
Debt of employees of the Company or any of its Wholly-Owned
Subsidiaries, in an aggregate principal amount at any time outstanding
not to exceed $1,000,000;
(f) Debt of the Company or any of its Wholly- Owned
Subsidiaries owing to a Subsidiary of the Company incurred as a result
of the transfer of funds from an account under the control of such
Subsidiary to an account under the control of the Company or such
Wholly-Owned Subsidiary in connection with the Company's cash
management program;
(g) Permitted Short-Term Debt of the Company in an aggregate
principal amount at any time outstanding not to exceed $20,000,000;
(h) Debt denominated in currencies other than United States
dollars and having a maturity, at the time such Debt is incurred, of
not more than one year from the date such Debt is incurred in an
aggregate principal amount at the time of incurrence of any such Debt
(the dollar equivalent of all Debt outstanding at the time of any such
incurrence being recalculated as of the time of such incurrence on the
basis of exchange rates then in effect) not to exceed the equivalent of
$18,000,000;
(i) Permitted Long-Term Debt of the Company in an aggregate
principal amount at any time outstanding not to exceed the Applicable
Percentage of Consolidated Net Worth; and
(j) Debt not otherwise permitted under the foregoing clauses of
this Section in an aggregate principal amount not to exceed $5,000,000
at any time outstanding.
SECTION 5.09. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Consolidated
Tangible Net Worth will at no time be less than the sum of (i) $88,000,000 and
(ii) 80% of the sum of (A) Aggregate Positive Consolidated Net Income and (B)
the net cash proceeds of all issuances by the Company of shares of its common
stock after the date hereof. For purposes of this Section, "Aggregate Positive
Consolidated Net Income" means the aggregate amount of consolidated net income
for each fiscal quarter commencing on or after December 31, 1993 and ending on
or prior to the date as of which compliance with this Section 5.09 is determined
(with no deduction for consolidated net losses for any such fiscal quarter).
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SECTION 5.10. RESTRICTED PAYMENTS. Neither the Company nor any
Subsidiary will declare or make any Restricted Payment unless, after giving
effect thereto, the aggregate of all Restricted Payments declared or made
subsequent to December 31, 1990 does not exceed 25% of consolidated net income
(less consolidated net loss, if any) of the Company and its Consolidated
Subsidiaries for the period from January 1, 1991 through the end of the
Company's then most recent fiscal quarter (treated for this purpose as a single
accounting period). Nothing in this Section 5.10 shall prohibit the payment of
any dividend or distribution within 60 days after the declaration thereof if
such declaration was not prohibited by this Section 5.10.
SECTION 5.11. INVESTMENTS. Neither the Company nor any Subsidiary
will make or acquire any Investment in any Person other than:
(a) Investments in Persons which immediately before and after
giving effect to such Investment are Subsidiaries of the Company, if,
immediately thereafter, the aggregate amount of all such Investments
made after the date hereof does not exceed $25,000,000 at any one time
outstanding;
(b) Temporary Cash Investments;
(c) loans or advances to current employees of the Company or
such Consolidated Subsidiary having a maturity of less than one year in
an aggregate principal amount at any time outstanding not to exceed
$1,000,000;
(d) Investments the sole consideration for which is newly
issued common stock of the Company or newly issued preferred stock of
the Company that is not subject to mandatory redemption or redemption
at the option of the holder before the fourth anniversary of the date
of issuance thereof;
(e) Investments consisting of Debt permitted under Section
5.08(d) or 5.08(f); and
(f) any Investment not otherwise permitted by the foregoing
clauses of this Section if, immediately after such Investment is made
or acquired, the aggregate amount of all Investments permitted by this
clause (f) does not exceed $10,000,000 at any one time outstanding.
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The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without adjustments for
increases or decreases in value, write-ups, write-downs or write-offs with
respect to such Investment.
SECTION 5.12. MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES. The Company
will at all times maintain direct or indirect legal and beneficial ownership of
the percentage of outstanding shares of each class of capital stock set forth on
Schedule II of each of its Subsidiaries, except as modified by (i) sales by
Subsidiaries of directors' qualifying shares, (ii) mergers and liquidations
permitted pursuant to the proviso to Section 5.14 and (iii) grants or sales by
The Outdoor Footwear Company of shares of its non-voting common stock to its
employees consistent with past practice.
SECTION 5.13. NEGATIVE PLEDGE. Neither the Company nor any Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal
amount not exceeding $15,000,000 and identified on Schedule I;
(b) any Lien existing on any asset of any corporation at the
time such corporation becomes a Subsidiary and not created in
contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed for
the purpose of financing all or any part of the cost of acquiring or
constructing such asset, PROVIDED that such Lien attaches to such
asset concurrently with or within 90 days after the acquisition or
construction thereof;
(d) any Lien on any asset of any corporation existing at the
time such corporation is merged or consolidated with or into the
Company or a Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition
thereof by the Company or a Subsidiary and not created in contemplation
of such acquisition;
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(f) any Lien arising out of the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section 5.13, PROVIDED that such Debt is not
increased and is not secured by any additional assets;
(g) Liens arising in the ordinary course of its business which
(i) do not secure Debt or Derivative Obligations, (ii) do not secure
any obligation in an amount exceeding $10,000,000 and (iii) do not in
the aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business;
(h) Liens on assets of Subsidiaries securing Debt owing to the
Company or to Wholly- Owned Subsidiaries permitted by Section 5.08;
(i) Liens on cash and cash equivalents securing Derivative
Obligations, PROVIDED that the aggregate amount of cash and cash
equivalents subject to such Liens may at no time exceed $5,000,000;
(j) Liens on Factorable Receivables arising in connection with
and as part of the sale or transfer of such Factorable Receivables
pursuant to Permitted Factoring Transactions; and
(k) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt in an aggregate principal or face amount at
any time outstanding not to exceed $5,000,000.
SECTION 5.14. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. The
Company will not (i) consolidate or merge with or into any other Person or (ii)
sell, lease or otherwise transfer, directly or indirectly in one transaction or
a series of related transactions, all or any substantial part of the assets of
the Company and its Subsidiaries, taken as a whole, to any other Person;
PROVIDED that a Subsidiary of the Company may merge with or liquidate into the
Company or a Wholly-Owned Subsidiary of the Company if (A) the Company or such
Wholly-Owned Subsidiary, as the case may be, is the corporation surviving such
merger or liquidation and (B) immediately after giving effect to such merger, no
Default shall have occurred and be continuing.
SECTION 5.15. RESTRICTIONS ON PREPAYMENTS OF AND AMENDMENTS TO CERTAIN
DEBT. (a) Except with the
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proceeds of the issuance by the Company of (i) Permitted Long-Term Debt the
average-life-to maturity of which is greater than that of the Debt being repaid
or prepaid, (ii) shares of its common stock or (iii) in the case of Debt
outstanding under any of the Note Agreements, each dated as of September 30,
1989 and between the Company and the Purchaser named in Schedule I thereto (each
a "Note Agreement"), refinancing thereof permitted under Section 5.08(b), the
Company will not, and will not permit any of its Subsidiaries to, voluntarily
repay or prepay (A) any Debt outstanding under any Note Agreement, (B) any April
1994 Private Placement Debt or (C) any Debt outstanding under the Chase Credit
Agreement, PROVIDED that the Company may voluntarily repay or prepay Debt
outstanding under the Chase Credit Agreement in a cumulative aggregate amount
not in excess of $5,000,000 without regard to the source of funds used for such
repayment or prepayment so long as, immediately before and after any such
repayment or prepayment, there shall be no Loans outstanding hereunder.
(b) The Company will not consent to (i) any amendment of the amount or
date of any required repayment or prepayment of any Debt outstanding under any
Note Agreement or the Chase Credit Agreement or of any April 1994 Private
Placement Debt, except for an amendment of any such date to a date on or after
the earlier of (A) the date of such required repayment or prepayment as in
effect prior to such amendment and (B) the first anniversary of the Termination
Date or (ii) any amendment, modification, supplement or waiver of the covenants
or events of default contained in the Chase Credit Agreement in any manner that
(A) causes such covenants or events of default to include greater or more
stringent restrictions on the Company and (B) could adversely affect the Banks.
SECTION 5.16. TRANSACTIONS WITH AFFILIATES. The Company will not, and
will not permit any Subsidiary to, directly or indirectly, pay any funds to or
for the account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate; PROVIDED, HOWEVER, that the foregoing provisions of this Section
5.16 shall not prohibit (a) the Company from declaring or paying any lawful
dividend so long as, after giving effect thereto, no Default shall have occurred
and be continuing, (b) the Company or any Subsidiary from making sales to or
purchases from any Affiliate and, in
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connection therewith, extending credit or making payments, or from making
payments for services rendered by any Affiliate, if such sales or purchases are
made or such services are rendered in the ordinary course of business and on
terms and conditions at least as favorable to the Company or such Subsidiary as
the terms and conditions which would apply in a similar transaction with a
Person not an Affiliate, (c) the Company or any Subsidiary from making payments
of principal, interest and premium on any Debt of the Company or such Subsidiary
held by an Affiliate if the terms of such Debt are substantially as favorable to
the Company or such Subsidiary as the terms which could have been obtained at
the time of the creation of such Debt from a lender which was not an Affiliate
and (d) the Company or any Subsidiary from participating in, or effecting any
transaction in connection with, any joint enterprise or other joint arrangement
with any Affiliate if the Company or such Subsidiary participates in the
ordinary course of its business and on a basis no less advantageous than the
basis on which such Affiliate participates.
SECTION 5.17. USE OF PROCEEDS. The proceeds of the Loans made under
this Agreement will be used by the Borrowers for general corporate purposes,
including working capital. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U.
ARTICLE VI
DEFAULTS
SECTION 6.01. EVENTS OF DEFAULT. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) any principal of any Loan shall not be paid when due, or
any interest, any fees or any other amount payable hereunder shall not
be paid within two Domestic Business Days of the due date thereof;
(b) the Company shall fail to observe or perform any covenant
contained in Sections 5.07 to 5.15, inclusive, and 5.17;
(c) any Borrower shall fail to observe or perform any covenant
or agreement contained in this Agreement (other than those covered by
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clause (a) or (b) above) for 30 days after written notice thereof
has been given to the Company by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement
made by any Borrower in this Agreement or in any certificate, financial
statement or other document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect when made (or
deemed made);
(e) the Company or any Subsidiary shall fail to make any
payment in respect of any Material Financial Obligation when due or
within any applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or, with
the giving of notice or lapse of time or both, would enable) the holder
of such Debt or any Person acting on such holder's behalf to accelerate
the maturity thereof;
(g) the Company or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to authorize any of
the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Company or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other
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proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Company or
any Subsidiary under the federal bankruptcy laws as now or hereafter
in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $500,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV
of ERISA to terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $500,000;
(j) a judgment or order for the payment of money in excess of
$1,000,000 shall be rendered against the Company or any Subsidiary and
such judgment or order shall continue unsatisfied and unstayed for a
period of (i) in the case of a judgment or order rendered by a court,
arbitrator or governmental authority located in the United States, 10
days or (ii) in the case of a judgment or order rendered by a court,
arbitrator or governmental authority located outside the United States,
30 days; or
(k) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
(other than the Swartz Family) shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) of 50% or more of the outstanding
shares of common stock of the Company or 20% or more of the voting
power to elect a majority of the
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board of directors of the Company; or the Swartz Family shall cease to
have beneficial ownership of 50% of the outstanding shares of common
stock of the Company and 51% of the ordinary voting power to elect a
majority of the board of directors of the Company; or during any period
of twelve consecutive calendar months, individuals who were directors
of the Company on the first day of such period shall cease to
constitute a majority of the board of the directors of the Company;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Company
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate principal
amount of the Loans, by notice to the Company declare the Notes (together with
accrued interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by each Borrower; PROVIDED that in
the case of any of the Events of Default specified in clause (g) or (h) above
with respect to any Borrower, without any notice to any Borrower or any other
act by the Agent or the Banks, the Commitments shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by each Borrower.
SECTION 6.02. NOTICE OF DEFAULT. The Agent shall give notice to the
Company under Section 6.01(c) promptly upon being requested to do so by any Bank
and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. APPOINTMENT AND AUTHORIZATION. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the Notes as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.02. AGENT AND AFFILIATES. Morgan Guaranty Trust Company of
New York shall have the same
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rights and powers under this Agreement as any other Bank and may exercise or
refrain from exercising the same as though it were not the Agent, and Morgan
Guaranty Trust Company of New York and its affiliates may accept deposits
from, lend money to, and generally engage in any kind of business with any
Borrower or any Subsidiary or affiliate of any Borrower as if it were not the
Agent hereunder.
SECTION 7.03. ACTION BY AGENT. The obligations of the Agent hereunder
are only those expressly set forth herein. Without limiting the generality of
the foregoing, the Agent shall not be required to take any action with respect
to any Default, except as expressly provided in Article VI.
SECTION 7.04. CONSULTATION WITH EXPERTS. The Agent may consult with
legal counsel (who may be counsel for any Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. LIABILITY OF AGENT. Neither the Agent nor any of its
affiliates or any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent
nor any of its affiliates or any of their respective directors, officers, agents
or employees shall be responsible for or have any duty to ascertain, inquire
into or verify (i) any statement, warranty or representation made in connection
with this Agreement or any Borrowing hereunder; (ii) the performance or
observance of any of the covenants or agreements of any Borrower; (iii) the
satisfaction of any condition specified in Article III, except receipt of items
required to be delivered to the Agent; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Notes or any other instrument or writing
furnished in connection herewith. The Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement or other
writing (which may be a bank wire, facsimile transmission, telex or similar
writing) believed by it to be genuine or to be signed by the proper party or
parties.
SECTION 7.06. INDEMNIFICATION. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent, its affiliates and their respective
directors, officers, agents and employees (to the extent
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not reimbursed by the Borrowers) against any cost, expense (including counsel
fees and disbursements), claim, demand, action, loss or liability (except such
as result from such indemnitees' gross negligence or willful misconduct) that
such indemnitees may suffer or incur in connection with this Agreement or any
action taken or omitted by such indemnitees hereunder.
SECTION 7.07. CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Banks and the Company. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent with the consent of the Borrower, which consent shall not be unreasonably
withheld. If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Banks and without the consent of the Borrower, appoint a successor
Agent, which shall be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $100,000,000. Upon the acceptance of its
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
SECTION 7.09. AGENT'S FEE. The Company shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon between
the Company and the Agent.
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ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR
UNFAIR. If on or prior to the first day of any Interest Period for any Fixed
Rate Borrowing:
(a) the Agent is advised by the Reference Banks that deposits
in dollars (in the applicable amounts) are not being offered to the
Reference Banks in the relevant market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks having 50% or
more of the aggregate amount of the Commitments advise the Agent that
the Adjusted CD Rate or the Adjusted Interbank Offered Rate, as the
case may be, as determined by the Agent, will not adequately and fairly
reflect the cost to such Banks of funding their CD Loans or Euro-Dollar
Loans, as the case may be, for such Interest Period,
the Agent shall forthwith give notice thereof to the Company and the Banks,
whereupon until the Agent notifies the Company that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be, shall be suspended, and
(ii) each outstanding CD Loan or Euro-Dollar Loan, as the case may be,
shall be converted into a Base Rate Loan on the last day of the then current
Interest Period applicable thereto. If the applicable Borrower shall have
received such a notice from the Agent, unless the applicable Borrower notifies
the Agent at least two Domestic Business Days before the date of any Fixed Rate
Borrowing for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a
Committed Borrowing, such Borrowing shall instead be made as a Base Rate
Borrowing, and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR
Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear
interest for each day from and including the first day to but excluding the last
day of the Interest Period applicable thereto at the Base Rate for such day.
SECTION 8.02. ILLEGALITY. If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any
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governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for any Bank (or such Applicable
Lending Office) to make, maintain or fund its Euro-Dollar Loans or Money Market
LIBOR Loans to any Borrower pursuant to this Agreement and such Bank shall so
notify the Agent, the Agent shall forthwith give notice thereof to the other
Banks and the Company, whereupon until such Bank notifies the Company and the
Agent that the circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans or to convert outstanding
Loans into Euro-Dollar Loans, as the case may be, shall be suspended. Before
giving any notice with respect to Euro-Dollar Loans or Money Market LIBOR Loans
to the Agent pursuant to this Section, such Bank shall designate a different
Euro-Dollar Lending Office or Money Market Lending Office if such designation
will avoid the need for giving such notice and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. If such notice is given with
respect to Euro-Dollar Loans or Money Market LIBOR Loans, each Euro-Dollar Loan
or, in the circumstances described in clause (b) below, Money Market LIBOR Loan
of such Bank then outstanding shall be converted to a Base Rate Loan either (a)
in the case of Euro-Dollar Loans only, on the last day of the then current
Interest Period applicable to such Euro-Dollar Loan, if such Bank may lawfully
continue to maintain and fund such Loan to such day, or (b) immediately, if such
Bank shall determine that it may not lawfully continue to maintain and fund such
Euro-Dollar Loan or Money Market LIBOR Loan to such day.
SECTION 8.03. INCREASED COST AND REDUCED RETURN. (a) If on or
after (x) the date hereof, in the case of any Committed Loan or any obligation
to make Committed Loans or (y) the date of the related Money Market Quote, in
the case of a Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency, shall impose, modify
or deem applicable any reserve (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System, but
excluding (i)
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with respect to any CD Loan any such requirement included in an applicable
Domestic Reserve Percentage and (ii) with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve Percentage),
special deposit, insurance assessment (excluding, with respect to any CD Loan,
any such requirement reflected in an applicable Assessment Rate) or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Bank (or its Applicable Lending Office) or shall impose
on any Bank (or its Applicable Lending Office) or on the United States market
for certificates of deposit or the London interbank market any other condition
affecting its Fixed Rate Loans, its Notes or its obligation to make Fixed Rate
Loans and the result of any of the foregoing is to increase the cost to such
Bank (or its Applicable Lending Office) of making or maintaining any Fixed Rate
Loan, or to reduce the amount of any sum received or receivable by such Bank (or
its Applicable Lending Office) under this Agreement or under its Notes with
respect thereto, by an amount deemed by such Bank to be material, then within 15
days after demand by such Bank (with a copy to the Agent), the Company shall pay
to such Bank such additional amount or amounts as will compensate such Bank for
such increased cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Agent), the Company shall pay to such Bank such
additional amount or amounts as will compensate such Bank (or its Parent) for
such reduction.
(c) Each Bank will promptly notify the Company and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount
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of, such compensation and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. A certificate of any Bank claiming compensation
under this Section 8.03 and setting forth the additional amount or amounts to be
paid to it hereunder shall be conclusive in the absence of manifest error.
In determining such amount, such Bank may use any reasonable averaging and
attribution methods.
SECTION 8.04. TAXES. (a) Any and all payments by any Borrower to or
for the account of any Bank or the Agent hereunder or under any Note shall be
made free and clear of and without deduction for any and all present or future
taxes, duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, EXCLUDING, in the case of each Bank and the
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Bank or the Agent (as the case may be)
is organized or any political subdivision thereof and, in the case of each Bank,
taxes imposed on its income, and franchise or similar taxes imposed on it, by
the jurisdiction of such Bank's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If any Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to any Bank or the
Agent, (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 8.04) such Bank or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions, (iii) such
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) such Borrower
shall furnish to the Agent, at its address referred to in Section 11.01, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Company agrees to pay any present or future stamp
or documentary taxes and any other excise taxes, or charges or similar levies,
or any future property taxes, which arise from any payment made hereunder or
under any Note or from the execution or delivery of, or otherwise with respect
to, this Agreement, any Election to Participate or Election to Terminate or any
Note (hereinafter referred to as "Other Taxes").
(c) The Company agrees to indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes
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(including, without limitation, any Taxes or Other Taxes imposed or asserted by
any jurisdiction on amounts payable under this Section 8.04) paid by such
Bank or the Agent (as the case may be) and any liability (including penalties,
interest and expenses, other than penalties, interest or expenses arising solely
from such Bank's gross negligence or willful misconduct) arising therefrom or
with respect thereto. This indemnification shall be made within 15 days from
the date such Bank or the Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Company (but
only so long as such Bank remains lawfully able to do so), shall provide the
Company and the Agent with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to benefits under an income tax treaty to
which the United States is a party which reduces the rate of withholding tax on
payments of interest or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States. If the form provided by a Bank at the time such Bank first
becomes a party to this Agreement indicates a United States interest withholding
tax rate in excess of zero, withholding tax at such rate shall be considered
excluded from "Taxes" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to provide
the Company with the appropriate form pursuant to Section 8.04(d) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.04(a) with respect to
Taxes imposed by the United States; PROVIDED that should a Bank, which is
otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
each Borrower shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If any Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.04, then such Bank will change
the jurisdiction of its Applicable Lending Office so as to
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eliminate or reduce any such additional payment which may thereafter accrue if
such change, in the judgment of such Bank, is not otherwise disadvantageous
to such Bank.
SECTION 8.05. BASE RATE LOANS SUBSTITUTED FOR AFFECTED FIXED RATE
LOANS. If (i) the obligation of any Bank to make Euro-Dollar Loans to any
Borrower pursuant to this Agreement has been suspended pursuant to Section 8.02
or (ii) any Bank has demanded compensation under Section 8.03 or 8.04 with
respect to its CD Loans or Euro-Dollar Loans to any Borrower and the Company
shall, by at least five Euro-Dollar Business Days' prior notice to such Bank
through the Agent, have elected that the provisions of this Section 8.05 shall
apply to such Bank, then, unless and until such Bank notifies the Company that
the circumstances giving rise to such suspension or demand for compensation no
longer exist:
(a) all Loans to such Borrower which would otherwise be made by
such Bank as (or continued as or converted into) CD Loans or
Euro-Dollar Loans, as the case may be, shall instead be Base Rate Loans
(on which interest and principal shall be payable contemporaneously
with the related Fixed Rate Loans of the other Banks), and
(b) if Base Rate Loans are substituted for Fixed Rate Loans,
after each of its CD Loans or Euro-Dollar Loans, as the case may be, to
such Borrower has been repaid (or converted to a Base Rate Loan), all
payments of principal which would otherwise be applied to repay such
Fixed Rate Loans shall be applied to repay its Base Rate Loans instead.
If such Bank notifies the Company that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan which
was substituted for a Fixed Rate Loan shall be converted into a CD Loan or
Euro-Dollar Loan, as the case may be, on the first day of the next succeeding
Interest Period applicable to the related CD Loans or Euro-Dollar Loans of the
other Banks.
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ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF ELIGIBLE SUBSIDIARIES
Each Eligible Subsidiary shall be deemed by the execution and delivery
of its Election to Participate to have represented and warranted as of the date
thereof that:
SECTION 9.01. CORPORATE EXISTENCE AND POWER. It is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is a Wholly-Owned Consolidated Subsidiary of
the Company.
SECTION 9.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION;
CONTRAVENTION. The execution and delivery by it of its Election to Participate
and its the performance by it of this Agreement and its Notes, are within its
corporate powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any governmental body,
agency or official and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of its certificate of
incorporation or by-laws or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Company or such Eligible Subsidiary
or result in the creation or imposition of any Lien on any asset of the Company
or any of its Subsidiaries.
SECTION 9.03. BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of such Eligible Subsidiary and its Notes, when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of such Eligible Subsidiary.
SECTION 9.04. TAXES. Except as disclosed in such Election to
Participate, there is no income, stamp or other tax of any country, or any
taxing authority thereof or therein, imposed by or in the nature of withholding
or otherwise, which is imposed on any payment to be made by such Eligible
Subsidiary pursuant hereto or on its Notes, or is imposed on or by virtue of the
execution, delivery or enforcement of its Election to Participate or its Notes.
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ARTICLE X
GUARANTY
SECTION 10.01. THE GUARANTY . The Company hereby unconditionally
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on each Note issued
by any Eligible Subsidiary pursuant to this Agreement and the full and punctual
payment of all other amounts payable by any Eligible Subsidiary under this
Agreement. Upon failure by any Eligible Subsidiary to pay punctually any such
amount, the Company shall forthwith on demand pay the amount not so paid at the
place and in the manner specified in this Agreement.
SECTION 10.02. GUARANTY UNCONDITIONAL. The obligations of the Company
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any Eligible Subsidiary under
this Agreement or any Note, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement or any Note;
(iii) any release, non-perfection or invalidity of any direct
or indirect security for any obligation of any Eligible Subsidiary
under this Agreement or any Note;
(iv) any change in the corporate existence, structure or
ownership of any Eligible Subsidiary, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Eligible
Subsidiary or its assets or any resulting release or discharge of any
obligation of any Eligible Subsidiary contained in this Agreement or
any Note;
(v) the existence of any claim, set-off or other rights which
the Company may have at any time against any Eligible Subsidiary, the
Agent, any Bank or any other Person, whether in connection herewith or
with any unrelated transactions, PROVIDED that nothing herein shall
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prevent the assertion of any such claim by separate suit or
compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against
any Eligible Subsidiary for any reason of this Agreement or any Note,
or any provision of applicable law or regulation purporting to prohibit
the payment by any Eligible Subsidiary of the principal of or interest
on any Note or any other amount payable by it under this Agreement; or
(vii) any other act or omission to act or delay of any kind by
any Eligible Subsidiary, the Agent, any Bank or any other Person or any
other circumstance whatsoever which might, but for the provisions of
this paragraph, constitute a legal or equitable discharge of the
Company's obligations hereunder.
SECTION 10.03. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN
CERTAIN CIRCUMSTANCES. The Company's obligations hereunder shall remain in full
force and effect until the Commitments shall have terminated and the principal
of and interest on the Notes and all other amounts payable by the Company and
each Eligible Subsidiary under this Agreement shall have been paid in full. If
at any time any payment of the principal of or interest on any Note or any other
amount payable by any Eligible Subsidiary under this Agreement is rescinded or
must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of any Eligible Subsidiary or otherwise, the Company's
obligations hereunder with respect to such payment shall be reinstated at such
time as though such payment had been due but not made at such time.
SECTION 10.04. WAIVER BY THE COMPANY. The Company irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against any Eligible Subsidiary or any other Person.
SECTION 10.05. WAIVER OF SUBROGATION. The Company irrevocably waives
any and all rights to which it may be entitled, by operation of law or
otherwise, upon making any payment hereunder to be subrogated to the rights of
the payee against an Eligible Subsidiary with respect to such payment or
otherwise to be reimbursed, indemnified or exonerated by an Eligible Subsidiary
in respect thereof.
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SECTION 10.06. STAY OF ACCELERATION. In the event that acceleration
of the time for payment of any amount payable by any Eligible Subsidiary under
this Agreement or its Notes is stayed upon insolvency, bankruptcy or
reorganization of such Eligible Subsidiary, all such amounts otherwise subject
to acceleration under the terms of this Agreement shall nonetheless be payable
by the Company hereunder forthwith on demand by the Agent made at the request of
the Required Banks.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. NOTICES . All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of any Borrower or the Agent, at its address or telex or
facsimile transmission number set forth on the signature pages hereof (or, in
the case of an Eligible Subsidiary, its Election to Participate), (y) in the
case of any Bank, at its address or telex or facsimile transmission number set
forth in its Administrative Questionnaire or (z) in the case of any party, at
such other address or telex or facsimile transmission number as such party may
hereafter specify for the purpose by notice to the Agent and the Company. Each
such notice, request or other communication shall be effective (i) if given by
telex, when such telex is transmitted to the number specified in or pursuant to
this Section and the appropriate answerback is received, (ii) if given by
certified mail, return receipt requested, three Domestic Business Days after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in or pursuant to this Section; PROVIDED that notices to
the Agent under Article II or Article VIII shall not be effective until
received.
SECTION 11.02. NO WAIVERS . No failure or delay by the Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
69
<PAGE> 76
SECTION 11.03. EXPENSES; DOCUMENTARY TAXES; INDEMNIFICATION. (a) The
Company shall pay (i) all direct out-of-pocket expenses (not to include in any
event any indirect or overhead charges) of the Agent, including reasonable fees
and disbursements of special counsel for the Agent, in connection with the
preparation and administration of this Agreement and the Notes, any waiver or
consent hereunder or any amendment hereof or any Default or alleged Default
hereunder and (ii) if an Event of Default occurs, all direct out-of-pocket
expenses (not to include in any event any indirect or overhead charges) incurred
by the Agent and each Bank, including fees and disbursements of counsel, in
connection with such Event of Default and collection, bankruptcy, insolvency and
other enforcement proceedings resulting therefrom.
(b) The Company agrees to indemnify the Agent and each Bank, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in connection
with any investigative, administrative or judicial proceeding (whether or not
such Indemnitee shall be designated a party thereto) brought or threatened
relating to or arising out of this Agreement or any actual or proposed use of
proceeds of Loans hereunder; PROVIDED that no Indemnitee shall have the right to
be indemnified hereunder for such Indemnitee's own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
SECTION 11.04. SHARING OF SET-OFFS. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to any Note held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks shall be shared by the
Banks pro rata; PROVIDED that nothing in this Section shall impair the right of
any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness of a
Borrower other than its indebtedness hereunder. Each Borrower agrees, to the
70
<PAGE> 77
fullest extent it may effectively do so under applicable law, that any holder of
a participation in a Note, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of such Borrower in the amount of such participation.
SECTION 11.05. AMENDMENTS AND WAIVERS. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Company and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
PROVIDED that no such amendment or waiver shall, unless signed by all the Banks,
(i) increase or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for any reduction or termination
of any Commitment, (iv) release the Company from all or substantially all of its
obligations under Article X, or (v) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Loans, or the number of Banks,
which shall be required for the Banks or any of them to take any action under
this Section 11.05 or any other provision of this Agreement; and PROVIDED ,
FURTHER, that no such amendment, waiver or modification shall, unless signed
by an Eligible Subsidiary, (w) subject such Eligible Subsidiary to any
additional obligation, (x) increase the principal of or rate of interest on any
outstanding Loan of such Eligible Subsidiary, (y) accelerate the stated maturity
of any outstanding Loan of such Eligible Subsidiary or (z) change this proviso.
SECTION 11.06. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that no Borrower may assign
or otherwise transfer any of its rights under this Agreement without the prior
written consent of all Banks.
(b) Any Bank may at any time, upon (except in the case of grants of
participating interests in Money Market Loans only) notice to the Company and
the Agent, grant to one or more banks or other institutions (each a
"Participant") participating interests in its Commitment or any or all of its
Loans. In the event of any such grant by a Bank of a participating interest to
a
71
<PAGE> 78
Participant, whether or not upon notice to the Borrowers and the Agent, such
Bank shall remain responsible for the performance of its obligations hereunder,
and the Borrowers and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under
this Agreement. Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain the sole right
and responsibility to enforce the obligations of the Borrowers hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; PROVIDED that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in clause (i), (ii) or (iii) of
Section 11.05 without the consent of the Participant. The Borrowers agree that
each Participant shall, to the extent provided in its participation agreement,
be entitled to the benefits of Section 2.18 and Article VIII with respect to its
participating interest. An assignment or other transfer which is not permitted
by subsection (c) or (d) below shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in accordance
with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit J hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Company and the Agent; PROVIDED that (i) any such assignment must
be in an amount of at least $5,000,000, (ii) if an Assignee is an affiliate of
such transferor Bank, no such consent shall be required and (iii) such
assignment may, but need not, include rights of the transferor Bank in respect
of outstanding Money Market Loans. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the
Borrowers shall make appropriate
72
<PAGE> 79
arrangements so that, if required, new Notes are issued to the Assignee. In
connection with any such assignment, the transferor Bank shall pay to the Agent
an administrative fee for processing such assignment in the amount of $2,500.
If the Assignee is not incorporated under the laws of the United States of
America or a state thereof, it shall, prior to the first date on which interest
or fees are payable hereunder for its account, deliver to the Company and the
Agent certification as to exemption from deduction or withholding of any United
States federal income taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Company's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 11.07. COLLATERAL . Each of the Banks represents to the Agent
and each of the other Banks that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 11.08. CONFIDENTIALITY. The Agent and each Bank shall keep
confidential any information provided by any Borrower and clearly identified as
confidential; PROVIDED that nothing herein shall prevent the Agent or any Bank
from disclosing such information (i) to its officers, directors, employees,
agents, attorneys and accountants in connection with the entry into and
administration of this Agreement and the extensions of credit hereunder, (ii)
upon the order of a court or administrative agency, (iii) upon the request or
demand of any regulatory agency or authority having jurisdiction over such
party, (iv) which has become publicly available without breach of any agreement
among the parties hereto, (v) as necessary for the exercise of any remedy
hereunder or under any Note or (vi) subject to provisions similar to
73
<PAGE> 80
those contained in this Section, to any prospective Participant or Assignee.
SECTION 11.09. GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. Each Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 11.10. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective upon receipt by the Agent of
counterparts hereof signed by each of the parties hereto (or, in the case of any
party as to which an executed counterpart shall not have been received, receipt
by the Agent in form satisfactory to it of telegraphic, telex, facsimile or
other written confirmation from such party of execution of a counterpart hereof
by such party).
SECTION 11.11. WAIVER OF JURY TRIAL . EACH OF THE BORROWERS, THE
AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
74
<PAGE> 81
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
THE TIMBERLAND COMPANY
By /s/ ?????????????
-----------------------
Title: Treasurer
11 Merrill Industrial Drive
P.O. Box 5050
Hampton, N.H. 03842-5050
Attention: Nancy A. Wels
Facsimile transmission
number: 603-929-1788
75
<PAGE> 82
Commitments
- - -----------
$25,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ ????????????
-------------------------
Title:
$25,000,000 ABN AMRO BANK N.V.
By /s/ ????????????
-------------------------
Title:
By /s/ ????????????
-------------------------
Title:
$25,000,000 THE FIRST NATIONAL BANK OF
BOSTON
By /s/ ????????????
-------------------------
Title:
$15,000,000 BARCLAYS BANK PLC
By /s/ ????????????
-------------------------
Title:
$15,000,000 CHEMICAL BANK
By /s/ ????????????
-------------------------
Title:
76
<PAGE> 83
$15,000,000 THE NORTHERN TRUST COMPANY
By /s/ ?????????????
--------------------------
Title: Vice President
$ 5,000,000 BANK HAPOALIM B.M.
By /s/ ?????????????
--------------------------
Title: Vice President
By /s/ ?????????????
--------------------------
Title: Vice President
_________________
Total Commitments
$ 125,000,000
=================
77
<PAGE> 84
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent
By /s/ ?????????????
----------------------
Title:
60 Wall Street
New York, New York 10260-0060
Attention: Charles Pardue
Telex number: 177615
Facsimile transmission
number: (212) 648-5018
78
<PAGE> 85
<TABLE>
Schedule I
DESCRIPTION OF EXISTING DEBT AND LIENS
May 13, 1993
<CAPTION>
Original
Effective Maturity Face Outstanding
Date Date Amount Liability
<S> <C> <C> <C> <C>
Money Market Lines
LIBOR 4/14/93 5/14/93 $ 5,000,000 $ 5,000,000
LIBOR 4/27/93 5/27/93 5,000,000 5,000,000
------------ ------------
$ 10,000,000 $ 10,000,000
============ ============
Revolving Credit Agreement
BASE -- -- $ 16,700,000 $ 16,700,000
============ ============
Foreign Currency Credit Facilities
First National Bank of Boston, London [POUNDS] 2,000,000 [POUNDS] --
First National Bank of Boston, Paris [FRANCS] 10,000,000 [FRANCS] 1,157,619
============ ============
Private Placement Senior Note
Principal Mutual Life Insurance
Company and other insurance
companies 12/06/89 12/1/99 $ 35,000,000 $ 35,000,000
============ ============
Capital Equipment Leases*
Banc New England Leasing Group 10/88 12/93 $ 1,700,000 $ 216,975
Pitney Bowes Credit Corp. 7/88 5/93 1,244,630 77,384
JCM Sales & Leasing, Inc. 5/90 7/93 96,000 1,000
BayBanks Financing & Leasing Co. Inc. 6/90 6/95 2,096,332 1,034,687
BayBanks Financing & Leasing Co. Inc. 10/90 11/95 456,507 255,673
BayBanks Financing & Leasing Co. Inc. 12/90 12/95 459,431 272,191
------------ ------------
$ 6,052,900 $ 1,857,910
============ ============
Industrial Revenue Bond*
Shawmut Bank N.A. 12/27/84 12/2014 $ 6,680,000 $ 5,345,000
Miscellaneous Other Liens* Maximum
Copy Machines, Computers --- --- $ 3,000,000 $ ---
Equipment, and other miscellaneous ============ ============
*Secured by lien
INTERCOMPANY DEBT BETWEEN COMPANY AND SUBSIDIARIES
Intercompany Debt:
Timberland World Trading GMBH DM 3,686,000
Intercompany Payables $ 39,713,554
The Outdoor Footwear Company 1,703,226
-------------
Timberland International Sales Corporation $ 41,416,780
=============
</TABLE>
<PAGE> 86
<TABLE>
SUBSIDIARIES OF THE TIMBERLAND COMPANY ("TIMBERLAND")
<CAPTION>
JURISDICTION OF OWNERSHIP
NAME OF SUBSIDIARY ORGANIZATION SUBSIDIARIES
<S> <C> <C>
Component Footwear Dominicana, S.A. Dominican Republic 99.4% owned by Timberland; .1% owned by each of:
(formerly Timberland Dominicana, S.A.) Timberland S.A.R.L.
Timberland (UK) Limited
Timberland Europe, Inc.
The Timberland World Trading Company
The Outdoor Footwear Company
Timberland Espana, S.A. (formerly
The Timberland World Trading Company, S.A.)
Outdoor Footwear Company, The Delaware 100% of voting stock owned by Timberland
Recreational Footwear Company, The Cayman Islands 100% owned by Timberland
Recreational Footwear Company Dominican Republic 99.4% owned by Timberland; .1% owned by each of:
(Dominicana), S.A., The Timberland S.A.R.L.
Timberland (UK) Limited
Timberland Europe, Inc.
The Timberland World Trading Company
The Outdoor Footwear Company
Timberland Espana, S.A. (formerly The Timberland World
Trading Company, S.A.)
Timberland (UK) Limited England 99.9% owned by Timberland;
S. Swartz beneficially holding .1%
Timberland Aviation, Inc. Delaware 100% owned by Timberland
Timberland Company of Australia Pty. Australia 66-2/3% owned by Timberland;
Ltd., The S. Swartz beneficially holding 33-1/3%
Timberland Direct Sales, Inc. Delaware 100% owned by Timberland
Timberland Espana, S.A. Spain 99.98% owned by Timberland ; .01% owned by each
S. Swartz and J. Swartz
Timberland Europe, Inc. Delaware 100% owned by Timberland
(formerly Precision Instruments, Inc.)
Timberland Finance Company, The Delaware 100% owned by The Outdoor Footwear Company
Timberland Footwear & Clothing Inc. Canada 100% owned by Timberland
(Les Vetements & Chaussures Timberland
Inc.)
</TABLE>
<PAGE> 87
<TABLE>
<CAPTION>
JURISDICTION OF OWNERSHIP
NAME OF SUBSIDIARY ORGANIZATION SUBSIDIARIES
<S> <C>
Timberland Footwear & Clothing New Zealand 99% owned by Timberland;S. Swartz beneficially holding 1%
New Zealand Limited
Timberland GmbH Austria 100% owned by Timberland
Timberland International, Inc. Delaware 100% owned by Timberland
Timberland International Sales U.S. Virgin Islands 100% owned by Timberland
Corporation
Timberland Manufacturing Company Delaware 100% owned by Timberland
Timberland Retail, Inc. (formerly Delaware 100% owned by Timberland
Timberland Overseas Company)
Timberland S.A.R.L. France .01% owned by The Outdoor Footwear Company and
99.9% owned by Timberland
Timberland Scandinavia, Inc. Delaware 100% owned by Timberland
Timberland World Trading Company, The Delaware 100% owned by Timberland
Timberland World Trading GmbH, The Federal Republic of 100% owned by The Timberland World Trading Company
Germany
</TABLE>
<PAGE> 88
DISTRIBUTORS
- Nozaki America, Inc. and Subsidiaries
- Inchcape PLC and Subsidiaries
- Ridenco S.A. and Subsidiaries
<PAGE> 89
EXHIBIT A
FORM OF NOTE
New York, New York
________ __, 199_
For value received, [NAME OF BORROWER], a [jurisdiction of
incorporation] corporation (the "Borrower"), promises to pay to the order of
[NAME OF BANK] (the "Bank"), for the account of its Applicable Lending Office,
the unpaid principal amount of each Loan made by the Bank to the Borrower
pursuant to the Credit Agreement referred to below on the Termination Date
provided for in the Credit Agreement. The Borrower promises to pay interest on
the unpaid principal amount of each such Loan on the dates and at the rate or
rates provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty Trust Company of
New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; PROVIDED that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated
as of May 4, 1994 among The Timberland Company, the banks listed on the
signature pages thereof and Morgan Guaranty Trust Company of New York, as Agent
(as the same may be amended from time to time, the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein with the same meanings.
Reference is made
1
<PAGE> 90
to the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
[The Timberland Company has, pursuant to the provisions of the Credit
Agreement, unconditionally guaranteed the payment in full of the principal of
and interest on this note.]*
[NAME OF BORROWER]
By ____________________
Title:
_________________
* To be deleted in case of Notes executed and delivered by the Company.
2
<PAGE> 91
LOANS AND PAYMENTS OF PRINCIPAL
________________________________________________________________________________
Type Amount Amount of
of of Principal Notation
Date Loan Loan Repaid Made By
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
3
<PAGE> 92
EXHIBIT B
FORM OF NOTICE OF COMMITTED BORROWING
-------------------------------------
Morgan Guaranty Trust Company
of New York, as Agent
under the Credit Agreement referred
to below
60 Wall Street
New York, New York 10260-0060
Attention: Credit Administration
Re: $125,000,000 Credit Agreement dated as of
May 4, 1994 among The Timberland Company,
the Banks listed on the signature pages thereof
and Morgan Guaranty Trust Company of New York,
as Agent (the "Credit Agreement")
-----------------------------------------------
Ladies and Gentlemen:
We, [name of Borrower] (the "Borrower"), refer to
the Credit Agreement and hereby give notice pursuant to
Section 2.02 of the Credit Agreement that we wish to make a
Committed Borrowing as set forth below:
Date of Borrowing: __________*
Aggregate Principal Amount of Borrowing: __________**
Type of Borrowing (choose one):
[Base Rate]/[CD]/[Euro-Dollar]
Initial Interest Period: __________***
____________________
*Not earlier than the third Euro-Dollar Business Day
after the date of the Notice of Committed Borrowing, in the
case of a Euro-Dollar Borrowing; not earlier than the second
Domestic Business Day after the date of the Notice of
Committed Borrowing, in the case of a CD Borrowing; may be
the same day as the Notice of Committed Borrowing, in the
case of a Base Rate Borrowing.
**Must be a multiple of $100,000 and, for a Base Rate
Borrowing, at least $500,000 and, for a CD Borrowing or
Euro-Dollar Borrowing, at least $1,000,000.
***One, two, three or six months, for a Euro-Dollar
Borrowing; 30, 60 or 90 days, for a CD Borrowing; does not
apply for a Base Rate Borrowing.
1
<PAGE> 93
Dated: __________ __, 199_
Very truly yours,
[BORROWER]
By: ________________________
Title:****
______________________________
****For the Company, the President, the Executive Vice
President, the Senior Vice President - Finance and
Administration, the Vice President - Finance or the
Treasurer only.
2
<PAGE> 94
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
To: [Name of Bank]
From: [Name of Borrower] (the "Borrower")
Re: $125,000,000 Credit Agreement dated as of May 4,
1994 among The Timberland Company, the Banks
listed on the signature pages thereof and Morgan
Guaranty Trust Company of New York, as Agent (the
"Credit Agreement")
Pursuant to Section 2.03 of the Credit Agreement
we are pleased to invite you to submit Money Market Quotes
to us for the following proposed Money Market Borrowing(s):
Date of Borrowing: __________________*
Principal Amount ** Interest Period ***
$
__________________
*Must be at least four Euro-Dollar Business Days after
the date of the Invitation, for a LIBOR Auction, or one
Domestic Business Day after the date of the Invitation, for
an Absolute Rate Auction.
**Amount must be $1,000,000 or a larger multiple of
$100,000.
***Not less than one month (or not less than 7 days, if
available) (LIBOR Auction) or 7 days (Absolute Rate
Auction), subject to the provisions of the definition of
Interest Period.
1
<PAGE> 95
Such Money Market Quotes should offer a Money
Market [Margin]**** [Absolute Rate].***** [The
applicable base rate is the Interbank Offered Rate.]****
Please respond to this invitation by no later than
[2:00 P.M.]**** [9:15 A.M.]***** (New York City time) on
[date].******
[NAME OF BORROWER]
By______________________
Authorized Officer*******
___________________
****To be included for LIBOR Auctions only.
*****To be included for Absolute Rate Auctions only.
******The fourth Euro-Dollar Business Day prior to the
Date of Borrowing, for a LIBOR Auction, or the Date of
Borrowing, for an Absolute Rate Auction.
*******For the Company, the President, the Executive Vice
President, the Senior Vice President - Finance and
Administration, the Vice President - Finance or the
Treasurer only.
2
<PAGE> 96
EXHIBIT D
FORM OF MONEY MARKET QUOTE
To: [Name of Borrower] (the "Borrower")
Re: Money Market Quote to the Borrower
In response to your invitation dated
_____________, 19__, we hereby make the following Money
Market Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
<TABLE>
<CAPTION>
Principal Interest Money Market
Amount ** Period *** [Margin ****] [Absolute Rate ***** ]
--------- ---------- ------------------------------------
<S> <C> <C>
$
$
</TABLE>
_____________________
*As specified in the related Invitation.
**Principal amount bid for each Interest Period may not
exceed principal amount requested. Specify aggregate
limitation if the sum of the individual offers exceeds the
amount the Bank is willing to lend. Bids must be made for
$500,000 or a larger multiple of $100,000.
***Not less than one month (LIBOR Auction) or not less
than 30 days (Absolute Rate Auction), as specified in the
related Invitation. No more than five bids are permitted
for each Interest Period.
****Margin over or under the Interbank Offered Rate
determined for the applicable Interest Period. Specify
percentage (to the nearest 1/10,000 of 1%) and specify
whether "PLUS" or "MINUS".
*****Specify rate of interest per annum (to the nearest
1/10,000th of 1%).
1
<PAGE> 97
[Provided, that the aggregate principal amount of Money
Market Loans for which the above offers may be accepted
shall not exceed $____________.]**
We understand and agree that the offer(s) set
forth above, subject to the satisfaction of the applicable
conditions set forth in the Credit Agreement dated as of May
4, 1994 among The Timberland Company, the Banks listed on
the signature pages thereof and Morgan Guaranty Trust
Company of New York, as Agent, irrevocably obligates us to
make the Money Market Loan(s) for which any offer(s) are
accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
2
<PAGE> 98
EXHIBIT E
OPINION OF
COUNSEL FOR THE COMPANY
-----------------------
[Closing Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
This opinion is being furnished to you pursuant to Section 3.01(b) of
the Credit Agreement dated as of May 4, 1994 (the "Credit Agreement") among The
Timberland Company, a Delaware corporation (the "Company"), the banks listed on
the signature pages thereof and Morgan Guaranty Trust Company of New York, as
Agent, in connection with the closing held this day under the Credit Agreement.
Terms defined in the Credit Agreement and not otherwise defined herein are used
herein with the meanings so defined.
We have acted as counsel to the Company in connection with the Credit
Agreement and the transactions contemplated thereby and as such are familiar
with the proceedings taken by the Company in connection therewith. Please be
advised, however, that, although we represent the Company on a regular basis,
the scope of our representation does not include, and, except as specified
herein, we have not undertaken, any special factual investigation into the
business, properties, agreements or affairs of the Company and its Subsidiaries
for purposes of rendering the opinions expressed in paragraphs 9, 10 and 11
below.
We have participated in the preparation of the Credit Agreement and have
examined copies, executed by the Company, of the Credit Agreement and each of
the Notes delivered to the Banks on the date hereof.
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We have also examined such certificates, documents and records, and have
made such examination of law, as we have deemed necessary to enable us to render
the opinions expressed below. In addition, we have examined and relied upon
representations and warranties contained in the Credit Agreement and in
certificates delivered to you in connection therewith as to matters of fact
(other than facts constituting conclusions of law) and upon the covenants
contained in the Credit Agreement as to the application of the proceeds of the
loans made pursuant thereto.
The opinion expressed in clause (c) of paragraph 11 below assumes,
without investigation, that the transactions contemplated by the Credit
Agreement will not result in a violation of financial ratios which are contained
in covenants.
We call your attention to the fact that the Credit Agreement and the
Notes provide that they are to be governed by and construed in accordance with
the internal laws of the State of New York and we understand that you are
relying on the advice of your own counsel with respect to all matters of New
York law. We are of the opinion that a Massachusetts court or a federal court
sitting in Massachusetts would, under conflict of laws principles observed by
the courts of Massachusetts, give effect to such provision. For purposes of
rendering the opinions expressed in paragraphs 6 and 8 below, we have assumed
that the Credit Agreement and each Note provides that it is to be governed by
and construed in accordance with the internal laws of The Commonwealth of
Massachusetts.
The opinions expressed below are limited to matters governed by the laws
of The Commonwealth of Massachusetts, the General Corporation Law of the State
of Delaware and the federal laws of the United States. With respect to the
opinions expressed in paragraphs 2 and 4 below concerning (i) the qualification
and good standing of the Company as a foreign corporation under the laws of New
Hampshire and Tennessee and (ii) the qualification and good standing of The
Outdoor Footwear Company, a Delaware corporation ("TOFC"), as a foreign
corporation under the laws of Puerto Rico, such opinions are based solely upon
certificates from officials of such jurisdictions, copies of which have been
furnished to you.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware with corporate powers
adequate for the execution, delivery and performance of the
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Credit Agreement and the Notes and for carrying on the business now conducted
by it.
2. The Company is duly qualified to do business as a foreign
corporation under the laws of New Hampshire and Tennessee.
3. TOFC is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware with corporate powers
adequate for carrying on the business now conducted by it.
4. TOFC is duly qualified to do business as a foreign corporation under
the laws of Puerto Rico.
5. The Credit Agreement has been duly authorized, executed and
delivered by the Company.
6. Subject to the qualifications stated in the penultimate paragraph
hereof, the Credit Agreement constitutes the legal, valid and binding obligation
of the Company and is enforceable against the Company in accordance with its
terms.
7. The Notes being delivered to the Banks today have been duly
authorized, executed and delivered by the Company.
8. Subject to the qualifications stated in the penultimate paragraph
hereof, the Notes being delivered to the Banks today constitute the legal, valid
and binding obligations of the Company and are enforceable against the Company
in accordance with the terms thereof.
9. The execution and delivery of the Credit Agreement do not, and the
performance by the Company of the terms thereof applicable to it will not,
result in any violation of, or be in conflict with, constitute a default under
or result in the creation of a lien under, any term or provision of: (a) its
charter or bylaws, (b) any presently existing federal or Massachusetts law,
statute or governmental regulation or the General Corporation Law of the State
of Delaware, or (c) any agreement, indenture or other instrument listed in
paragraph (4) of Exhibit A hereto.
10. Under existing provisions of law, no approval of, or authorization
or other action by, or filing with, any federal or Massachusetts governmental
authority, and no approval, authorization or other action or filing under the
General Corporation Law of the State of Delaware, is required to be obtained or
made by the Company in connection with the execution, delivery or performance of
the Credit
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Agreement or the Notes, except for such filings as do not affect the validity or
enforceability of the Credit Agreement and the Notes.
11. To the best of our knowledge after having made due inquiry of
officers of the Company, but without having investigated any governmental
records or court dockets, there is no governmental action or proceeding and no
litigation pending against the Company or any of its Subsidiaries which places
in question the validity or enforceability of the Credit Agreement or the Notes.
[We call your attention to the fact that John E. Beard is the Secretary
of the Company. Our opinions expressed herein do not include matters which may
have come to the attention of John E. Beard in that capacity and which have not
been referred to us for substantive legal advice.]
Our opinions that the Credit Agreement and the Notes being delivered to
the Banks today are legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms are subject to
(i) bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and (ii) general
principles of equity, regardless of whether applied in proceedings in equity or
at law. Such opinions are also subject to the following qualifications:
(a) the enforceability of the provisions of the Credit
Agreement providing for indemnification may be affected by public
policy considerations or court decisions which may limit the right of
the indemnified party to obtain indemnification;
(b) we express no opinion as to the enforceability of any
provision of the Credit Agreement which purports to grant the right of
setoff to a purchaser of a participation in the obligations of the
Company under the Credit Agreement and the Notes from a bank party to
the Credit Agreement; and
(c) we express no opinion as to the enforceability of any
provision of the Credit Agreement to the extent it requires the Company
to indemnify any of you or any other party against loss in obtaining
the currency due under the Credit Agreement from a court judgment,
order, award or decision in another currency.
In addition, we call your attention to the fact that certain waivers
contained in the Credit Agreement may be
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unenforceable in whole or in part by reason of certain laws or judicial
decisions; however, the inclusion of such waivers in the Credit Agreement
does not affect the validity of any of the other provisions of the Credit
Agreement.
The foregoing opinion is solely for your benefit and may not be relied
on by any other person.
Very truly yours,
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EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
--------------------------------------
[Closing Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
We have participated in the preparation of the Credit Agreement (the
"Credit Agreement") dated as of May 4, 1994, among The Timberland Company, a
Delaware corporation (the "Company"), the banks listed on the signature pages
thereof (the "Banks") and Morgan Guaranty Trust Company of New York, as Agent
(the "Agent"), and have acted as special counsel for the Agent for the purpose
of rendering this opinion pursuant to Section 3.01(c) of the Credit Agreement.
Terms defined in the Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Company of the Credit
Agreement and its Notes are within the Company's corporate powers and have been
duly authorized by all necessary corporate action.
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2. The Credit Agreement constitutes a valid and binding agreement of
the Company and its Notes constitute valid and binding obligations of the
Company.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United States of America and the General Corporation Law of the State of
Delaware. In giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State of New York) in
which any Bank is located which limits the rate of interest that such Bank may
charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent.
Very truly yours,
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EXHIBIT G
FORM OF ELECTION TO PARTICIPATE
-------------------------------
, 19
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
for the Banks named in the Credit
Agreement dated as of May 4, 1994
among The Timberland Company, such
Banks and such Agent
(the "Credit Agreement")
Ladies and Gentlemen:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation, hereby elects to be an Eligible Subsidiary for
purposes of the Credit Agreement, effective from the date hereof until an
Election to Terminate shall have been delivered on behalf of the undersigned in
accordance with the Credit Agreement. The undersigned confirms that the
representations and warranties set forth in Article IX of the Credit Agreement
are true and correct as to the undersigned as of the date hereof, and the
undersigned hereby agrees to perform all the obligations of an Eligible
Subsidiary under, and to be bound in all respects by the terms of, the Credit
Agreement, including without limitation Section 11.09 thereof, as if the
undersigned were a signatory party thereto.
[Tax disclosure pursuant to Section 9.04]
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The address to which all notices to the undersigned under the Credit
Agreement should be directed is: . This instrument shall be
construed in accordance with and governed by the laws of the State of New York.
Very truly yours,
[NAME OF ELIGIBLE SUBSIDIARY]
By_________________________________
Title:
The undersigned hereby confirms that [name of Eligible Subsidiary] is an
Eligible Subsidiary for purposes of the Credit Agreement described above.
THE TIMBERLAND COMPANY
By_________________________________
Title:
Receipt of the above Election to Participate is hereby acknowledged on
and as of the date set forth above.
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent
By_________________________________
Title:
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EXHIBIT H
FORM OF ELECTION TO TERMINATE
-----------------------------
, 19
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
for the Banks named in the Credit
Agreement dated as of May 4, 1994
among The Timberland Company, such
Banks and such Agent
(the "Credit Agreement")
Ladies and Gentlemen:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation, hereby elects to terminate its status as an Eligible
Subsidiary for purposes of the Credit Agreement, effective as of the date
hereof. The undersigned hereby represents and warrants that all principal and
interest on all Notes of the undersigned and all other amounts payable by the
undersigned pursuant to the Credit Agreement have been paid in full on or prior
to the date hereof. Notwithstanding the foregoing, this Election to Terminate
shall not affect any obligation of the undersigned under the Credit Agreement or
under any Note heretofore incurred.
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This instrument shall be construed in accordance with and governed by
the laws of the State of New York.
Very truly yours,
[NAME OF ELIGIBLE SUBSIDIARY]
By____________________________
Title:
The undersigned hereby confirms that the status of [name of Eligible
Subsidiary] as an Eligible Subsidiary for purposes of the Credit Agreement
described above is termi- nated as of the date hereof.
THE TIMBERLAND COMPANY
By____________________________
Title:
Receipt of the above Election to Terminate is hereby acknowledged on and
as of the date set forth above.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By__________________________
Title:
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EXHIBIT I
OPINION OF
COUNSEL FOR THE BORROWER
(BORROWINGS BY ELIGIBLE SUBSIDIARIES)
-------------------------------------
[Dated as provided in
Section 3.03 of the
Credit Agreement]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
9 West 57th Street
New York, New York 10019
Ladies and Gentlemen:
I am counsel to [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation (the "Borrower"), and give this opinion pursuant to
Section 3.03(b) of the Credit Agreement (the "Credit Agreement") dated as of May
4, 1994 among The Timberland Company (the "Company"), the banks listed on the
signature pages thereof and Morgan Guaranty Trust Company of New York, as Agent.
Terms defined in the Credit Agreement are used herein as therein defined.
I have examined originals or copies, certified or otherwise identified
to my satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of [jurisdiction of incorporation], and is a
Wholly-Owned Consolidated Subsidiary of the Company.
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<PAGE> 110
2. The execution and delivery by the Borrower of its Election to
Participate and its Notes and the performance by the Borrower of the Credit
Agreement and its Notes are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Borrower or
of any agreement, judgment, injunction, order, decree or other instrument
binding upon the Company or the Borrower or result in the creation or imposition
of any Lien on any asset of the Company or any of its Subsidiaries.
3. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and its Notes constitute valid and binding obligations of the
Borrower.
4. Except as disclosed in the Borrower's Election to Participate, there
is no income, stamp or other tax of [jurisdiction of incorporation and, if
different, principal place of business], or any taxing authority thereof or
therein, imposed by or in the nature of withholding or otherwise, which is
imposed on any payment to be made by the Borrower pursuant to the Credit
Agreement or its Notes, or is imposed on or by virtue of the execution, delivery
or enforcement of its Election to Participate or of its Notes.
Very truly yours,
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<PAGE> 111
EXHIBIT J
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
-------------------------------------------
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the "Assignor"),
[ASSIGNEE] (the "Assignee"), THE TIMBERLAND COMPANY (the "Company") and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Credit Agreement dated as of May 4, 1994 among the Company, the
Assignor and the other Banks party thereto, as Banks, and the Agent (the "Credit
Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans in an aggregate amount at any time outstanding not to
exceed $__________;
WHEREAS, Committed Loans made by the Assignor under the Credit Agreement
in the aggregate principal amount of $__________ are outstanding at the date
hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Committed Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. ASSIGNMENT. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the
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obligations of the Assignor under the Credit Agreement to the extent of the
Assigned Amount, including the purchase from the Assignor of the corresponding
portion of the principal amount of the Committed Loans made by the Assignor
outstanding at the date hereof. Upon the execution and delivery hereof by the
Assignor, the Assignee, the Company and the Agent and the payment of the amounts
specified in Section 3 required to be paid on the date hereof (i) the Assignee
shall, as of the date hereof, succeed to the rights and be obligated to perform
the obligations of a Bank under the Credit Agreement with a Commitment in an
amount equal to the Assigned Amount, and (ii) the Commitment of the Assignor
shall, as of the date hereof, be reduced by a like amount and the Assignor
released from its obligations under the Credit Agreement to the extent such
obligations have been assumed by the Assignee. The assignment provided for
herein shall be without recourse to the Assignor.
SECTION 3. PAYMENTS. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds an amount heretofore agreed between them.* It is
understood that facility fees with respect to the Assigned Amount accrued to the
date hereof are for the account of the Assignor and such fees accruing from and
including the date hereof are for the account of the Assignee. Each of the
Assignor and the Assignee hereby agrees that if it receives any amount under the
Credit Agreement which is for the account of the other party hereto, it shall
receive the same for the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such other party.
SECTION 4. CONSENT OF THE COMPANY AND THE AGENT. This Agreement is
conditioned upon the consent of the Company and the Agent pursuant to Section
11.06(c) of the Credit Agreement. The execution of this Agreement by the
Company and the Agent is evidence of this consent. Pursuant to Section 11.06(c)
the Company agrees to execute and deliver a Note, and to cause each Eligible
Subsidiary, if any, to execute and deliver a Note, payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.
_____________________
*Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be
preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
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<PAGE> 113
SECTION 5. NON-RELIANCE ON ASSIGNOR. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of any
Borrower, or the validity and enforceability of the obligations of any Borrower
in respect of the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrowers.
SECTION 6. GOVERNING LAW. This Agreement shall
be governed by and construed in accordance with the laws of
the State of New York.
SECTION 7. COUNTERPARTS. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By____________________________
Title:
[ASSIGNEE]
By____________________________
Title:
THE TIMBERLAND COMPANY
By____________________________
Title:
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<PAGE> 114
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By____________________________
Title:
4
