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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993 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
incorporation or organization) Identification No.)
11 MERRILL INDUSTRIAL DRIVE
HAMPTON, NEW HAMPSHIRE 03842-5050
(Address of principal executive office) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE, IS (603) 926-1600
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange on which registered
Class A Common Stock, par value $.01 per share New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of Class A Common Stock of the Registrant held
by non-affiliates of the Registrant was approximately $259,148,765 on March 15,
1994. For purposes of the foregoing sentence the term "affiliate" includes
each director and executive officer of the Registrant. See Item 12 of this
Form 10-K.
7,616,579 shares of Class A Common Stock and 3,237,121 shares of Class B
Common Stock of the Registrant were outstanding on March 15, 1994.
DOCUMENTS INCORPORATED BY REFERENCE:
Annual Report to security holders for the fiscal year ended December 31,
1993 (Part I, Item 1 regarding foreign and domestic sales; Part II, Items 5, 6,
7 and 8) and Proxy Statement for the 1994 Annual Meeting of Stockholders (Part
III).
The list of Exhibits appears on page 15 of this report.
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PART I
ITEM 1. BUSINESS
OVERVIEW
The Timberland Company was incorporated in Delaware on December 20,
1978, and is the successor to Abington Shoe Company, which was incorporated in
Massachusetts in 1933 (The Timberland Company, together with its subsidiaries,
is referred to herein as "Timberland" or the "Company," unless the context
indicates otherwise). The Company designs, develops, manufactures and markets
men's and women's premium quality footwear, apparel and accessories under the
Timberland [Registered]1 brand. These products are sold primarily through
better-grade department stores and other retail stores in the United States and
in more than 50 countries worldwide. In addition, the Company sells its
products through specialty stores devoted exclusively to Timberland
[Registered] products which are operated or licensed by it in the United
States, Europe, South America, Mexico, Australia, New Zealand and Asia.
Timberland also sells its products through Company-operated factory outlet
stores in the United States.
The Company has built its product lines to reflect classic rugged styles
which provide durability and quality. In marketing its products, the Company
has consistently stressed the workmanship and detailing incorporated into its
products, which are designed to provide lasting protection from the elements.
During 1993, the Company implemented a strategic decision to attempt to
lead the market by pre-emptively reducing prices for certain of its products
and to improve the price/value proposition for the consumer. By continuing to
improve its manufacturing and logistics process, the Company believes that it
will be able to more efficiently respond to consumer demand, to provide high
quality products at competitive prices and to increase its sales. The Company
increased its sales from $291.4 million in 1992 to $418.9 million in 1993.
CURRENT PRODUCTS
The Company's two major product categories are footwear (shoes and boots)
and apparel and accessories. During 1993, net sales attributable to the
footwear category totaled $349.5 million, as compared to $242.6 million and
$188.3 million in 1992 and 1991, respectively. During 1993, net sales
attributable to the apparel and accessories category totaled $69.4 million, as
compared to $48.8 million and $37.8 million in 1992 and 1991, respectively.
During 1993, the Company did not have sales to a single customer which equaled
or exceeded 10% of the Company's total net sales.
FOOTWEAR
Timberland offers men's and women's shoes and sandals featuring hand-sewn
construction, premium waterproof leather or water resistant fabric uppers and
selected use of waterproof fabric bootie construction. The Company's shoes and
sandals are based on classic styling and are designed for durability. In 1993,
the Company introduced a variety of new boat shoes, a variety
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1 TIMBERLAND is a registered trademark of The Timberland Company.
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of new styles in its waterproof Weatherbuck Collection and a new turf sandal,
as well as other new sandal styles.
In 1973, Timberland's predecessor, Abington Shoe Company, produced the
first pair of waterproof "mini-buck" leather boots under the Timberland
[Registered] brand. The Company now offers a variety of styles of boots for
men and women, including hikers and lightweight trail boots. In 1993, the
Company introduced a variety of new lightweight trail boots and bush hikers,
including an outdoor, multipurpose boot featuring a stretch waterproof fabric
internal fit system.
APPAREL AND ACCESSORIES
Timberland offers premium-quality apparel, consisting of rugged outerwear,
sweaters, shirts, pants, shorts and skirts. Incorporated into many of such
products are premium waterproof leathers, waterproof fabric, rust-proof
hardware, canvas, denim and other quality performance materials. During 1993,
in response to consumer demand, the Company redesigned its women's line of
apparel to better coordinate its sportswear and outerwear. The Company also
continued to offer its men's line of rugged apparel, with an emphasis on
performance-wear designed to protect against the elements.
Timberland's accessories collection includes luggage, briefcases,
wallets, handbags, belts, caps, hats, gloves and socks. For 1993,
introductions in the accessories collection included a variety of new styles in
each of its lines.
TIMBERLAND'S STRATEGY
During 1993, the Company pursued its strategy for growth by capitalizing
on its core business and continuing to expand its domestic and international
presence through building increased consumer awareness of the Timberland
[Registered] brand. Timberland believes that its integrated brand strategy,
which is to showcase the Timberland [Registered] brand as an integrated source
of footwear, apparel and accessories, is best carried out in specialty stores
and in concept shops or corners. Specialty stores are stores owned or licensed
by the Company which sell only Timberland [Registered] products. Concept shops
or corners are areas of third-party stores dedicated exclusively to the
presentation and merchandising of Timberland [Registered] products.
The Company continued to promote consumer demand for its products in 1993
through advertising campaigns which emphasized the workmanship and
detailing of its footwear, apparel and accessories and the protection which
these products offer against the elements. Timberland believes that the
premium quality, durability, functionality and classic styling of its products,
combined with its reputation for high-performance products and increased
consumer awareness of the Timberland [Registered] brand, will continue to
increase consumer demand for its products. Advertising through print and
television campaigns is used to present Timberland as an integrated,
world-class source of quality footwear, apparel and accessories for the rugged
outdoors. The Company reinforces this advertising with a variety of in-store
promotions, point-of-purchase displays and a cooperative advertising program
with its retailers, as well as retail sales clerk training and other incentive
programs and promotional campaigns.
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In response to consumers' heightened sensitivity to maximum value, the
Company is also exploring new ways in which it can improve the price/value
proposition to its customers. The Company believes that the continuing
implementation of its modular manufacturing program will assist in providing
the consumer with the highest quality footwear at the best prices (see
"Business -- Manufacturing"). During 1993, the Company lowered its prices on a
variety of styles in a number of product lines. The Company is committed to
maintaining a solid price/value relationship for its consumers.
The Company intends to continue its growth through a combination of
internal development and the development of business relationships with
independent manufacturers, suppliers, distributors and retailers capable of
reinforcing the Company's image and standards. The Company may, from time to
time, consider the possibility of acquiring other companies which produce or
distribute quality footwear, apparel, accessories or related products which
complement the Company's product lines.
DISTRIBUTION
U.S. OPERATIONS
In 1993, 1992 and 1991, 71%, 63%, and 59%, respectively, of the Company's
net sales were generated in the United States. The Company's strategy is to
distribute its products through specialty stores and through retailers who
reinforce the Timberland image of quality, performance and service. The
Company's customer accounts within the United States range from better-grade
department stores and retail stores to sporting goods stores, marinas and
specialty retailers. These accounts are serviced through a combination of
field and corporate-based sales teams.
The Company's principal showroom in the United States for wholesale
customers is located on Fifth Avenue in New York City. Its regional showrooms
are located in Chicago, Dallas, Atlanta, Denver and Seattle. The showrooms
located in Denver and Seattle were opened in 1993.
In 1993, the Company's domestic retail operations accounted for 8% of
the net sales of the Company compared to 10% in 1992 and 11% in 1991. The
Company operates nine Timberland [Registered] specialty stores located in
Atlanta; Boston; Chicago; Dallas; Newport, Rhode Island; New York City; San
Francisco; Sausalito, California; and Washington, D.C. The Company opened the
San Francisco, Dallas and Chicago specialty stores in 1993 and opened the
specialty store in Atlanta in February 1994. The specialty stores showcase the
Timberland [Registered] brand as an integrated source of footwear, apparel and
accessories. These stores also provide sales and consumer-trend information
which assists the Company in developing its marketing strategies, including
point-of-purchase materials. In addition, the training and customer service
programs established in the Company's specialty stores serve as a model which
may be adopted by the Company's other retail accounts. The Company also
operates ten factory outlet stores located in the United States, which
typically sell factory-second and close-out product offerings. The Company
carries material amounts of inventory in order to meet delivery and any other
requirements of its customers.
The Company established distribution facilities in Wilmington,
Massachusetts in 1993 and in Danville, Kentucky in early 1994. Currently,
orders are filled primarily from the Company's
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Hampton, New Hampshire distribution center and the Wilmington center. The
Company plans to make the Danville facility another principal distribution
center in 1994. The Company's long-term distribution strategy is to centralize
its points of distribution in order to cut costs and increase responsiveness to
consumer demand.
INTERNATIONAL
In 1993, international sales accounted for 29% of Timberland's net
sales compared to 37% in 1992 and 41% in 1991. Timberland sells its products
internationally through distributors, commission agents and seven subsidiaries.
The Company's subsidiaries located in England, France, Germany, Spain,
Austria, Australia and New Zealand provide sales, administrative and, in
certain instances, warehousing support for the sale of Timberland [Registered]
products to retailers in their respective countries, and in certain instances,
to distributors and commission agents in other countries.
Internationally, retail distribution of the Company's products occurs
through better-grade department stores, retail stores and specialty stores.
Timberland operates international specialty stores in London; Munich;
Dusseldorf; Vienna; Paris; Lyon, France; Sydney, Australia and Auckland, New
Zealand. Additionally, the Company grants licenses to operate international
specialty stores to certain third parties.
In December 1993, the Company entered into a nonbinding Memorandum of
Understanding with its Italian distributor outlining the contemplated
termination of the distributor's distribution rights and acquisition of certain
of its assets. Net sales to this distributor represented 4% of the Company's
consolidated revenues in 1993. Timberland intends to assume the distribution
of its own products in Italy, effective on the termination date.
Reference is hereby made to the information set forth in footnote 9,
entitled "Industry Segment and Geographical Area Information," appearing on
page 21 of the Company's 1993 Annual Report to Stockholders, which information
is incorporated herein by reference.
ADVERTISING AND MARKETING
The Company designs its domestic advertising campaigns to emphasize quality,
lasting protection from the elements and classic rugged style, placing
advertisements in popular, fashion and sports-focused national periodicals and
newspapers. The Company uses its retail specialty stores and concept shops as
effective vehicles to promote its integrated brand strategy, by showcasing an
integrated presentation of Timberland [Registered] products in settings designed
to complement the Timberland style. In an effort to broaden consumer exposure
during 1993, Timberland aired television advertisements in an expanded number
of major United States metropolitan areas. In 1993, the Company's print
advertising continued to win national awards. All advertising of the Company's
product lines is designed to reflect Timberland's basic theme of extending the
rugged, functional qualities of Timberland's original boots into a broad range
of footwear, apparel and accessories products, as well as to express the
Company's position on certain important social issues.
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Internationally, the Company participates in a variety of direct and
cooperative advertising efforts. This advertising uses and adapts for the
international markets many of the same promotional themes that are used in the
United States.
During 1993, Timberland was again the primary sponsor of the annual
1,049-mile Iditarod [Registered]2 sled dog race from Anchorage to Nome, Alaska
and continued its "Tough Enough" for The Last Great Race on Earth [Registered]
2 promotional program to build upon its association with this unique event.
The Company outfitted five Iditarod mushers entirely in Timberland [Registered]
outerwear, apparel and footwear, including five-time Iditarod winner Rick
Swenson. Through its sponsorship of the Iditarod [Registered] race and similar
events, the Company seeks to promote the Timberland image of superior product
quality and performance beyond its traditional advertising and promotional
efforts. The Company also sponsors, at times in conjunction with its
international distributors and subsidiaries, individual sailors and sailing
teams from various countries, including the United States and New Zealand.
In 1993, the Company continued to publish Elements[Registered]3, a
color print magazine, which features articles by prominent writers about their
outdoor experiences. The topics covered include sailing, hiking and the
Iditarod [Registered] sled dog race. Elements [Registered] is distributed
biannually to the Company's preferred domestic and international consumers.
SEASONALITY
In 1993, as has traditionally been the case, the Company's sales were
higher in the last two quarters of the year than in the first two quarters.
The Company expects this sales trend to continue in 1994.
BACKLOG
At December 31, 1993, Timberland's backlog of orders from its customers
was approximately $69 million compared to $60 million at December 31, 1992.
While all orders in the backlog are subject to cancellation by the customers,
the Company expects that the majority of such orders will be filled in 1994.
The Company does not believe that its backlog of orders at year end is
representative of the orders which will be filled during 1994, due to the shift
towards "at once" orders being adopted by many retailers.
MANUFACTURING
The Company manufactures the majority of its footwear products in its
own factories. The Company also uses independent manufacturers to provide the
additional production capacity and flexibility to meet increased consumer
demand. During 1993, approximately 70% of the Company's footwear products were
manufactured in the Company's leased facilities located in
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2 IDITAROD and THE LAST GREAT RACE ON EARTH are registered trademarks of the
Iditarod Trail Committee, Inc.
3 ELEMENTS is a registered trademark of The Timberland Company.
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Tennessee, North Carolina, Puerto Rico and the Dominican Republic, compared to
79% during 1992. The remainder of the Company's footwear unit volume was
sourced from manufacturers in the Far East, Europe and North America.
The Company sources all of its apparel and accessories from independent
manufacturers located in Europe, the Far East and North America. As a result,
the apparel and accessories operations of the Company are substantially
dependent upon foreign operations with unaffiliated parties and are subject to
the usual risks of doing business abroad. These risks potentially include
political or labor disturbances, expropriation, acts of war and other similar
events.
The Company believes that, because it manufactures the majority of its
footwear in the United States, the Company has less exposure to potential U.S.
import restrictions and duties than do many of its competitors which import the
majority of their products from the Far East, South America and Europe. With
respect to the Company's operations in the Dominican Republic, the Company is
subject to the usual risks of doing business abroad.
During 1993, the Company began implementation of certain cost savings
programs, such as modular manufacturing, to enhance materials management and
reduce manufacturing cycle times. The modular manufacturing program aims to
improve quality, productivity and asset utilization by rearranging certain
manufacturing facilities and functions. Another expected benefit of modular
manufacturing is the reduction of the amount of inventory that the Company must
carry to meet delivery and other requirements of its customers.
RAW MATERIALS
The Company purchases its raw materials from a number of domestic and
foreign sources. The Company has three suppliers located in the United States
that, together, supply more than 70% of the Company's requirements for leather.
The Company has no reason to believe that leather will not continue to be
available from these or alternative sources.
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TRADEMARKS AND TRADE NAMES; PATENTS; RESEARCH & DEVELOPMENT
The Company's principal trademarks and trade names are Timberland[Registered]
and the Timberland stylized tree design logo [Logo]4, which have been
registered in the United States and in certain foreign countries. Other
Company trademarks are HydroTech[Registered]4, Elements[Registered],
Weathergear[Registered]4 and More Quality Than You May Ever Need[Registered]4.
The Company regards these trademarks and trade names as valuable assets and
believes that they are important factors in marketing its products,
particularly in the case of the Timberland[Registered] brand which is essential
to the Company's integrated brand strategy. It is the policy of the Company to
defend its trademarks and trade names against infringement to the fullest
extent practicable under the laws of the United States and other countries. In
addition, the Company seeks to protect and defend vigorously its patents,
designs, proprietary rights and copyrights under applicable laws.
The Company conducts research, design and development efforts for its
footwear, apparel and accessories. In connection with these efforts, the
Company continues to explore innovative ways to bring new products from the
design stage to the marketplace in the most expedient manner possible. While
Timberland continues to be a leader in product innovation, its expenses
relating to research, design and development have not represented a material
expenditure relative to other expenses of the Company.
Timberland tests a number of its products under actual field conditions
in order to evaluate performance characteristics. The Company receives product
evaluation information from a broad range of users, frequently referred to as
"Team Timberland." These users include mushers who participate in the
Iditarod[Registered] sled dog race and a number of world class sailors.
Through these and other relationships, Timberland is able to measure the
performance of its products in the outdoors and to obtain ideas for improving
its products' performance based upon the experience and competitive needs of
these athletes.
COMPETITION
The Company does not believe that it has any major competitors who offer a
full complement of products which directly compete with Timberland's integrated
brand. The Company does, however, have a variety of separate major competitors
in sales of its separate lines of footwear, apparel and accessories.
The Company's footwear lines are marketed in a highly competitive
environment, and the footwear industry is subject to rapid changes in consumer
preference. Although the footwear industry is fragmented to a great degree,
many of the Company's competitors are larger and have substantially greater
resources than the Company.
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4 [Logo], HYDROTECH, WEATHERGEAR and MORE QUALITY THAN YOU MAY EVER
NEED are registered trademarks of The Timberland Company.
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The Company's major competitors for its boot products are located
principally in the United States. The Company has at least four major
competitors in classic boot sales, at least two major competitors in sport boot
sales and at least seven major competitors in hiking boot sales.
In the boat shoe market, the Company faces competition from at least three
companies located in the United States. Other casual shoes produced by the
Company face competition from at least four other primary competitors in the
United States.
Internationally, the Company faces competition from many manufacturers of
footwear. As in the United States, some of these manufacturers attempt to copy
the Company's styles.
Each of the Company's lines of men's and women's apparel faces competition
from at least four major apparel companies, the majority of which are located
in the United States. Timberland's accessories face strong competition
primarily from three companies in the United States.
Product performance and quality, including continuing technological
improvements, product identity through marketing and promotion, and product
design, styling and pricing are all important elements of competition in the
footwear, apparel and accessories markets served by the Company. Although
changing fashion trends generally affect demand for particular footwear,
apparel and accessories products, the Company believes that demand for its
products is less sensitive to changing trends in fashion because its products
are designed primarily for functionality and performance.
ENVIRONMENTAL MATTERS
Compliance with federal, state and local provisions which have been enacted
or adopted regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, have not had, nor are
they expected to have, any material effect on the capital expenditures,
earnings or competitive position of the Company.
EMPLOYEES
At December 31, 1993, the Company had approximately 6,700 employees
worldwide. Management considers its employee relations to be good. None of
the Company's employees is represented by a labor union, and the Company has
never suffered a material interruption of business caused by labor disputes.
ITEM 2. PROPERTIES
The Company owns property in Hampton, New Hampshire, currently housing
its principal executive offices. This facility is used for offices as well as
warehousing and distribution of certain of the Company's products. In
connection with the purchase financing for such property, industrial revenue
bonds are outstanding in the principal amount of $5,345,000, due in 2014. The
bonds bear interest at 6.75% through November 30, 1994, and thereafter at rates
adjusted every five years, through maturity. The bonds are collateralized by a
mortgage on such real estate and by a security interest on specified equipment
at the Company's headquarters and distribution center. The Company also leases
office space in two additional buildings in Hampton, New Hampshire,
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under leases expiring in January 1997. Although its headquarters facilities
currently meet the Company's immediate needs, the Company is examining the
continued suitability and adequacy of such facilities.
The Company leases approximately 389,000 square feet of production
facilities, which are located in Mountain City, Tennessee; Boone, North
Carolina; Isabela, Puerto Rico and Santiago, Dominican Republic. These
production facilities are occupied under eleven leasing arrangements which
expire at various times from April 1994 to February 1997. The Company is
currently negotiating an extension of the leasing arrangement that expires in
April 1994. Although its production facilities are adequate and suitable to
meet the Company's current needs, the Company is examining the continued
suitability and adequacy of its production facilities. (Also see "Business --
Manufacturing.")
The Company leases ten factory outlet stores located in the United States;
nine domestic specialty stores; six domestic showrooms; and eight international
specialty stores. (Also see "Business -- Distribution.")
The Company's international subsidiaries also lease office and warehouse
space to meet their individual requirements.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in litigation and various legal matters, including
U.S. customs claims, which have arisen in the ordinary course of business.
Management believes that the ultimate resolution of any existing matter will
not have a material effect on the Company's financial statements.
On February 15, 1994, a complaint was filed by Michael Germano in
United States District Court for the district of New Hampshire in which the
Company and one of its officers were named as defendants in a purported class
action lawsuit brought on behalf of purchasers of the Company's stock between
November 15, 1993 and February 10, 1994. The suit alleges material
misstatements and omissions in the Company's public filings and statements in
1993. The named plaintiff contends he suffered damages as a result of his
December 1993 purchase of 50 shares of the Company's Class A Common Stock. To
date, the court has not approved the formation of a class nor has the plaintiff
specified damages sought in this action. While the suit is in its preliminary
stages, based on an initial review, and after consultation with counsel,
management believes the allegations are without merit. Accordingly, management
does not expect the outcome of such litigation to have a material adverse
effect on the Company's financial statements. The Company intends to defend
this proceeding vigorously.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report, no
matter was submitted to a vote of security holders through the solicitation of
proxies or otherwise.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is submitted as to the executive officers of the
Company:
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Name Age Position
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Sidney W. Swartz 58 Chairman of the Board, President, Chief Executive
Officer and Director
Jeffrey B. Swartz 34 Executive Vice President, Chief Operating Officer and Director
Keith D. Monda 47 Senior Vice President-Finance and Administration and
Chief Financial Officer
Kenneth A. Snyder 46 Senior Vice President-Domestic Sales
Edmund J. Feeley 33 Senior Vice President-Manufacturing and Operations
Jane E. Owens 40 Vice President and General Counsel
Edward J. Suleski, Jr. 37 Corporate Controller and Chief Accounting Officer
</TABLE>
All executive officers serve at the discretion of the Board of Directors.
Sidney W. Swartz has served the Company as Chairman of the Board, Chief
Executive Officer and President since June 1986, when he and his family trust
became the sole stockholders of the Company. During the prior 20 years, Mr.
Swartz, as the owner of 50% of the Company, was responsible for the
manufacturing, marketing, distribution and financial aspects of the Company.
Jeffrey B. Swartz has served the Company as Executive Vice President since
March 1990 and Chief Operating Officer since May 1991. From June 1986 to
February 1990, Mr. Swartz served the Company in a variety of positions,
including Senior Vice President of International Operations, Vice
President-Operations/Manufacturing, Vice President-International and General
Manager of International Business. Jeffrey Swartz is the son of Sidney W.
Swartz.
Keith D. Monda joined the Company in December 1993 as Senior Vice
President-Finance and Administration and Chief Financial Officer. From May
1990 to December 1993, Mr. Monda was Executive Vice President of Finance and
Administration of J. Crew Group, Inc.; from July 1989 to May 1990, he was
Senior Vice President and Chief Financial Officer of Bunge Corporation (an
integrated food company); and from April 1986 to July 1989, he was Vice
President of Finance and Chief Financial Officer of the chemical division of
Pfizer, Inc.
Kenneth A. Snyder joined the Company in June 1990 as Divisional Vice
President of Domestic Sales. In February 1991, Mr. Snyder assumed the office
of Senior Vice President-Domestic Sales. From October 1989 until May 1990, Mr.
Snyder was Vice President of Sales of New Balance Athletic Company; and from
November 1988 until September 1989, he was Vice President of Sales of Stride
Rite Corporation.
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Edmund J. Feeley joined the Company in February 1993 as Senior Vice
President-Manufacturing and Operations. From May 1990 to January 1993, Mr.
Feeley was a Principal of Booz, Allen and Hamilton, a general management and
consulting firm, where he had also been a Senior Associate from May 1987 to
April 1990.
Jane E. Owens joined the Company as Vice President and General Counsel in
September 1992. From June 1990 until August 1992, Ms. Owens was counsel for
Reebok International Ltd.; and from March 1988 until June 1990, she was a
partner in the law firm of Gaston & Snow.
Edward J. Suleski, Jr. joined the Company in February 1992 as its
International Controller. In June 1992, Mr. Suleski was appointed Corporate
Controller for the Company, and in March 1994, he was named Chief Accounting
Officer. From September 1988 to February 1992, Mr. Suleski held various
positions with Wang Laboratories, Inc., including Senior Finance Manager for
North American Operations Accounting and Reporting, Senior Finance Manager,
Eastern Region Pricing and Contracts and Financial Controller for Wang Ireland,
Ltd.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is included in the Registrant's 1993
Annual Report to Stockholders under the caption "Quarterly Market Information
and Related Matters" on page 13 and is incorporated herein by reference. The
closing sales price of the Registrant's Class A Common Stock on March 15, 1994
was $34.125.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is included in the Registrant's 1993
Annual Report to Stockholders under the caption "Five Year Summary of Selected
Financial Data" on page 10 and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is included in the Registrant's 1993
Annual Report to Stockholders under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 11 and 12
and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is included in the Registrant's 1993
Annual Report to Stockholders on pages 14 through 23 and is incorporated herein
by reference.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On August 11, 1992, the Audit Committee of the Board of Directors of the
Company recommended to the Board of Directors that the Company appoint Deloitte
& Touche as the Company's independent accountants. By Unanimous Consent dated
August 12, 1992, the Board of Directors appointed Deloitte & Touche as the
Company's independent accountants to replace Arthur Andersen & Co. for fiscal
year 1992. The Company's management did not consult with Deloitte & Touche on
any accounting, auditing or reporting matter prior to their appointment as
independent accountants for the Company. During the two fiscal years ended
December 31, 1991 and the interim period subsequent to December 31, 1991, there
had been no disagreements with Arthur Andersen on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure or any reportable events. Arthur Andersen's report on the Company's
financial statements for such two years contained no adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to the information set forth under the caption, "Executive
Officers of the Registrant," in Item 4A of Part I of this report and to
information under the captions, "Information with Respect to Nominees" and
"Executive Compensation," in the Registrant's definitive proxy statement (the
"Registrant's 1994 Proxy Statement") relating to its 1994 Annual Meeting of
Stockholders, to be filed with the Commission within 120 days after the close
of the Registrant's fiscal year ended December 31, 1993, which information is
incorporated herein by reference. Reference is also made to the information
set forth in the Registrant's 1994 Proxy Statement with respect to compliance
with Section 16(a) of the Exchange Act, which information is incorporated herein
by reference.
ITEM 11. EXECUTIVE COMPENSATION
Reference is made to the information set forth in the Registrant's 1994
Proxy Statement under the caption "Executive Compensation," which information
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Reference is made to the information set forth under the caption, "Security
Ownership of Certain Beneficial Owners and Management," in the Registrant's
1994 Proxy Statement which information is incorporated herein by reference. For
purposes of calculating the aggregate market value of the Class A Common Stock
on March 15, 1994, the shares owned by The Sidney W. Swartz 1982 Family Trust
have not been considered owned by an affiliate.
-13-
<PAGE> 14
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is made to the information set forth under the caption, "Certain
Relationships and Related Transactions," in the Registrant's 1994 Proxy
Statement, which information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
List of Financial Statements and Financial Statement Schedules.
<TABLE>
(a)(1) Financial Statements. The following financial statements,
appearing in the Company's Annual Report to Stockholders for the year ended
December 31, 1993, are incorporated by reference in this Form 10-K:
ANNUAL REPORT
<CAPTION>
PAGE
----
<S> <C>
Consolidated Balance Sheets as of December 31, 1993,
and December 31, 1992 14
For the years ended December 31, 1993, 1992 and 1991:
Consolidated Statements of Income 15
Consolidated Statements of Changes in Stockholders' Equity 16
Consolidated Statements of Cash Flows 17
Notes to Consolidated Financial Statements 18
</TABLE>
<TABLE>
(a)(2) Financial Statement Schedules. The following additional
financial data should be read in conjunction with the Consolidated Financial
Statements in the Registrant's 1993 Annual Report to Stockholders:
<CAPTION>
FORM 10-K
PAGE
----
<S> <C>
Report of Independent Public Accountants on Schedules F-1
Report of Independent Public Accountants on Schedules F-2
Schedule VIII - Valuation and Qualifying Accounts F-3
Schedule X - Supplementary Income Statement Information F-3
</TABLE>
-14-
<PAGE> 15
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and have therefore
been omitted.
(b) No reports on Form 8-K were filed by the Company during the fourth
quarter of 1993.
<TABLE>
(c) Listed below are all the Exhibits filed as part of this report,
some of which are incorporated by reference from documents previously filed by
Timberland with the Commission in accordance with the provisions of Rule 12b-32
of the Securities Exchange Act of 1934, as amended.
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
(3) Articles of incorporation and by-laws
3.1 Restated Certificate of Incorporation (1)
3.2 By-Laws, as amended May 19, 1993,
filed herewith
(4) Instruments defining the rights of security holders, including indentures
(See also Exhibits 3.1 and 3.2)
4.1 Specimen stock certificate for shares of
the Company's Class A Common Stock (9)
(10) Material Contracts
10.1 Agreement dated as of August 29, 1979
between The Timberland Company and
Sidney W. Swartz (1)
10.2 The Company's 1987 Stock Option Plan, as
amended, filed herewith
10.3 The Company's 1991 Employee Stock
Purchase Plan (8)
10.4 The Company's 1991 Stock Option Plan
for Non-Employee Directors (9)
10.5 The Timberland Company Long Term Incentive
Plan for Senior Management, filed herewith
10.6 The Timberland Company Annual Bonus Plan
for Exempt Employees, filed herewith
</TABLE>
-15-
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
10.7 The Timberland Retirement Earnings 401(k)
Plan and Trust Agreements, dated as of
February 1, 1991 (9)
10.8 The Timberland Company Profit Sharing Plan
and Trust Agreements, dated as of
January 1, 1991 (9)
10.9 (a) Lease dated March 23, 1987 between
The Outdoor Footwear Company and
Corporacion Sublistatica, S.A. (1)
(b) Lease dated January 11, 1993 between
Thomas M. Moulton, Trustee of the
Fairview Nominee Trust, and The
Timberland Company (10)
(c) Lease dated January 11, 1993 between
Thomas M. Moulton, Trustee of the
Fairview Nominee Trust, and The
Timberland Company (10)
</TABLE>
-16-
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
(d) Lease dated November 21, 1988 between
745 Associates and The Timberland Company (10)
(e) (i) Lease dated July 20, 1992 among Louise
Minges, Mitchell Minges and
The Timberland Company (10)
(ii) Amendment dated July 16, 1993 to lease
dated July 20, 1992 among Louise Minges,
Mitchell Minges and The Timberland Company,
filed herewith
(f) Lease dated January 3, 1984 between the
Industrial Development Board of the County
of Johnson, Tennessee, and The Timberland
Company, and subsequent amendments (10)
(g) Lease dated March 23, 1987 between
Corporacion Sublistatica, S.A. and
The Outdoor Footwear Company (10)
(h) Lease dated March 31, 1981 between the
Puerto Rico Industrial Development and
The Timberland Company (10)
(i) Lease dated September 7, 1992 between
Corporacion Zona Franca Industrial
De Santiago, Inc. and The Recreational
Footwear Company (10)
(j) Lease dated December 2, 1992 between
Corporacion Zona Franca Industrial
De Santiago, Inc. and The Recreational
Footwear Company (10)
</TABLE>
-17-
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
(k) Lease dated as of February 1, 1994 between
Melville Corporation and The Timberland Company,
filed herewith
(l) Lease dated as of June 29, 1993 between
Timberland Dominicana, S.A. and Santiago Norte, S.A.
(Pisano) Industrial Park, filed herewith
(m) Lease dated as of November 30, 1993 between
Timberland Dominicana, S.A. and Santiago Norte, S.A.
(Pisano) Industrial Park, filed herewith
(n) Lease dated as of December 16, 1993 between
Timberland Dominicana, S.A. and Santiago Norte, S.A.
(Pisano) Industrial Park, filed herewith
(o) Lease dated as of March 8, 1993 between Watauga
Committee of 100, Inc. and The Timberland
Company, filed herewith
(p) Lease dated as of March 31, 1993 between
Talbot Operations, Inc. and The Timberland Company,
filed herewith
10.10 Credit Agreement dated as of October 4, 1991
among The Timberland Company, Morgan
Guaranty Trust Company of New York and
The First National Bank of Boston, as Co-
Agents, and Morgan Guaranty Trust Company
of New York, as Administrative Agent (9)
10.11 (i) Credit Agreement dated as of May 13, 1993
among The Timberland Company, Morgan
Guaranty Trust Company of New York, for
itself and as Administrative Agent, ABN AMRO
Bank N.V., The First National Bank of Boston,
Barclays Bank PLC and The Northern
Trust Company (the "May Credit Agreement"),
filed herewith
</TABLE>
-18-
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C> <C>
(ii) Amendment dated November 15, 1993 to the
May Credit Agreement, filed herewith
10.12 Credit Agreement dated as of November 15, 1993
among The Timberland Company, certain banks listed
therein and The Chase Manhattan Bank, N.A. as Agent,
filed herewith
10.13 (i) Note Agreements dated as of September 30,
1989 regarding $35,000,000 9.70% Senior
Notes due December 1, 1999
(the "Senior Note Agreements")(6)
(ii) Amendment dated September 15, 1993
to the Senior Note Agreements,
filed herewith
(13) Annual Report to security holders
13. Portions of 1993 Annual Report to Stockholders,
as incorporated herein by reference, filed herewith
(16) Letter Regarding Change in Certifying Accountant
16. Letter dated March 21, 1994 from Arthur
Andersen & Co. regarding change in
certifying accountant, filed herewith
(21) Subsidiaries
21. List of subsidiaries of the Registrant, filed herewith
(23) Consent of experts and counsel
23.1 The Consent of Deloitte & Touche to
the incorporation by reference of their
report included in Registrant's Annual
Report to Stockholders for the fiscal
years ended December 31, 1993 and
1992, filed herewith
23.2 The Consent of Arthur Andersen & Co. to
the incorporation by reference of their report
included in Registrant's Annual Report to
Stockholders for the fiscal year ended
December 31, 1991, filed herewith
</TABLE>
-19-
<PAGE> 20
- -------------------------------
(1) Filed as exhibits to Registration Statement on Form S-1, numbered
33-14319, and incorporated herein by reference.
(2) Filed on September 30, 1987, as an exhibit to Registration Statement on
Form S-8, numbered 33-17552, and incorporated herein by reference.
(3) Filed on December 21, 1987, as an exhibit to Registration Statement on
Form S-8, numbered 33-19183, and incorporated herein by reference.
(4) Filed as exhibits to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1987, and incorporated herein by reference.
(5) Filed as exhibits to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, and incorporated herein by reference.
(6) Filed as exhibits to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1989, and incorporated herein by reference.
(7) Filed as exhibits to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, and incorporated herein by reference.
(8) Filed on July 9, 1991, as an exhibit to Registration Statement on Form
S-8, numbered 33-41660, and incorporated herein by reference.
(9) Filed as exhibits to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1991, and incorporated herein by reference.
(10) Filed as exhibits to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, and incorporated herein by reference.
-20-
<PAGE> 21
Pursuant to Item 4(iii) of Item 601, Regulation S-K, the Registrant has filed
as Exhibits only the instruments defining the rights of holders of long-term
debt of the Registrant and its consolidated subsidiaries with respect to which
the total amount of securities authorized thereunder exceeds 10% of the total
assets of the Registrant and its subsidiaries on a consolidated basis. The
Registrant agrees to furnish to the Commission upon its request copies of other
instruments defining the rights of holders of long-term debt of the Registrant
and its subsidiaries, with respect to which the total amount of securities
authorized does not exceed 10% of such assets. The Registrant also agrees to
furnish to the Commission upon its request copies of any omitted schedule or
exhibit to any Exhibit filed herewith.
-21-
<PAGE> 22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
THE TIMBERLAND COMPANY
March 22, 1994 By: /s/ Sidney W. Swartz
-----------------------------
Sidney W. Swartz, President
Pursuant to the requirements of the Securities Exchange of 1934, as amended,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
------------------------------------------------------------------------------------------
<S> <C> <C>
Chairman of the Board, President,
/s/ Sidney W. Swartz Chief Executive Officer and Director March 22, 1994
- --------------------------
(Sidney W. Swartz)
(PEO)
Executive Vice President, Chief
/s/ Jeffrey B. Swartz Operating Officer and Director March 22, 1994
- --------------------------
(Jeffrey B. Swartz)
Senior Vice President-Finance
and Administration and Chief
/s/ Keith D. Monda Financial Officer March 22, 1994
- --------------------------
(Keith D. Monda)
(CFO)
Corporate Controller and
/s/ Edward J. Suleski, Jr. Chief Accounting Officer March 22, 1994
- --------------------------
(Edward J. Suleski, Jr.)
(CAO)
/s/ Robert M. Agate Director March 22, 1994
- --------------------------
(Robert M. Agate)
/s/ John F. Brennan Director March 22, 1994
- --------------------------
(John F. Brennan)
/s/ Thomas R. Schwarz Director March 22, 1994
- --------------------------
(Thomas R. Schwarz)
/s/ Abraham Zaleznik Director March 22, 1994
- --------------------------
(Abraham Zaleznik)
</TABLE>
-22-
<PAGE> 23
Item 14(d)
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of The Timberland Company:
We have audited the consolidated financial statements of The Timberland Company
as of December 31, 1993 and 1992, and for the years then ended, and have
issued our report thereon dated Feruary 15, 1994; such consolidated financial
statments and report are included in your 1993 Annual Report to Stockholders
and are incorporated herein by reference. Our audits also included the
consolidated financial statement schedules of The Timberland Company, listed in
Item 14. These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such 1993 and 1992 consolidated financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE
/s/ Deloitte & Touche
Boston, Massachusetts
February 15, 1994
F-1
<PAGE> 24
Item 14(d)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Timberland Company:
We have audited the consolidated statements of income, changes in stockholders'
equity and cash flows of The Timberland Company (a Delaware corporation) and
subsidiaries for the year ended December 31, 1991 (incorporated by reference in
this Form 10K). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and the cash flows of The
Timberland Company and subsidiaries for the year ended December 31, 1991, in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedules listed in the index above for the
year ended December 31, 1991, are the responsibility of the Company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen & Co.
/s/ Arthur Andersen & Co.
Boston, Massachusetts,
February 12, 1992.
F-2
<PAGE> 25
<TABLE>
SCHEDULE VIII
THE TIMBERLAND COMPANY
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<CAPTION>
Additions
Balance at --------------------------------- Deductions Balance at
Beginning Charged to Costs Charged to Net End
of Period and Expenses Other Accounts Write-Offs of Period
--------- ------------ -------------- ---------- ---------
Description
- -----------
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful accounts:
Year ended
December 31, 1993 $1,821 $1,131 $ - $1,938 $1,014
December 31, 1992 1,675 1,374 - 1,228 1,821
December 31, 1991 904 1,107 - 336 1,675
Group insurance
reserve:
Year ended
December 31, 1993 $1,401 $5,752 $ - $5,834 $1,319
December 31, 1992 1,127 3,946 - 3,672 1,401
December 31, 1991 737 3,012 - 2,622 1,127
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
SCHEDULE X
SUPPLEMENTAL INCOME STATEMENT INFORMATION
(IN THOUSANDS)
<CAPTION>
Charged to Costs and Expenses
-----------------------------
Year ended December 31,
-----------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Maintenance and repairs $8,356 $5,817 $4,466
Advertising Costs 24,143 11,040 9,194
</TABLE>
F-3
<PAGE> 26
EXHIBIT INDEX
-------------
(3) Articles of incorporation and by-laws
3.2 By-Laws, as amended May 19, 1993,
filed herewith
(10) Material Contracts
10.2 The Company's 1987 Stock Option Plan, as
amended, filed herewith
10.5 The Timberland Company Long Term Incentive
Plan for Senior Management, filed herewith
10.6 The Timberland Company Annual Bonus Plan
for Exempt Employees, filed herewith
<PAGE> 27
EXHIBIT INDEX
-------------
10.9(e) (ii) Amendment dated July 16, 1993 to Lease
Dated July 20, 1992 among Louise Minges,
Mitchell Minges and The Timberland Company,
filed herewith
10.9(k) Lease dated as of February 1, 1994 between
Melville Corporation and The Timberland Company,
filed herewith
<PAGE> 28
EXHIBIT INDEX
-------------
10.9(l) Lease dated as of June 29, 1993 between
Timberland Dominicana, S.A. and Santiago Norte, S.A.
(Pisano) Industrial Park, filed herewith
10.9(m) Lease dated as of November 30, 1993 between
Timberland Dominicana, S.A. and Santiago Norte, S.A.
(Pisano) Industrial Park, filed herewith
10.9(n) Lease dated as of December 16, 1993 between
Timberland Dominicana, S.A. and Santiago Norte, S.A.
(Pisano) Industrial Park, filed herewith
10.9(o) Lease dated as of March 8, 1993 between Watauga
Committee of 100, Inc. and The Timberland
Company, filed herewith
10.9(p) Lease dated as of March 31, 1993 between
Talbot Operations, Inc. and The Timberland Company,
filed herewith
10.11 (i) Credit Agreement dated as of May 13, 1993
among The Timberland Company, Morgan
Guaranty Trust Company of New York, for
itself and as Administrative Agent, ABN AMRO
Bank N.V., The First National Bank of Boston,
Barclays Bank PLC and The Northern
Trust Company (the "May Credit Agreement"),
filed herewith
(ii) Amendment dated November 15, 1993 to the
May Credit Agreement, filed herewith
10.12 Credit Agreement dated as of November 15, 1993
among The Timberland Company, certain banks listed
therein and The Chase Manhattan Bank, N.A. as Agent,
filed herewith
<PAGE> 29
EXHIBIT INDEX
-------------
10.13 (ii) Amendment dated September 15, 1993
to the Senior Note Agreements,
filed herewith
(13) Annual Report to security holders
13. Portions of 1993 Annual Report to Stockholders,
as incorporated herein by reference, filed herewith
(16) Letter Regarding Change in Certifying Accountant
16. Letter dated March 21, 1994 from Arthur
Andersen & Co. regarding change in
certifying accountant, filed herewith
(21) Subsidiaries
21. List of subsidiaries of the Registrant, filed herewith
(23) Consent of experts and counsel
23.1 The Consent of Deloitte & Touche to
the incorporation by reference of their
report included in Registrant's Annual
Report to Stockholders for the fiscal
years ended December 31, 1993 and
1992, filed herewith
23.2 The Consent of Arthur Andersen & Co. to
the incorporation by reference of their report
included in Registrant's Annual Report to
Stockholders for the fiscal year ended
December 31, 1991, filed herewith
<PAGE> 1
Exhibit 3.2
AMENDED BY-LAWS
OF
THE TIMBERLAND COMPANY
Section 1. LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS
1.1. These By-Laws are subject to the
certificate of incorporation of the corporation. In
these By-Laws, references to law, the certificate of
incorporation and By-Laws mean the law, the provisions
of the certificate of incorporation and the By-Laws as
from time to time in effect.
Section 2. STOCKHOLDERS
2.1. Annual Meeting. The annual meeting of
stockholders shall be held at 2:00 p.m. on the third
Thursday in May in each year, unless that day be a
legal holiday at the place where the meeting is to be
held, in which case the meeting shall be held at the
same hour on the next succeeding day not a legal
holiday, or at such other date and time as shall be
designated from time to time by the board of directors
and stated in the notice of the meeting, at which they
shall elect a board of directors and transact such
other business as may be required by law or these
By-Laws or as may properly come before the meeting.
2.2. Special Meeting in Place of Annual
Meeting. If the election for directors shall not be
held on the day designated by these By-Laws, the
directors shall cause the election to be held as soon
thereafter as convenient, and to that end, if the
annual meeting is omitted on the day herein provided
therefor or if the election of directors shall not be
held thereat, a special meeting of the stockholders may
be held in place of such omitted meeting or election,
and any business transacted or election held at such
special meeting shall have the same effect as if
transacted or held at the annual meeting, and in such
case all references in these By-Laws to the annual
meeting of the stockholders, or to the annual election
of directors, shall be deemed to refer to or include
such special meeting. Any such special meeting shall
be called, and the purposes thereof shall be specified
in the call, as provided in Section 2.3.
2.3. Special Meetings. A special meeting of
the stockholders may be called at any time by the
chairman of the board, if any, the president or by the
board of directors. A special meeting of the
stockholders shall be called by the secretary, or in
the case of the death, absence, incapacity or refusal
of the secretary, by an assistant secretary or some
other officer, upon application of a majority of the
directors or one
<PAGE> 2
or more stockholders who are entitled
to vote and who hold capital stock having the power to
cast at least 10% of all votes able to be cast by the
holders of all capital stock issued and outstanding.
Any such application shall state the purpose or
purposes of the proposed meeting. Any such call shall
state the place, date, hour, and purposes of the
meeting.
2.4. Place of Meeting. All meetings of the
stockholders for the election of directors or for any
other purpose shall be held at such place within or
without the State of Delaware as may be determined from
time to time by the chairman of the board, if any, the
president or the board of directors. Any adjourned
session of any meeting of the stockholders shall be
held at the place designated in the vote of
adjournment.
2.5. Notice of Meetings. Except as otherwise
provided by law, a written notice of each meeting of
stockholders stating the place, day and hour thereof
and, in the case of a special meeting, the purposes for
which the meeting is called, shall be given not less
than ten nor more than sixty days before the meeting,
to each stockholder entitled to vote thereat, and to
each stockholder who, by law, by the certificate of
incorporation or by these By-Laws, is entitled to
notice, by leaving such notice with him or at his
residence or usual place of business, or by depositing
it in the United States mail, postage prepaid, and
addressed to such stockholder at his address as it
appears in the records of the corporation. Such notice
shall be given by the secretary, or by an officer or
person designated by the board of directors, or in the
case of a special meeting by the officer calling the
meeting. As to any adjourned session of any meeting of
stockholders, notice of the adjourned meeting need not
be given if the time and place thereof are announced at
the meeting at which the adjournment was taken except
that if the adjournment is for more than thirty days or
if after the adjournment a new record date is set for
the adjourned session, notice of any such adjourned
session of the meeting shall be given in the manner
heretofore described. No notice of any meeting of
stockholders or any adjourned session thereof need be
given to a stockholder if a written waiver of notice,
executed before or after the meeting or such adjourned
session by such stockholder, is filed with the records
of the meeting or if the stockholder attends such
meeting without objecting at the beginning of the
meeting to the transaction of any business because the
meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of,
any meeting of the stockholders or any adjourned
session thereof need be specified in any written waiver
of notice.
2.6. Quorum of Stockholders. At any meeting
of the stockholders, whether the same be an original or
an adjourned
<PAGE> 3
session, a quorum shall consist of a
majority of the voting power of all stock issued and
outstanding and entitled to vote at the meeting, except
in any case where a larger quorum is required by law,
by the certificate of incorporation or by these
By-Laws. Any meeting may be adjourned from time to
time by a majority of the votes properly cast upon the
question, whether or not a quorum is present.
2.7. Action by Vote. When a quorum is present
at any meeting, whether the same be an original or an
adjourned session, a plurality of the votes properly
cast for election to any office shall elect to such
office and a majority of the votes properly cast upon
any question other than an election to an office shall
decide the question, except when a larger vote is
required by law, by the certificate of incorporation or
by these By-Laws. No ballot shall be required for any
election unless requested by a stockholder present or
represented at the meeting and entitled to vote in the
election.
2.8. Action without Meetings. Unless
otherwise provided in the certificate of incorporation,
any action required or permitted to be taken by
stockholders for or in connection with any corporate
action may be taken without a meeting, without prior
notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by
the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted.
If action is taken by unanimous consent of
stockholders, the writing or writings comprising such
unanimous consent shall be filed with the records of
the meetings of stockholders.
If action is taken by less than unanimous consent
of stockholders and in accordance with the foregoing,
there shall be filed with the records of the meetings
of stockholders the writing or writings comprising such
less than unanimous consent and a certificate signed
and attested to by the secretary that prompt notice was
given to all stockholders of the taking of such action
without a meeting and by less than unanimous written
consent.
In the event that the action which is consented to
is such as would have required the filing of a
certificate under any of the provisions of the General
Corporation Law of Delaware, if such action had been
voted upon by the stockholders at a meeting thereof,
the certificate filed under such provision shall state
that written consent has been given under Section 228
of said General Corporation Law, in lieu of stating
that the stockholders
<PAGE> 4
have voted upon the corporate
action in question, if such last mentioned statement is
required thereby.
2.9. Proxy Representation. Every stockholder
may authorize another person or persons to act for him
by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of
any meeting, objecting to or voting or participating at
a meeting, or expressing consent or dissent without a
meeting. Every proxy must be signed by the stockholder
or by his attorney-in-fact. No proxy shall be voted or
acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is
irrevocable and, if, and only as long as, it is coupled
with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable
regardless of whether the interest with which it is
coupled is an interest in the stock itself or an
interest in the corporation generally. The
authorization of a proxy may but need not be limited to
specified action, provided, however, that if a proxy
limits its authorization to a meeting or meetings of
stockholders, unless otherwise specifically provided
such proxy shall entitle the holder thereof to vote at
any adjourned session but shall not be valid after the
final adjournment thereof.
2.10. Inspectors. The directors or the person
presiding at the meeting may, but need not, appoint one
or more inspectors of election and any substitute
inspectors to act at the meeting or any adjournment
thereof. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector at such
meeting with strict impartiality and according to the
best of his ability. The inspectors, if any, shall
determine the number of shares of stock outstanding and
the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum,
the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are
proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding
at the meeting, the inspectors shall make a report in
writing of any challenge, question or matter determined
by them and execute a certificate of any fact found by
them.
2.11. List of Stockholders. The secretary
shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the
stockholders entitled to vote at such meeting, arranged
in alphabetical order and showing the address of each
stockholder and the number of shares registered in his
name. The stock ledger shall be the only evidence as
to who are
<PAGE> 5
stockholders entitled to examine such list
or to vote in person or by proxy at such meeting.
Section 3. Board of Directors
3.1. Number. The number of directors which
shall constitute the whole board shall be not less than
one nor more than fifteen. The first board shall
consist of one director. Thereafter, within the
foregoing limits, the stockholders at the annual
meeting shall determine the number of directors and
shall elect the number of directors as determined.
Within the foregoing limits, the number of directors
may be increased at any time or from time to time by
the stockholders or by the directors by vote of a
majority of the directors then in office. The number
of directors may be decreased to any number permitted
by the foregoing at any time either by the stockholders
or by the directors by vote of a majority of the
directors then in office, but only to eliminate
vacancies existing by reason of the death, resignation
or removal of one or more directors. Directors need
not be stockholders.
3.2. Tenure. Except as otherwise provided by
law, by the certificate of incorporation or by these
By-Laws, each director shall hold office until the next
annual meeting and until his successor is elected and
qualified, or until he sooner dies, resigns, is removed
or becomes disqualified.
3.3. Powers. The business of the corporation
shall be managed by or under the direction of the board
of directors who shall have and may exercise all the
powers of the corporation and do all such lawful acts
and things as are not by law, the certificate of
incorporation or these By-Laws directed or required to
be exercised or done by the stockholders.
3.4. Vacancies. Vacancies and any newly
created directorships resulting from any increase in
the number of directors may be filled by vote of the
stockholders at a meeting called for the purpose, or by
a majority of the directors then in office, although
less than a quorum, or by a sole remaining director.
When one or more directors shall resign from the board,
effective at a future date, a majority of the directors
then in office, including those who have resigned,
shall have power to fill such vacancy or vacancies, the
vote or action by writing thereon to take effect when
such resignation or resignations shall become
effective. The directors shall have and may exercise
all their powers notwithstanding the existence of one
or more vacancies in their number, subject to any
requirements of law or of the certificate of
incorporation or of these By-Laws as to the number of
directors required for a quorum or for any vote or
other actions.
<PAGE> 6
3.5. Committees. The board of directors may,
by vote of a majority of the whole board, (a)
designate, change the membership of or terminate the
existence of any committee or committees, each
committee to consist of one or more of the directors;
(b) designate one or more directors as alternate
members of any such committee who may replace any
absent or disqualified member at any meeting of the
committee; and (c) determine the extent to which each
such committee shall have and may exercise the powers
of the board of directors in the management of the
business and affairs of the corporation, including the
power to authorize the seal of the corporation to be
affixed to all papers which require it and the power
and authority to declare dividends or to authorize the
issuance of stock; excepting, however, such powers
which by law, by the certificate of incorporation or by
these By-Laws they are prohibited from so delegating.
In the absence or disqualification of any member of
such committee and his alternate, if any, the member or
members thereof present at any meeting and not
disqualified from voting, whether or not constituting a
quorum, may unanimously appoint another member of the
board of directors to act at the meeting in the place
of any such absent or disqualified member. Except as
the board of directors may otherwise determine, any
committee may make rules for the conduct of its
business, but unless otherwise provided by the board or
such rules, its business shall be conducted as nearly
as may be in the same manner as is provided by these
By-Laws for the conduct of business by the board of
directors. Each committee shall keep regular minutes
of its meetings and report the same to the board of
directors upon request.
3.6. Regular Meetings. Regular meetings of
the board of directors may be held without call or
notice at such places within or without the State of
Delaware and at such times as the board may from time
to time determine, provided that notice of the first
regular meeting following any such determination shall
be given to absent directors. A regular meeting of the
directors may be held without call or notice
immediately after and at the same place as the annual
meeting of stockholders.
3.7. Special Meetings. Special meetings of
the board of directors may be held at any time and at
any place within or without the State of Delaware
designated in the notice of the meeting, when called by
the chairman of the board, if any, the president, or by
one-third or more in number of the directors,
reasonable notice thereof being given to each director
by the secretary or by the chairman of the board, if
any, the president or any one of the directors calling
the meeting.
<PAGE> 7
3.8. Notice. It shall be reasonable and
sufficient notice to a director to send notice by mail
at least forty-eight hours or by telegram at least
twenty-four hours before the meeting addressed to him
at his usual or last known business or residence
address or to give notice to him in person or by
telephone at least twenty-four hours before the
meeting. Notice of a meeting need not be given to any
director if a written waiver of notice, executed by him
before or after the meeting, is filed with the records
of the meeting, or to any director who attends the
meeting without protesting prior thereto or at its
commencement the lack of notice to him. Neither notice
of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
3.9. Quorum. Except as may be otherwise
provided by law, by the certificate of incorporation or
by these By-Laws, at any meeting of the directors a
majority of the directors then in office shall
constitute a quorum; a quorum shall not in any case be
less than one-third of the total number of directors
constituting the whole board. Any meeting may be
adjourned from time to time by a majority of the votes
cast upon the question, whether or not a quorum is
present, and the meeting may be held as adjourned
without further notice.
3.10. Action by Vote. Except as may be
otherwise provided by law, by the certificate of
incorporation or by these By-Laws, when a quorum is
present at any meeting the vote of a majority of the
directors present shall be the act of the board of
directors.
3.11. Action Without a Meeting. Any action
required or permitted to be taken at any meeting of the
board of directors or a committee thereof may be taken
without a meeting if all the members of the board or of
such committee, as the case may be, consent thereto in
writing, and such writing or writings are filed with
the records of the meetings of the board or of such
committee. Such consent shall be treated for all
purposes as the act of the board or of such committee,
as the case may be.
3.12. Participation in Meetings by Conference
Telephone. Members of the board of directors, or any
committee designated by such board, may participate in
a meeting of such board or committee by means of
conference telephone or similar communications
equipment by means of which all persons participating
in the meeting can hear each other or by any other
means permitted by law. Such participation shall
constitute presence in person at such meeting.
3.13. Compensation. In the discretion of the
board of directors, each director may be paid such fees
for his services
<PAGE> 8
as director and be reimbursed for his
reasonable expenses incurred in the performance of his
duties as director as the board of directors from time
to time may determine. Nothing contained in this
section shall be construed to preclude any director
from serving the corporation in any other capacity and
receiving reasonable compensation therefor.
3.14. Indemnification. The corporation shall
indemnify each person who is an existing, former or
prospective director, officer or fiduciary of: (a) this
corporation; or (b) another organization (provided he
serves such other organization in such capacity at the
behest of this corporation) against expenses (including
attorneys' fees and expenses), judgments, fines,
penalties and amounts paid in settlement in connection
with defending, investigating, preparing to defend or
being or preparing to be a witness in any threatened,
pending or completed action, suit, proceeding or claim
(whether civil, criminal, administrative or
investigative), to the maximum extent permitted from
time to time under Delaware law. The foregoing right
of indemnification shall be in addition to any rights
or which any such director, officer or fiduciary may
otherwise be entitled and shall inure to the benefit of
the heirs and legal representatives of such director,
officer or fiduciary. The corporation may, subject to
the approval of the board of directors, pay the
expenses incurred by such director, officer or
fiduciary in defending a civil or criminal action, suit
or proceeding in advance of the final disposition of
such action, suit, or proceeding, upon receipt of an
undertaking by the person indemnified to repay such
payment if he shall be adjudicated to be not entitled
to indemnification as provided herein.
3.15. Interested Directors and Officers.
(a) No contract or transaction between
the corporation and one or more of its directors or
officers, or between the corporation and any other
corporation, partnership, association, or other
organization in which one or more of the corporation's
directors or officers are directors or officers, or
have a financial interest, shall be void or voidable
solely for this reason, or solely because the director
or officer is present at or participates in the meeting
of the board or committee thereof which authorizes the
contract or transaction, or solely because his or their
votes are counted for such purpose, if:
(1) The material facts as to his
relationship or interest and as to the contract or
transaction are disclosed or are known to the board of
directors or the committee, and the board or committee
in good faith authorizes the contract or transaction by
the affirmative votes of a majority of the
<PAGE> 9
disinterested directors, even though the disinterested
directors be less than a quorum; or
(2) The material facts as to his
relationship or interest and as to the contract or
transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract
or transaction is specifically approved in good faith
by vote of the stockholders; or
(3) The contract or transaction is
fair as to the corporation as of the time it is
authorized, approved or ratified, by the board of
directors, a committee thereof, or the stockholders.
(b) Common or interested directors may
be counted in determining the presence of a quorum at a
meeting of the board of directors or of a committee
which authorizes the contract or transaction.
Section 4. OFFICERS AND AGENTS
4.1. Enumeration; Qualification. The officers
of the corporation shall be a president, a treasurer, a
secretary and such other officers, if any, as the board
of directors from time to time may in its discretion
elect or appoint including without limitation a
chairman of the board, one or more vice presidents and
a controller. The corporation may also have such
agents, if any, as the board of directors from time to
time may in its discretion choose. Any officer may be
but none need be a director or stockholder. Any two or
more offices may be held by the same person. Any
officer may be required by the board of directors to
secure the faithful performance of his duties to the
corporation by giving bond in such amount and with
sureties or otherwise as the board of directors may
determine.
4.2. Powers. Subject to law, to the
certificate of incorporation and to the other
provisions of these By-Laws, each officer shall have,
in addition to the duties and powers herein set forth,
such duties and powers as are commonly incident to his
office and such additional duties and powers as the
board of directors may from time to time designate.
4.3. Election. The officers may be elected by
the board of directors at their first meeting following
the annual meeting of the stockholders or at any other
time. At any time or from time to time the directors
may delegate to any officer their power to elect or
appoint any other officer or any agents.
4.4. Tenure. Each officer shall hold office
until the first meeting of the board of directors
following the next annual
<PAGE> 10
meeting of the stockholders
and until his respective successor is chosen and
qualified unless a shorter period shall have been
specified by the terms of his election or appointment,
or in each case until he sooner dies, resigns, is
removed or becomes disqualified. Each agent shall
retain his authority at the pleasure of the directors,
or the officer by whom he was appointed or by the
officer who then holds agent appointive power.
4.5. Chairman of the Board of Directors,
President and Vice President. The chairman of the
board, if any, shall have such duties and powers as
shall be designated from time to time by the board of
directors. If there is a chairman of the board, he
shall preside at all meetings of the stockholders and
of the board of directors at which he is present,
except as otherwise voted by the board of directors.
If there is no chairman of the board or in the absence
of the chairman of the board, the president shall
preside at all meetings of the stockholders and of the
board of directors at which he is present, except as
otherwise voted by the board of directors.
Unless the board of directors otherwise specifies,
the president shall be the chief executive officer and
shall have direct charge of all business operations of
the corporation and, subject to the control of the
directors, shall have general supervision over the
entire business of the corporation.
Any vice president or senior vice president shall
have such duties and powers as shall be set forth in
these By-Laws and shall have such other duties as may
be designated from time to time by the board of
directors or by the president. The vice president or
the senior vice president who is principally
responsible for the financial matters of the
corporation shall be designated by the board of
directors as the chief financial officer of the
corporation.
4.6. Treasurer and Assistant Treasurers. The
treasurer shall be in charge of the corporation's funds
and valuable papers, and shall have such other duties
and powers as shall be designated from time to time by
the board of directors or by the president.
Any assistant treasurers shall have such duties
and powers as shall be designated from time to time by
the board of directors, the president or the treasurer.
4.7. Controller and Assistant Controllers. If
a controller is elected, he shall be in charge of its
books of account and accounting records, and of its
accounting procedures. He shall have such other duties
and powers as may be designated
<PAGE> 11
from time to time by
the board of directors, the president or the treasurer.
The vice president of finance or the corporate
controller shall be appointed as chief accounting
officer of the corporation as designated by the board
of directors.
Any assistant controller shall have such duties
and powers as shall be designated from time to time by
the board of directors, the president, the treasurer or
the controller.
4.8. Secretary and Assistant Secretaries. The
secretary shall record all proceedings of the
stockholders, of the board of directors and of
committees of the board of directors in a book or
series of books to be kept therefor and shall file
therein all actions by written consent of stockholders
or directors. In the absence of the secretary from any
meeting, as assistant secretary, or if there be none or
he is absent, a temporary secretary chosen at the
meeting, shall record the proceedings thereof. Unless
a transfer agent has been appointed, the secretary
shall keep or cause to be kept the stock and transfer
records of the corporation, which shall contain the
names and record addresses of all stockholders and the
number of shares registered in the name of each
stockholder. He shall have such other duties and
powers as may from time to time be designated by the
board of directors or the president.
Any assistant secretaries shall have such duties
and powers as shall be designated from time to time by
the board of directors, the president or the secretary.
Section 5. RESIGNATIONS AND REMOVALS
5.1. Any director or officer may resign at any
time by delivering his resignation in writing to the
chairman of the board, if any, the president, or the
secretary or to a meeting of the board of directors.
Such resignation shall be effective upon receipt unless
specified to be effective at some other time, and
without in either case the necessity of its being
accepted unless the resignation shall so state. A
director (including persons elected by directors to
fill vacancies in the board) may be removed from office
with or without cause by the vote of the holders of
share having a majority of the voting power of the
shares issued and outstanding and entitled to vote in
the election of directors. The board of directors may
at any time remove any officer either with or without
cause. The board of directors may at any time
terminate or modify the authority of any agent. No
director or officer resigning and (except where a right
to receive compensation shall be expressly provided in
a duly authorized written agreement with the
corporation) no director or officer removed shall have
any right to any compensation as such director or
officer for any period following
<PAGE> 12
his resignation or
removal, or any right to damages on account of such
removal, whether his compensation be by the month or by
the year or otherwise; unless, in the case of a
resignation, the directors, or, in the case of removal,
the body acting on the removal, shall in their or its
discretion provide for compensation.
Section 6. VACANCIES
6.1. If the office of the president or the
treasurer or the secretary becomes vacant, the
directors may elect a successor by vote of a majority
of the directors then in office. If the office of any
other officer becomes vacant, any person or body
empowered to elect or appoint that officer may choose a
successor. Each such successor shall hold office for
the unexpired term, and in the case of the president,
the treasurer and the secretary until his successor is
chosen and qualified or in each case until he sooner
dies, resigns, is removed or becomes disqualified. Any
vacancy of a directorship shall be filled as specified
in Section 3.4 of these By-Laws.
Section 7. CAPITAL STOCK
7.1. Stock Certificates. Each stockholder
shall be entitled to a certificate stating the number
and the class and the designation of the series, if
any, of the shares held by him, in such form as shall,
in conformity to law, the certificate of incorporation
and the By-Laws, be prescribed from time to time by the
board of directors. Such certificate shall be signed
by the chairman or vice chairman of the board, if any,
or the president or a vice president and by the
treasurer or an assistant treasurer or by the secretary
or an assistant secretary. Any of or all the
signatures on the certificate may be a facsimile. In
case an officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed on
such certificate shall have ceased to be such officer,
transfer agent, or registrar before such certificate is
issued, it may be used by the corporation with the same
effect as if he were such officer, transfer agent, or
registrar at the time of its issue.
7.2. Loss of Certificates. In the case of the
alleged theft, loss, destruction or mutilation of a
certificate of stock, a duplicate certificate may be
issued in place thereof, upon such terms, including
receipt of a bond sufficient to indemnify the
corporation against any claim on account thereof, as
the board of directors may prescribe.
Section 8. TRANSFER OF SHARES OF STOCK
<PAGE> 13
8.1. Transfer on Books. Subject to the
restrictions, if any, (i) stated in the certificate of
incorporation or (ii) stated or noted on the stock
certificate, shares of stock may be transferred on the
books of the corporation by the surrender to the
corporation or its transfer agent of the certificate
therefor properly endorsed or accompanied by a written
assignment and power of attorney properly executed,
with necessary transfer stamps affixed, and with such
proof of the authenticity of signature as the board of
directors or the transfer agent of the corporation may
reasonably require. Except as may be otherwise
required by law, by the certificate of incorporation or
by these By-Laws, the corporation shall be entitled to
treat the record holder of stock as shown on its books
as the owner of such stock for all purposes, including
the payment of dividends and the right to receive
notice and to vote or to give any consent with respect
thereto and to be held liable for such calls and
assessments, if any, as may lawfully be made thereon,
regardless of any transfer, pledge or other disposition
of such stock until the shares have been properly
transferred on the books of the corporation.
It shall be the duty of each stockholder to notify
the corporation of his post office address.
8.2. Record Date and Closing Transfer Books.
In order that the corporation may determine the
stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or
to express consent to corporate action in writing
without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect
of any change, conversion or exchange of stock or for
the purpose of any other lawful action, the board of
directors may fix, in advance, a record date, which
shall not be more than sixty nor less than ten days (or
such longer period as may be required by law) before
the date of such meeting, nor more than sixty days
prior to any other action.
If no record date is fixed
(a) The record date for determining stockholders
entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the
day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is
held.
(b) The record date for determining stockholders
entitled to express consent to corporate action in
writing without a meeting,
<PAGE> 14
when no prior action by the
board of directors is necessary, shall be the day on
which the first written consent is expressed.
(c) The record date for determining stockholders
for any other purpose shall be at the close of business
on the day on which the board of directors adopts the
resolution relating thereto.
A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders
shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix
a new record date for the adjourned meeting.
Section 9. CORPORATE SEAL
9.1. Subject to alteration by the directors,
the seal of the corporation shall consist of a
flat-faced circular die with the word "Delaware" and
the name of the corporation cut or engraved thereon,
together with such other words, dates or images as may
be approved from time to time by the directors.
Section 10. EXECUTION OF PAPERS
10.1. Except as the board of directors may
generally or in particular cases authorize the
execution thereof in some other manner, all deeds,
leases, transfers, contracts, bonds, notes, checks,
drafts or other obligations made, accepted or endorsed
by the corporation shall be signed by the chairman of
the board, if any, the president, a vice president or
the treasurer.
Section 11. FISCAL YEAR
11.1. The fiscal year of the corporation shall
end on December 31 of each year.
Section 12. AMENDMENTS
12.1. These By-Laws may be adopted, amended or
repealed by vote of a majority of the directors then in
office or by vote of the holders of shares having a
majority of the voting power of the shares outstanding
and entitled to vote. Any by-law, whether adopted,
amended or repealed by the stockholders or directors,
may be amended or reinstated by the stockholders or the
directors.
<PAGE> 1
Exhibit 10.2
THE TIMBERLAND COMPANY
1987 STOCK OPTION PLAN
(AS AMENDED)
1. PURPOSE
-------
The purpose of this 1987 Stock Option Plan (the "Plan") is to advance the
interests of The Timberland Company (the "Company") by enhancing the ability of
the Company (a) to attract and retain employees who are in a position to make
significant contributions to the success of the Company; (b) to reward
employees for such contributions; and (c) to encourage employees to take into
account the long-term interests of the Company through ownership of shares of
the Company's Class A Common Stock (the "Stock").
Options granted pursuant to the Plan may be incentive stock options as
defined in section 422 of the Internal Revenue Code of 1986 (as it may from
time to time be amended) (the "Code") (any option that is intended so to
qualify as an incentive stock option being referred to herein as an "incentive
option"), or options that are not incentive options, or both.
2. ADMINISTRATION
--------------
The Plan shall be administered by the Board of Directors of the Company
(the "Board").
The Board may, in its discretion, delegate its powers with respect to the
Plan to a committee (the "Committee"), in which event all references herein to
the Board shall be deemed to be references to the Committee, PROVIDED that the
Board may not so delegate its powers to amend or terminate the Plan in
accordance with the last sentence of Section 8 below. The Committee shall
consist of at least three Directors. A majority of the members of the
Committee shall constitute a quorum, and all determinations of the Committee
shall be made by a majority of its members. Any determination of the Committee
under the Plan may be made without notice or meeting of the Committee by a
writing signed by a majority of the Committee members. Following any
registration of the Stock under the Securities Exchange Act of 1934, all
members of the Committee shall be disinterested persons within the meaning of
Rule 16b-3 under the Act.
The Board shall have authority, not inconsistent with the express
provisions of the Plan; (a) to grant options to such eligible employees as the
Committee may select; (b) to determine the time or times when options shall be
granted and the number of
<PAGE> 2
shares of Stock subject to each option; (c) to determine which options are,
and which options are not, incentive options; (d) to determine the terms and
conditions of each option; (e) to prescribe the form or forms of instruments
evidencing options and any other instruments required under the Plan and to
change such forms from time to time; (f) to adopt, amend and rescind rules and
regulations for the administration of the Plan; and (g) to interpret the Plan
and to decide any questions and settle all controversies and disputes that may
arise in connection with the Plan. Subject to Section 8 the Board shall also
have the authority, both generally and in particular instances, to waive
compliance by an employee with any obligation to be performed by him under an
option and to waive any condition or provision of an option, except that the
Board may not, in the case of an incentive option, other than in accordance
with Section 4(c), (i) increase the total number of shares covered by the
option, (ii) extend the term of the option to more than ten years (five years,
in the case of an incentive option granted to a "ten-percent shareholder" as
defined in Section 6(b) below), or (iii) unless the optionee consents, reduce
the option exercise price per share or otherwise cause a modification,
extension or renewal (within the meaning of section 424(h) of the Code) of the
option. All such determinations and actions of the Board shall be conclusive
and shall bind all parties.
3. EFFECTIVE DATE AND TERM OF PLAN
-------------------------------
The Plan shall become effective upon the date on which the Plan is
approved by the shareholders of the Company. Grants of options under the Plan
may be made prior to that date (but after adoption of the Plan by the Board of
Directors), subject to approval of the Plan by such shareholders.
No option shall be granted under the Plan after the completion of ten
years from the date on which the Plan was adopted by the Board of Directors,
but options previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
--------------------------
(a) NUMBER OF SHARES. Subject to adjustment as provided in Section
4(c), the maximum aggregate number of shares of Stock that may be delivered
upon the exercise of options granted under the Plan shall be 1,600,000. If any
option granted under the Plan terminates without having been exercised in full,
the number of shares of stock as to which such option was not exercised shall
be available for future grants within the limits set forth in this Section
4(a).
-2-
<PAGE> 3
(b) SHARES TO BE DELIVERED. Shares delivered under the Plan shall be
authorized but unissued Stock or, if the Board so decides in its sole
discretion, previously issued Stock acquired by the Company and held in
treasury. No fractional shares of Stock shall be delivered under the Plan.
(c) CHANGES IN STOCK. In the event of a stock dividend, stock split
or combination of shares, recapitalization or other change in the Company's
capital stock, the number and kind of shares of stock or securities of the
Company subject to options then outstanding or subsequently granted under the
Plan, the maximum number of shares or securities that may be delivered under
the Plan, the exercise price, and other relevant provisions shall be
appropriately adjusted by the Board, whose determination shall be binding on
all persons.
The Board may also adjust the number of shares subject to outstanding
options, the exercise price of outstanding options and the terms of outstanding
options, to take into consideration material changes in accounting practices or
principles, consolidations or mergers (except those described in Section 6(i)),
acquisitions or dispositions of stock or property or any other event if it is
determined by the Board that such adjustment is appropriate to avoid distortion
in the operation of the Plan, provided that no such adjustment shall be made in
the case of an incentive option if it would constitute a modification,
extension or renewal of the option within the meaning of section 424(h) of the
Code.
(d) REPLACEMENT OPTIONS. The Board may grant options under the Plan
in substitution for options held by employees of another corporation who
concurrently become employees of the Company or a subsidiary as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary or the acquisition by the Company or a subsidiary of property or
stock of the employing corporation. The Board may direct that the replacement
options be granted on such terms and conditions as the Committee considers
appropriate in the circumstances.
5. ELIGIBILITY FOR OPTIONS
-----------------------
Employees eligible to receive options under the Plan shall be those
employees of the Company and its subsidiaries who, in the opinion of the Board,
are in a position to make a significant contribution to the success of the
Company or such subsidiaries. A subsidiary for purposes of the Plan shall be a
corporation in which the Company owns, directly or indirectly, stock possessing
50% or more of the total combined voting power of all classes of stock.
-3-
<PAGE> 4
Directors who are not employees shall not be eligible to participate in
the Plan. Incentive options shall be granted only to "employees" as defined in
the provisions of the Code or regulations thereunder applicable to incentive
stock options. Receipt of options under the Plan or of awards under any other
employee benefit plan of the Company or any of its subsidiaries shall not
preclude an employee from receiving options or additional options under the
Plan.
6. TERMS AND CONDITIONS OF OPTIONS
-------------------------------
(a) AGGREGATE VALUE OF COMMON STOCK SUBJECT TO INCENTIVE STOCK
OPTIONS. Solely for the purposes of determining whether an option granted
under the Plan will be treated for federal income tax purposes as an incentive
option or an option that is not an incentive option, the aggregate fair market
value (determined as of the time of grant) of the Stock with respect to which
incentive options are exercisable for the first time by an employee during any
calendar year (under all plans of his employer corporation and its parent and
subsidiary corporations, as those terms are used in section 422(d) of the Code)
shall not exceed $100,000. This Section 6(a) shall be construed and applied in
accordance with section 422(d) of the Code and the regulations, if any,
promulgated thereunder.
(b) EXERCISE PRICE. The exercise price of each option shall be
determined by the Board but in the case of an incentive option shall not be
less than 100% (110%, in the case of an incentive option granted to a
ten-percent shareholder) of the fair market value per share of the Stock at the
time the incentive option is granted; nor shall the exercise price of any
option be less, in the case of an original issue of authorized stock, than par
value per share. In the case of employees who are subject to Section 16 of the
Securities Exchange Act of 1934, the exercise price of an option shall not be
less than 50% of the fair market value of the Common Stock on the date of the
grant. For this purpose, "fair market value" in the case of incentive options
shall have the same meaning as it does in the provisions of the Code and the
regulations thereunder applicable to incentive options; and "ten-percent
shareholder" shall mean any employee who at the time of grant owns directly, or
is deemed to own by reason of the attribution rules set forth in section 424(d)
of the Code, stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or of any of its parent or subsidiary
corporations.
(c) DURATION OF OPTIONS. In no case shall an option be exercisable
more than ten years (five years, in the case of an
-4-
<PAGE> 5
incentive option granted to a "ten-percent shareholder" as defined in (b)
above) from the date the option was granted.
(d) Exercise of Options.
-------------------
(1) Each option shall be made exercisable at such time or times,
whether or not in installments, as the Board shall prescribe at
the time an option is granted.
In the case of an option not immediately exercisable in full, the
Board may at any time accelerate the time at which all or any part of the
option may be exercised.
(2) The award forms or other instruments evidencing incentive options
shall contain such provisions relating to exercise and other
matters as are required of incentive options under the applicable
provisions of the Code and the regulations thereunder, as from
time to time in effect.
(3) Any exercise of an option shall be in writing, signed by the
proper person and delivered or mailed to the Company, accompanied
by (a) the option certificate and any other documents required by
the Board and (b) payment in full for the number of shares for
which the option is exercised.
(4) In the case of an option that is not an incentive option, the
Board shall have the right to require that the individual
exercising the option remit to the Company an amount sufficient
to satisfy any federal, state, or local withholding tax
requirements (or make other arrangements satisfactory to the
Company with regard to such taxes) prior to the delivery of any
Stock pursuant to the exercise of the option. In the case of an
incentive option, if at the time the option is exercised the Board
determines that under applicable law and regulations the Company
could be liable for the withholding of any federal or state tax
with respect to a disposition of the Stock received upon exercise,
the Board may require as a condition of exercise that the
individual exercising the option agree (i) to inform the Company
promptly of any disposition (within the meaning of section 424(c)
of the Code and the regulations thereunder) of Stock received upon
exercise, and (ii) to give such security as the Board deems
adequate to meet the potential liability of the Company for the
withholding of tax, and to augment such security from time to time
in any amount reasonably
-5-
<PAGE> 6
deemed necessary by the Committee to preserve the adequacy of such
security.
(5) If an option is exercised by the executor or administrator of a
deceased employee, or by the person or persons to whom the option
has been transferred by the employee's will or the applicable
laws of descent and distribution, the Company shall be under no
obligation to deliver Stock pursuant to such exercise until the
Company is satisfied as to the authority of the person or persons
exercising the option.
(e) PAYMENT FOR AND DELIVERY OF STOCK. Stock purchased under the Plan
shall be paid for as follows: (i) in cash or by certified check, bank draft or
money order payable to the order of the Company or (ii) if so permitted by the
terms of the option, (A) through the delivery of shares of Stock having a fair
market value on the last business day preceding the date of exercise equal to
the purchase price or (B) by a combination of cash and Stock as PROVIDED in
clauses (i) and (ii)(A) above or (iii) if so permitted by the terms of the
option, by delivery of a promissory note of the employee containing such terms
and conditions, including without limitation interest rate and maturity, as the
Board may specify in the option (except that the option may provide that the
rate of interest on the note will be such rate as is sufficient at all times to
avoid the imputation of any interest under the applicable provision of the
Code), or by a combination of cash (or cash and Stock) and such a promissory
note; provided, that if the Stock delivered upon exercise of the option is an
original issue of authorized Stock, at least so much of the exercise price as
represents the par value of such Stock shall be paid in cash, in Stock or by a
combination of cash and Stock.
An option holder shall not have the rights of a shareholder with regard to
awards under the Plan except as to Stock actually received by him under the
Plan.
The Company shall not be obligated to deliver any shares of Stock (a)
until, in the opinion of the Company's counsel, all applicable federal and
state laws and regulations have been complied with, and (b) if the outstanding
Stock is at the time listed on any stock exchange, until the shares to be
delivered have been listed or authorized to be listed on such exchange upon
official notice of issuance, and (c) until all other legal matters in
connection with the issuance and delivery of such shares have been approved by
the Company's counsel. If the sale of Stock has not been registered under the
Securities Act of 1933, as amended, the Company may require, as a condition to
exercise of the option, such representations or agreements as
-6-
<PAGE> 7
counsel for the Company may consider appropriate to avoid violation of such Act
and may require that the certificates evidencing such Stock bear an appropriate
legend restricting transfer.
(f) NONTRANSFERABILITY OF OPTIONS. No option may be transferred other
than by will or by the laws of descent and distribution, and during an
employee's lifetime an option may be exercised only by him.
(g) DEATH. If an employee's employment with the Company and its
subsidiaries terminates by reason of death, each option held by the employee
immediately prior to death shall become immediately exercisable by his executor
or administrator, or by the person or persons to whom the option is transferred
by will or the applicable laws of descent and distribution, at any time within
the one-year period ending with the first anniversary of the employee's death
(subject, however, to the limitations of section 6(c) regarding the maximum
exercise period for such option).
(h) OTHER TERMINATION OF EMPLOYMENT. If an employee's employment with
the Company and its subsidiaries terminates for any reason other than death,
all options held by the employee that are not then exercisable shall terminate.
Options that are exercisable on the date of termination shall continue to be
exercisable for a period of three months (subject to Section 6(c) and the last
sentence of Section 6(g)) unless the employee was discharged for cause which in
the opinion of the Board casts such discredit on him as to justify termination
of his options. After completion of that three-month period, such options
shall terminate to the extent not previously exercised, expired or terminated.
For purposes of this Section 6(h), employment shall not be considered
terminated (i) in the case of sick leave or other bona fide leave of absence
approved for purposes of the Plan by the Board, so long as the employee's right
to reemployment is guaranteed either by statute or by contract, or (ii) in the
case of a transfer of employment between the Company and a subsidiary or
between subsidiaries, or to the employment of a corporation (or a parent or
subsidiary corporation of such corporation) issuing or assuming an option in a
transaction to which section 424(a) of the Code applies.
(i) MERGERS, ETC. In the event of any merger or consolidation
involving the Company, any sale of substantially all of the Company's assets or
any other transaction or series of related transactions as a result of which a
single Person (as defined below) or several Persons acting in concert own a
majority of the Company's then outstanding voting common stock (such merger,
consolidation, sale or other transaction being
-7-
<PAGE> 8
hereinafter referred to as a "Transaction"), all outstanding options shall
become exercisable, immediately prior to the consummation of such Transaction.
Upon consummation of the Transaction, all outstanding options shall terminate
and cease to be exercisable. There shall be excluded from the foregoing any
Transaction as a result of which (a) the holders of Stock prior to the
Transaction retain or acquire securities constituting a majority of the
outstanding voting common stock of the acquiring or surviving corporation or
other entity and (b) no single Person owns more than half of the outstanding
voting common stock of the acquiring or surviving corporation or other entity,
unless such Person was a stockholder of the Company on February 3, 1987 or is
at the time an Affiliate of any such stockholder. For purposes of this
Section, voting common stock of the acquiring or surviving corporation or other
entity that is issuable upon conversion of convertible securities or upon
exercise of warrants or options shall be considered outstanding, and all
securities that vote in the election of directors (other than solely as the
result of a default in the making of any dividend or other payment) shall be
deemed to constitute that number of shares of voting common stock which is
equivalent to the number of such votes that may be cast by the holders of such
securities.
In lieu of the provisions of the immediately preceding paragraph, if there
is an acquiring or surviving corporation or entity, the Board may, by vote of a
majority of the members of the Board who are Continuing Directors (as defined
below), arrange to have such acquiring or surviving corporation or entity or an
Affiliate (as defined below) thereof grant to employees holding outstanding
options replacement options which, in the case of incentive options, satisfy,
in the determination of the Board, the requirements of Section 424(e) of the
Code.
The term "Continuing Director" shall mean any director of the Company
who (i) is not an Acquiring Person or an Affiliate of an Acquiring Person and
(ii) either was (A) a member of the Board of Directors of the Company on
February 3, 1987 or (B) nominated for his or her initial term of office by a
majority of the Continuing Directors in office at the time of such nomination.
The term "Acquiring Person" shall mean, with respect to any Transaction, each
Person who is a party to or a participant in such Transaction or who, as a
result of such Transaction, would (together with other Persons acting in
concert) own a majority of the Company's outstanding Common Stock; PROVIDED,
HOWEVER, that none of the Company, any wholly-owned subsidiary of the Company,
any employee benefit plan of the Company, any trustee in respect thereof acting
in such capacity or any Person which was a stockholder of the Company on
February 3, 1987 or is at the time an Affiliate of any such stockholder shall,
for purposes of this Section, be deemed an "Acquiring Person". The term
"Affiliate"
-8-
<PAGE> 9
with respect to any Person, shall mean any other Person who is, or would be
deemed to be, an "affiliate" or an "associate" of such Person within the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended, as such
rule is in effect on June 1, 1986. The term "Person" shall mean a corporation,
association, partnership, joint venture, trust, organization, business,
individual or government or any governmental agency or political subdivision
thereof.
7. EMPLOYMENT RIGHTS
-----------------
Neither the adoption of the Plan nor the grant of options shall confer
upon any employee any right to continued employment with the Company or any
parent or subsidiary or affect in any way the right of the Company or parent or
subsidiary to terminate the employment of an employee at any time. Except as
specifically provided by the Board in any particular case, the loss of existing
or potential profit in options granted under this Plan shall not constitute an
element of damages in the event of termination of the employment of an employee
even if the termination is in violation of an obligation of the Company to the
employee by contract or otherwise.
8. EFFECT OF DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
-----------------------------------------------------------------
Neither adoption of the Plan nor the grant of options to an employee shall
affect the Company's right to grant to such employee options that are not
subject to the Plan, to issue to such employees Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued to
employees.
The Board may at any time discontinue granting options under the Plan.
With the consent of the employee, the Board may at any time cancel an existing
option in whole or in part and grant the employee another option for such
number of shares as the Board specifies. The Board may at any time or times
amend the Plan for the purpose of satisfying the requirements of section 422 of
the Code or of any changes in applicable laws or regulations and the Board of
Directors may amend the Plan for any other purpose which may at the time be
permitted by law, or may at any time terminate the Plan as to any further
grants of options, provided that (except to the extent expressly required or
permitted hereinabove) no such amendment shall, without the approval of the
shareholders of the Company, (a) increase the maximum number of shares
available under the Plan, (b) change the group of employees eligible to receive
options under the Plan, (c) reduce the price at which incentive options may be
granted, (d) extend
-9-
<PAGE> 10
the time within which options may be granted, (e) alter the Plan in such a
way that incentive options already granted hereunder would not be considered
incentive stock options under section 422 of the Code, or (f) amend the
provision of this Section 8, and no such amendment shall adversely affect the
rights of any employee (without his consent) under any option previously
granted.
-10-
<PAGE> 1
Exhibit 10.5
THE TIMBERLAND COMPANY
LONG TERM INCENTIVE PLAN FOR SENIOR MANAGEMENT
----------------------------------------------
1. PURPOSE
The purpose of The Timberland Company Long Term Incentive Plan for
Senior Management (the "Plan") is to promote the long#term success of The
Timberland Company (the "Company") and its shareholders by providing annual
incentive compensation to senior management of the Company.
2. TERM
As more fully described below, award opportunities under the Plan will
be based solely on Company performance over periods consisting, in each case,
of three consecutive calendar years, with a new three#year period commencing
every year. The first such three#year period began January 1, 1991. The Plan
will remain in effect until terminated by the Company's Board of Directors (the
"BOARD").
3. PLAN ADMINISTRATION
The Plan is administered by the Compensation Committee of the Board
(the "COMMITTEE"). The Committee has full and exclusive power to interpret the
Plan and to adopt such rules, regulations and guidelines for carrying out the
Plan as it may deem necessary or proper.
ELIGIBILITY; DETERMINATION OF COMPANY TARGET AND PARTICIPANT AWARDS
The following will be participants ("PARTICIPANTS") in the Plan: (i)
the Chief Executive Officer and Chief Operating Officer of the Company; (ii)
those employees of the Company who hold the title Senior Vice President; (iii)
those employees of the Company who hold the title Vice President or who are
Vice President level executive officers (i.e., job grade 9), and (iv) such
other employees, if any, of the Company or its subsidiaries as the Committee
may designate from time to time.
Toward the beginning of each three-year performance period (a
"PERFORMANCE PERIOD" or "PERIOD"), the Committee will designate both a
cumulative financial target for the Company (the "TARGET") and, for each
Participant, an award opportunity (the "AWARD") expressed in terms of a
percentage, or range of percentages, of the Participant's salary during the
last year of such Performance Period. The Company Target will consist of an
earnings per share component. Beginning with the second year of the
Performance Period which began in 1992, and all new Performance Periods
beginning during or after 1993, an earnings
<PAGE> 2
per share component and a return on net assets component will be designated.
Each Award will also set forth the relationship between the payout percentages
specified in the Award and the extent, if any, to which cumulative financial
performance of the Company for the Period exceeds the Target. No amount will
be payable under an Award for a Performance Period if the Target is not met by
the end of that Period.
The Committee may at any time during a Performance Period or
thereafter, but prior to Award payment, make appropriate adjustments Target or
in the percentages determined with respect to any Participant under an Award to
avoid undue windfalls or hardships due to external conditions outside the
control of management, non-recurring or abnormal items, or other matters as the
Committee may, in its sole discretion, determine to be appropriate.
Except as otherwise determined by the Committee, an individual will not
be a Participant for any Performance Period unless he or she was hired by the
Company prior to July 1 of the first year of the Performance Period.
5. PAYMENT OF AWARDS
As soon as practicable after the end of a Performance Period, but no
later than the end of the first quarter immediately following the Performance
Period, the Committee will determine the amount of each Award and will pay such
amount, in cash to the Participant.
6. TERMINATION
Except as provided in this Section, an individual who, prior to the
date Award payments are made for a Performance Period, ceases (whether by
termination or employment or change of responsibilities) to be a Participant as
defined in the first paragraph of Section {ref eligibility|4.} above, will
forfeit all rights to any payment for that period. However, if an individual
ceases to be a Participant by reason of (a) death, (b) total and permanent
disability, or (c) retirement at or after age 65 (or earlier retirement after
age 55 with the consent of the Company) or (d) such other circumstances (if
any) as the Committee in its sole discretion may determine, then the Committee
in its sole discretion may direct that all or a portion of such individual's
Award be paid, taking into account the duration of participation during the
Performance Period and such other matters as the Committee may deem
appropriate.
7. Transferability
Awards under the Plan may not be assigned, alienated, sold or otherwise
transferred by the Participant other than by will or the laws of descent and
distribution.
-2-
<PAGE> 3
8. MERGERS, ETC.
In the event of a merger or consolidation with another company, or in
the event of a liquidation or reorganization of the Company, the Committee in
its sole discretion may determine whether to provide for adjustments and
settlements of Awards.
9. AMENDMENT AND MODIFICATION
The Committee may, from time to time, change the components used to
determine the Target for any year of a Performance Period. The Board may from
time to time amend, modify, or discontinue the Plan or any provision thereof in
its sole discretion.
10. WITHHOLDING TAXES
The Company will have the right to deduct withholding taxes from any
payments made pursuant to the Plan, or make such other provisions as it deems
necessary or appropriate to satisfy its obligations for withholding federal,
state, or local income or other taxes incurred by reason or payments pursuant
to the Plan.
11. FUTURE RIGHTS
No person will have any claim or rights to be granted an Award under
the Plan, and no Participant will have any rights under the Plan to be retained
in the employ of the Company. The loss of potential income with respect to any
award shall not constitute an element of damages in the event of a
Participant's termination of employment or change in status, even if such
termination or change is in violation of an obligation of the Company to the
Participant by contract or otherwise.
-3-
<PAGE> 1
Exhibit 10.6
The Timberland Company
ANNUAL BONUS PLAN FOR EXEMPT EMPLOYEES
1. Purpose
The purpose of The Timberland Company Annual Bonus Plan for Exempt Employees
(the "Plan") is to promote the long-term success of The Timberland Company (the
"Company") and its shareholders by providing annual incentive compensation to
the exempt employees of the Company.
2. Effective Date; Term
The Plan is effective January 1, 1992 (1). The Plan will remain in effect until
terminated by the Company's Board of Directors (the "Board").
3. Plan Administration
The Plan is administered by the Compensation Committee of the Board (the
"Committee"). The Committee has full and exclusive power to interpret the Plan
and to adopt such rules, regulations and guidelines for carrying out the Plan
as it may deem necessary or proper.
4. Eligibility; Determination of Bonus Award
All exempt employees are eligible to participate ("Participants") in the
Plan. The Committee may modify the eligibility provisions of this Section 4.
at any time in its sole discretion. Except asotherwise determined by the
Committee, an individual will not be a Participant for any year unless he or
she was hired by the Company prior to July 1 of that year.
Toward the beginning of each calendar year, the Committee will determine for
each Participant (or category of Participants) a Target Award for the year,
expressed as a percentage of the Participant's base salary rate, and will
divide the Participant's Target Award into two components, one based on Company
performance (the "Financial Component"), the other based on individual
performance (the "Personal Component"). The Committee shall set the percentage
split between the Financial Component and the Personal Component annually.
Annually, the Committee will also determine a financial target (the "Financial
Target") and a financial threshold (the "Financial Threshold") for the Company.
For 1992, the Financial Target and Financial Threshold for all Participants
will consist of an earnings per share component. For 1993, and future years,
the Financial Target and Financial Threshold for the senior executive positions
(i.e., Chief Executive Officer, Chief Operating Officer and Senior Vice
Presidents) will consist of an earnings per share component and a return on net
assets component. The Financial Target and Financial Threshold for all other
Participants will consist of an earnings per share component only. No bonuses
(under either component of a Participant's Target Award) will be payable for a
year unless the
- --------------------
(1) The Plan set forth herein modifies, formalizes and replaces an annual
bonus award program previously in place at the Company.
<PAGE> 2
Company achieves at least its Financial Threshold for the year. If the Company
achieves or exceeds its Financial Threshold, a Participant's bonus will be
determined as follows:
4.1 The Financial Component of a Participant's Target Award will be
multiplied by a factor reflecting the relationship of the Company's earnings
per share for the year to the Company's Financial Target. If the Company
achieves earnings per share equal to the Financial Target, the multiplier
factor will be one (1.0). Except as otherwise determined by the Committee, the
maximum multiplier factor for earnings per share in excess of the Financial
Target will be one and one-half (1.5). Other factors to reflect earnings per
share results at or above the Financial Threshold will be determined by the
Committee.
4.2 The Personal Component of a Participant's Target Award will be
multiplied by a factor reflecting the extent, if any, by which the
Participant's individual performance exceeded or fell below expected
performance, as determined in accordance with the Company's performance review
criteria and procedures as from time to time in effect.
4.3 The sum of the results under 4.1 and 4.2. above, if any, will be
subject to appropriate adjustment by the Committee to reflect a partial year of
employment (where the Participant was hired after January 1, but on or before
June 30, of the year). The adjusted number will be the bonus amount payable to
the Participant under the Plan for the year. The Committee may at any time
prior to payment of bonuses hereunder make appropriate adjustments in the
Company's Financial Target or Financial Threshold or in the division between a
Participant's Financial Component and Personal Component to avoid undue
windfalls or hardships due to external conditions outside the control of
management, nonrecurring or abnormal items, or other matters as the
Committee may, in its sole discretion, determine to be appropriate.
5. Payment of Bonuses Payment of bonuses as determined under Section 4.
above will be made as soon as practicable after the end of a year. All bonuses
will be paid in cash.
6. Termination
Except as provided in this Section, a Participant who, prior to the date bonus
payments are made, ceases (whether by termination or employment or change of
responsibilities) to be a Participant as defined in the first paragraph of
Section 4. above, will thereupon forfeit all right to a bonus payment.
However, if an individual ceases to be a Participant by reason of (a) death,
(b) total and permanent disability, (c) retirement at or after age 65 (or
earlier retirement after age 55 with the consent of the Company) or (d) such
other circumstances (if any) as the Committee in its sole discretion may
determine, then the Committee in its sole discretion may direct that all or a
portion
<PAGE> 3
of such individual's bonus be paid, taking into account the duration of
participation during the year and such other matters as the Committee may deem
appropriate.
7. Transferability
Awards under the Plan may not be assigned, alienated, sold or otherwise
transferred by the Participant other than by will or the laws of descent and
distribution.
8. Mergers, etc.
In the event of a merger or consolidation with another company or in the event
of a liquidation or reorganization of the Company, the Committee in its sole
discretion may determine whether to provide for adjustments and settlements of
bonus awards.
9. Option Grants
<TABLE>
In addition to the bonuses described above, Participants may be awarded stock
options under the Company's 1987 Stock Option Plan (or a successor plan). As a
norm for annual option grants, it will be proposed to the Committee that stock
options be awarded annually as follows:
<CAPTION>
Category of Participant Number of Options
<S> <C>
Chief Operating Officer 10,000
Senior Vice President 8,000
Vice President 3,000
Director 1,500
Manager/Senior Professional 750
Supervisor/Professional 500
Associate Professional 250
</TABLE>
However, the Chairman and Chief Executive Officer of the Company may at any
time reduce, increase or otherwise alter or deviate from these recommended
norms and may recommend to the Committee that option grants be made to persons
not described in the foregoing list.
Actual option grants, if any, will be made by the Committee in its sole
discretion subject to the terms of the 1987 Stock Option Plan (or a successor
plan) and will in all respects be governed by the provisions of the 1987 Stock
Option Plan (or a successor plan).
10. Amendment and Modification
The Board may from time to time amend, modify, or discontinue the Plan or any
provision hereof in its sole discretion.
11. Withholding Taxes
The Company will have the right to deduct withholding taxes from any payments
made pursuant to the Plan, or make such other provisions as it deems necessary
or appropriate to satisfy its obligations for withholding federal, state, or
local income or other taxes incurred by reason of payments pursuant to the
Plan.
12. Future Rights
No person will have any claim or rights to be granted an award under the Plan,
and no Participant will have any rights under the Plan to be retained in the
employ of the Company. The loss of
<PAGE> 4
potential income with respect to any award
shall not constitute an element of damages in the event of a Participant's
termination of employment or change in status, even if such termination or
change is in violation of an obligation of the Company to the Participant by
contract or otherwise.
<PAGE> 1
10.9(e)(ii)
AMENDMENT TO LEASE
------------------
THIS AGREEMENT is entered into as of the 16th day of July, 1993, between THE
TIMBERLAND COMPANY (the "TENANT") and Louise Minges and Mitchell Minges (the
"LANDLORD").
WHEREAS, the Tenant and the Landlord entered into a real estate lease dated
July 20, 1992 (the "LEASE"); and
WHEREAS, the parties wish to amend certain provisions of the Lease;
NOW, THEREFORE, the parties hereby agree as follows:
1. Section 1.7 ("TERM") shall be and hereby is replaced in its entirety
with the following:
"A period of six (6) months, commencing August 1, 1993 and
unless otherwise terminated as provided for elsewhere within
this Lease, ending January 1, 1994."
2. Section 1.9 ("RENEWAL") shall be and hereby is further amended as
follows:
"The Tenant shall have the option to renew this Lease for
consecutive six (6) month terms. The Landlord agrees to a six
month advance notification of any increase in rental
amount. Notice of the exercise of this option shall be given
in writing to the Landlord at least three months prior to the
end of the then current term."
Except as expressly amended above, all other terms and conditions of the Lease
shall remain in full force and effect.
IN WITNESS WHEREOF, the duly authorized representatives of the parties have
signed this Amendment as of the date first written above.
THE TIMBERLAND COMPANY
/s/ John R. Ranelli /s/ Louise Minges
By:__________________________ _________________________
John R. Ranelli Louise Minges
Senior Vice President
Finance & Administration /s/ C. Mitchell Minges
_________________________
C. Mitchell Minges
<PAGE> 1
Exhibit 10.9(k)
AGREEMENT OF LEASE
Between
MELVILLE CORPORATION
Landlord,
- and -
THE TIMBERLAND COMPANY
Tenant.
TABLE OF CONTENTS
Page
1. Demise 1
2. Term; Right to Terminate 1
3. Rent 2
4. Net Lease 2
5. Use of the Demised Premises 3
6. Condition of the Demised Premises 3
7. Taxes and Utility Expenses 3
8. Compliance with Laws 4
9. Repairs 4
10. Alterations and Improvements 4
11. Indemnification of Landlord 4
12. Insurance 5
<PAGE> 2
13. Assignment, Subletting and Mortgaging 6
14. Fixtures 6
15. Landlord's Access to the Demised Premises 6
16. Restoration Obligations 7
17. Eminent Domain 8
18. Quiet Enjoyment 9
19. Landlord's Representations and Warranties 9
20. Force Majeure 9
21. Landlord's Right to Cure 10
22. Tenant's Default 10
23. Holding Over 12
24. End of Term 12
25. Signs 12
26. No Broker 12
27. Notices 12
28. Certificates 13
29. Arbitration 14
30. Invalidity of Certain Provisions 14
31. Governing Law 14
32. No Waiver 14
33. Interpretation 15
34. Captions 15
35. Entire Agreement 15
36. Successors and Assigns 15
37. Right of First Refusal 15
<PAGE> 3
EXHIBITS
Exhibit A - The Land
Exhibit B - Equipment
Exhibit C - Permitted Encumbrances
AGREEMENT OF LEASE
AGREEMENT OF LEASE (this "Lease") made as of February 1, 1994, between
MELVILLE CORPORATION, a New York corporation, having an office at c/o Thom McAn
Shoe Company, 67 Millbrook Street, Worcester, MA 01606 ("Landlord"), and THE
TIMBERLAND COMPANY, a Delaware corporation having an office at 11 Merrill
Industrial Drive, P.O. Box 5050, Hampton, New Hampshire 03842-5050 ("Tenant").
1. Demise. Landlord hereby leases to Tenant, and Tenant hereby hires
from Landlord, subject to all of the terms, covenants and conditions of this
Lease, all of that certain plot, piece or parcel of land located in Danville,
Kentucky, and more particularly described in Exhibit A attached hereto and made
a part hereof (the "Land"), together with (a) all of the buildings and
improvements now or hereafter erected on the Land (the "Improvements"), (b)
all fixtures and articles of personal property now or hereafter attached to or
used in connection with the Land or the Improvements, (c) all equipment in "as
is" condition, listed on Exhibit B attached hereto and made a part hereof (the
"Equipment"), (d) all appurtenances, rights, privileges and easements
benefiting, belonging or pertaining to the Land and (e) all of Landlord's
right, title and interest, if any, in and to any land lying in the bed of any
street, road or highway (open or proposed) in front of or adjoining the Land,
to the center line thereof, and any strips and/or gores relating to the Land
(all of the foregoing are hereinafter collectively called the "Demised
Premises").
2. Term; Right to Terminate.
(a) This Lease shall be for a term (the "Term") of five (5) years (or
until sooner terminated as hereinafter provided), to commence on February 1,
1994 (the "Commencement Date") and to end at midnight on January 31, 1999 (the
"Expiration Date").
(b) Provided Tenant shall not be in default of any of the
<PAGE> 4
terms or provisions of this Lease, Tenant shall have the right ("Tenant's
Termination Right") to terminate this Lease in accordance with the terms
hereof. If Tenant shall exercise Tenant's Termination Right during the first
year of the Term, then upon at least twelve (12) month's advance written notice
to Landlord, this Lease shall terminate on January 31, 1996, the last day of
the second year of the Term, and shall be null and void and of no further force
or effect. If Tenant shall elect to exercise Tenant's Termination Right at any
time after commencement of the third year of the Term, then upon twelve (12)
month's advance written notice to Landlord, this Lease shall terminate, and
shall be null and void and of no further force or effect.
(c) Provided Landlord shall not be in default of any terms and
provisions of this Lease, Landlord shall have the right ("Landlord's
Termination Right") to terminate this Lease at any time after commencement of
the third year of the Term, upon twelve (12) months advance written notice to
Tenant. If Landlord shall exercise Landlord's Termination Right, this Lease
shall terminate on a date which is twelve (12) months from the date Tenant
shall receive notice of Landlord's exercise of Landlord's Termination Right,
and shall be null and void and of no further force or effect.
3. Rent.
(a) Tenant shall pay rent ("Fixed Rent") to Landlord, at Landlord's
address set forth at the beginning of this Lease, or at such other address as
Landlord shall designate, at an annual rental rate of $1,021,608, payable in
equal monthly installments of $85,134 each, in advance on the first day of each
month during the Term. The first monthly installment of Fixed Rent due
hereunder shall be due and payable to Landlord upon execution of this Lease by
Tenant. Provided, however, in the event Tenant shall exercise Tenant's
Termination Right during the first year of the Term so that this Lease
terminates on January 31, 1996, the last day of the second year of the Term,
the Fixed Rent for the second year of Term shall be at an annual rental rate of
$1,115,916, payable in equal monthly installments of $92,993 each in advance on
the first day of each month during the second year of the Term commencing on
February 1, 1995.
(b) Tenant shall also pay as rent, all sums, costs, expenses and other
payments which Tenant assumes or agrees to pay under the terms of this Lease
(all of which are hereinafter collectively called "Additional Rent"), and, if
Tenant shall fail to pay any Additional Rent, Landlord shall have all of the
rights and remedies against Tenant provided for in this Lease, at law or in
equity, available to Landlord for Tenant's non-payment of
<PAGE> 5
Fixed Rent.
(c) No payment of less than the full amount of all Fixed Rent and
Additional Rent due under this Lease shall release Tenant from its obligation
to pay rent hereunder and the obligation of Tenant to pay the full amount of
all Fixed Rent and Additional Rent shall survive the expiration or earlier
termination of this Lease.
4. Net Lease. It is the intention of the parties that the rent payable
under this Lease shall be absolutely net to Landlord, so that this Lease shall,
under all circumstances, yield to Landlord the net annual Fixed Rent specified
in Article 3 of this Lease during the Term, and that all costs, expenses and
obligations of every kind and nature whatsoever relating to the Demised
Premises, including but not limited to, all taxes, utilities, maintenance and
any structural damage caused by any act or omission of Tenant, shall be paid by
Tenant.
5. Use of the Demised Premises. Tenant shall have the right to use the
Demised Premises for a distribution facility and for no other purpose.
6. Condition of the Demised Premises. Tenant shall accept possession
of the Demised Premises in its "AS IS" condition on the Commencement Date.
From and after the Commencement Date, Landlord shall have no obligation to
furnish, render or supply any work, labor, services, furniture, fixtures,
equipment, materials or other items to make the Demised Premises, or any
portion(s) thereof, ready or suitable for Tenant's occupancy.
7. Taxes and Utility Expenses.
(a) Tenant shall, during the Term, pay as Additional Rent all "Taxes"
and "Utility Expenses" (as such quoted terms are hereinafter defined) prior to
the imposition of any interest or penalty for late or non-payment. For the
purpose of this Article 7, "Taxes" shall mean all real property taxes,
installments of special and general assessments, water and sewer rents, rates
and charges and other governmental impositions and charges of every kind and
nature whatsoever, general and special, ordinary and extraordinary, foreseen
and unforeseen, which shall or may during the Term be levied, assessed or
imposed upon the Demised Premises, or any part thereof; and "Utility Expenses"
shall mean all water and sewer rents, rates and charges payable for the
furnishing of water to the Demised Premises based on actual usage, and all
amounts payable for the furnishing of steam, heat, gas, hot water, electricity,
light and power, and any other service or services to the Demised Premises, or
any part thereof.
<PAGE> 6
(b) If permitted by law, Tenant shall have the right to pay any
assessment for local improvements assessed during the Term in installments
and, in such event, Tenant's obligation to pay such assessment shall be
limited to the installments coming due during the Term. If the payment of
assessments in installments may be made only after application to an
appropriate authority, Tenant shall have the right to make such application,
in Landlord's name if legally required. Upon receipt of request therefor from
Tenant, Landlord shall execute any and all applications and/or other documents
necessary for such application.
(c) Taxes for the first year of the Term shall be prorated between
Landlord and Tenant.
8. Compliance with Laws.
(a) At all times during the Term, Tenant shall, at its own cost and
expense, promptly observe and comply with (i) all laws, orders and regulations
of any Federal, state, county and municipal authorities (including, but not
limited to, building codes and environmental laws, orders and regulations) (and
with any direction pursuant to law of any public officer thereof) having or
asserting jurisdiction over all or any part of the Demised Premises, or the use
and occupancy thereof, and of the National Board of Fire Underwriters, any
local board of fire underwriters or any other body or bodies exercising similar
functions (all of the foregoing are hereinafter collectively, called
"Governmental Regulations") and (ii) the provisions of all insurance policies
required to be maintained pursuant to Article 12 hereof and the requirements of
the issuers of all such policies.
9. Repairs. Tenant shall not do or suffer any waste or damage to the
Demised Premises or any part thereof and Tenant shall, at all times during the
Term, at its sole cost and expense, take good care of the Demised Premises and
make, or cause to be made, all maintenance and repairs, whether interior or
exterior, non-structural, or structural caused by any act or omission of
Tenant, ordinary or extraordinary, foreseen or unforeseen, necessary to keep
and maintain all of the Improvements in at least as good order and condition as
the same shall have been on the Commencement Date, reasonable wear and tear and
obsolescence excepted.
10. Alterations and Improvements. Tenant, with the prior written
consent of Landlord, which consent Landlord shall not withhold or delay
unreasonably, shall have the right, during the Term, at its own cost and
expense, to make any non-structural
<PAGE> 7
alterations, installations, improvements, additions, restorations, replacements
and other changes (collectively, "Alterations"), in, of or to the Improvements,
provided that the same shall not reduce the value of the Demised Premises.
Tenant, in making Alterations, shall comply with all applicable Governmental
Regulations and with all reasonable conditions imposed by Landlord in
connection with the making of any Alterations. Tenant shall obtain or cause to
be obtained all building permits, licenses, temporary and permanent
certificates of occupancy, and other governmental approvals which may be
required in connection with the making of any Alterations. Landlord shall
cooperate with Tenant in obtaining same and shall execute any documents
required therefor all at Tenant's sole cost and expense.
11. Indemnification of Landlord. Tenant shall indemnify, defend and hold
harmless Landlord against and from all liabilities, obligations, damages,
penalties, claims, costs, charges and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, which may be imposed on or
incurred by or asserted against Landlord by reason of any of the following
occurrences during the Term:
(a) any work or thing done in, on or about the Demised Premises, or any
part thereof, by any party other than Landlord;
(b) any use, non-use, possession, occupation, condition, operation,
maintenance or management of the Demised Premises;
(c) any negligence on the part of Tenant or any of its agents,
contractors, servants, employees, subtenants, licensees or invitees; or
(d) any accident, injury or damage to any person or property occurring
in the Demised Premises.
12. Insurance.
(a) Tenant shall provide, at its sole cost and expense, and shall keep
in force at all times during the Term, policies of insurance with an insurance
companies licensed to do business in the State of Kentucky, reasonably
satisfactory to Landlord, as follows:
(i) Comprehensive general public liability insurance in respect
of the Demised Premises and the conduct of Tenant's business, with a combined
single limit of not less than $10,000,000 for personal injury or death to any
number of persons in any one occurrence and for property damage. Each such
policy of liability insurance shall include Landlord and any other
<PAGE> 8
person(s) Landlord may designate as additional insureds;
(ii) casualty insurance for the benefit of Landlord covering all
of the Improvements for the full replacement value thereof and insuring against
loss or damage by fire or other casualty customarily included in extended
coverage endorsements. All proceeds payable under such casualty insurance
policies shall be adjusted with and payable to Tenant, to be held by Tenant in
trust for the benefit of Landlord and applied toward repair and restoration of
the Demised Premises in accordance with Article 16 of this Lease;
(iii) worker's compensation insurance covering all persons
employed by Tenant at the Demised Premises in such amounts and as required by
law, naming Landlord as an additional insured; and
(b) Tenant shall deliver policies of such insurance to Landlord on or
before the Commencement Date and thereafter not less than ten (10) days prior
to the expiration of any such policy. Such insurance shall provide, (i) that
it cannot be cancelled (including cancellation for failure to pay premiums) or
modified in any material respect without thirty (30) days' prior written notice
to Landlord and (ii) that no act or thing done by the Tenant shall invalidate
the policy as against the Landlord.
(c) Any insurance required to be provided by Tenant pursuant to this
Lease may, to the extent applicable, be provided by blanket insurance covering
the Demised Premises and other locations at which Tenant conducts business,
provided such blanket insurance complies with all applicable requirements of
this Lease and contains an endorsement specifically identifying the Demised
Premises as being covered thereunder.
(d) Tenant shall cause all policies of fire and casualty insurance
maintained by it in the respect of the Demised Premises to contain provisions
waiving any right of subrogation on the part of the insurer with respect to any
claims against Landlord.
13. Assignment, Subletting and Mortgaging. Tenant shall not, by
operation of law or otherwise, assign or otherwise transfer this Lease or the
term and estate hereby granted, sublet the Demised Premises or any part thereof
or allow the same to be used, occupied or utilized by anyone other than Tenant,
or mortgage, pledge, or encumber this Lease or the Demised Premises or any part
thereof in any manner by reason of any act or omission on the part of Tenant,
without in each instance obtaining the prior written consent of Landlord, which
consent Landlord shall not unreasonably withhold. Any transfer of the voting
stock of Tenant resulting in the "person(s)" who shall own a majority of such
stock immediately before such transfer ceasing
<PAGE> 9
to own a majority of such stock after such transfer or any transfer of all or
substantially all of the assets of Tenant shall be deemed to be an assignment
of this Lease as to which Landlord's consent shall have been required.
14. Fixtures. All trade fixtures, equipment and items of personal
property furnished or installed by Tenant at the Demised Premises, regardless
of the manner of attachment, shall be and remain the property of Tenant and may
be removed by Tenant at any time and from time to time during the Term or
within the period of ten (10) days after the expiration of the Term. Tenant
shall promptly repair all damage to the Demised Premises caused by the removal
of any such trade fixtures, equipment and personal property. Any property of
Tenant remaining in the Demised Premises after the expiration of such ten (10)
day period shall be deemed abandoned by Tenant and shall become the property of
Landlord without payment therefor.
15. Landlord's Access to the Demised Premises. Tenant shall permit
Landlord to enter upon the Demised Premises, at all reasonable times during
customary business hours of Tenant and upon reasonable notice, to inspect the
Demised Premises.
16. Restoration Obligations.
(a) In the event of damage to or destruction of the Demised Premises, or
any part thereof, Tenant shall give prompt written notice thereof to Landlord
and Tenant shall, at Tenant's sole cost and expense (whether or not any
"Proceeds" (as hereinafter defined) are sufficient therefor) (i) immediately
take all actions necessary to secure the Demised Premises from theft and
vandalism and to safeguard against the risk of collapse and falling debris and
(ii) promptly commence and diligently perform to completion the repair,
restoration and rebuilding of that portion or portions of the Demised Premises
so damaged or destroyed so as to restore the same to full compliance with all
Governmental Regulations and so that the Improvements shall be repaired and
restored, as nearly as possible, to the condition, value and general utility
that existed prior to the damage or destruction (such repair, restoration and
rebuilding being herein called "Restoration").
(b) All costs of Restoration, and all other work performed by or for
Tenant at the Demised Premises, shall be paid for promptly when due and all
Restoration and such other work shall be completed free and clear of claims of
mechanics, materialmen, contractors, subcontractors and other persons. If
required by Landlord, Tenant shall obtain waivers of liens, in form and
content satisfactory to Landlord, from all such mechanics, materialmen,
contractors, subcontractors and all other persons.
<PAGE> 10
(c) If any Restoration is structural, or if the cost of any Restoration,
as estimated by the Landlord, shall exceed $100,000 (in either case "Major
Restoration"), Tenant shall, prior to the commencement of the Major
Restoration, furnish to Landlord for its approval: (i) complete plans and
specifications for the Major Restoration prepared by an architect satisfactory
to the Landlord (the "Architect"), which shall be accompanied by (A) the
Architect's signed estimate, bearing the Architect's seal, of the entire cost
of completing the Major Restoration and (B) satisfactory evidence of the
approval thereof by all governmental authorities whose approval is required;
(ii) certified copies of all permits and approvals required in connection with
the commencement and conduct of the Major Restoration; and (iii) a surety bond
for, and/or guaranty of, the payment for the completion of the Major
Restoration, which bond and/or guaranty shall be in form and content, and from
a surety or guarantor, satisfactory to Landlord, and shall be in an amount not
less than the Architect's estimate of the entire cost of completing the Major
Restoration, less the net amount of insurance proceeds or (in the case of a
"Taking", as defined in Article 17), the net amount of the condemnation award
or compensation (in any such case "Proceeds"), if any, then held by Tenant for
application toward the cost of the Major Restoration. Tenant shall not
commence any Major Restoration until Tenant shall have complied with the
applicable requirements of this Article 16, and after commencing any Major
Restoration (and any other work undertaken at the Demised Premises) Tenant
shall proceed diligently and in good faith to perform the same to completion in
a good and workmanlike manner in accordance with (if required) the approved
plans and specifications therefor.
17. Eminent Domain.
(a) In the event of a taking for any public or quasi-public use by any
lawful power or authority by exercise of the right of condemnation or eminent
domain or by private purchase in lieu thereof (in any such event, a "Taking")
of the entire or a substantial portion of the Demised Premises which is
sufficient to render the remaining portion thereof unsuitable for restoration
for its continued use or occupancy by Tenant, either party to this Lease shall
have the right to cancel this Lease by a notice to the other given not later
than sixty (60) days following the Taking. Such notice shall specify a date
(the "Taking Cancellation Date") on which this Lease shall be cancelled, which
Taking Cancellation Date shall be the earlier to occur of the date of vesting
of title or the date of transfer of possession, as a result of the Taking. If
either party to this Lease shall exercise its right to cancel this Lease
pursuant to this Paragraph (a), this Lease and the term and estate granted
<PAGE> 11
by this Lease shall be wholly extinguished, and the Term shall expire on the
Taking Cancellation Date in the same manner and with the same effect as if the
Taking Cancellation Date were the Expiration Date, except that any Fixed Rent
paid for any period after the Taking Cancellation Date shall be refunded to
Tenant within fifteen (15) days after the Taking Cancellation Date.
(b) If this Lease shall not be cancelled pursuant to Paragraph (a) of
this Article 17, or in the event of a Taking of less than substantially all of
the Demised Premises, then (i) this Lease and the Term shall, upon the earlier
to occur of the date of vesting of title or transfer of possession as a result
of the Taking, cease and expire with respect to the portion of the Demised
Premises so Taken, (ii) Tenant shall promptly commence, and with reasonable
dispatch prosecute to completion, the restoration of the portion of the Demised
Premises remaining after the Taking to substantially the same condition and
tenantability as existed immediately preceding the Taking, any such restoration
to be performed in accordance with the provisions of Article 16 of this Lease,
and (iii) the Fixed Rent shall be equitably abated as of the date of vesting of
title or transfer of possession, whichever occurs earlier, as a result of the
Taking, to reflect the rental value of the portion of the Demised Premises lost
to Tenant by reason of the Taking. Any dispute as to the amount of such
equitable abatement in the Fixed Rent shall be submitted to arbitration
pursuant to Article 29 of this Lease. Until final resolution of the dispute,
Tenant shall pay the Fixed Rent at the rate determined by Landlord and, after
such determination, Landlord shall credit the amount of any overpayment toward
future payments of the Fixed Rent.
(c) In the event of a Taking, and whether or not this Lease is
terminated, Tenant shall have no claim in respect of the award or payment for
the value of the unexpired term of this Lease. Tenant may interpose and
prosecute in any proceeding in respect of a Taking, independent of any claim of
Landlord, claims for the reasonable value of Tenant's trade fixtures and
leasehold improvements, for damages for interruption or dislocation of business
in the Demised Premises and loss of good will, and for moving and remodeling
expenses. The Proceeds of any award or payment received by Landlord in
respect of any Taking shall be applied first toward payment of the cost of
restoring the Demised Premises or any portion thereof damaged as a result of
such Taking; the balance of such Proceeds, if any, shall be the sole property
of Landlord and Tenant shall have no claim thereto.
18. Quiet Enjoyment. Tenant, upon paying the Fixed Rent and any
Additional Rent due hereunder, and observing and keeping all covenants,
warranties, agreements and conditions of this Lease on its part to be kept,
shall quietly have and enjoy the
<PAGE> 12
Demised Premises during the term of this Lease, without hindrance or
molestation.
19. Landlord's Representations and Warranties.
(a) Landlord represents and warrants to Tenant that, as of the
Commencement Date:
(i) Landlord has full power and authority to execute and
deliver this Lease and to carry out and perform all covenants to be performed
by Landlord hereunder;
(ii) The Demised Premises are free from all encumbrances,
liens, defects in title, leases, tenancies, easements, restrictions and
agreements, except the Permitted Encumbrances;
(iii) The execution, delivery and performance of this Lease
by Landlord (A) does not violate any contract, agreement or commitment to
which Landlord is a party or by which Landlord is bound, and (B) have been duly
authorized by all necessary corporate action of Landlord.
20. Force Majeure. If either party shall be prevented or delayed from
punctually performing any obligation or satisfying any condition under this
Lease by any strike, lockout, labor dispute, inability to obtain labor or
materials, or reasonable substitutes therefor, Act of God, governmental
restriction, regulation or control, enemy or hostile government action, civil
commotion, insurrection, sabotage, fire or other casualty, or anyother
condition beyond the reasonable control of such party, then the time to perform
such obligation or satisfy such condition shall be extended by the delay caused
by such event. If either party shall, as a result of any such event, be unable
to exercise any right or option within any time limit provided therefor in this
Lease, such time shall be deemed extended for a period equal to the duration of
the delay caused by such event.
21. Landlord's Right to Cure. If Tenant shall be in default hereunder,
Landlord, after thirty (30) days' written notice that Landlord intends to cure
such default, or without notice if, in Landlord's reasonable judgment, an
emergency shall exist, shall have the right, but not the obligation, to cure
such default, and Tenant shall pay to Landlord upon demand the reasonable cost
thereof plus interest at the lesser of twelve percent (12%) per annum or the
maximum legal rate.
22. Tenant's Default.
(a) If Tenant defaults in the performance of any obligation
<PAGE> 13
under this Lease, Landlord may give notice to Tenant specifying the nature of
such default. If Tenant does not, within ten (10) days after receipt of such
notice, cure any default, other than a default in the payment of Fixed Rent or
Additional Rent, or, if the default is of such a nature that it cannot
reasonably be cured within such ten (10) day period and Tenant does not
commence and proceed with reasonable diligence and in good faith to cure such
default, or, if Tenant does not, within five (5) days after receipt of such
notice, cure a default in the payment of Fixed Rent or Additional Rent, then
after the expiration of such ten (10) or five (5) day period, as the case may
be, Landlord may give to Tenant a notice terminating this Lease, and thereupon,
this Lease and the term and estate hereby granted shall terminate with the same
effect as if the date of such notice of termination were the Expiration Date,
but Tenant shall remain liable for damages as provided in Paragraph (c) of this
Article 22. Upon such termination Landlord may reenter the Demised Premises
and dispossess Tenant and any other occupants thereof, remove their effects and
hold the Demised Premises as if this Lease had not been made; and Tenant waives
the service of any additional notice of intention to terminate this Lease,
reenter the Demised Premises or to institute legal proceedings to that end.
(b) If Tenant shall make an assignment for the benefit of creditors or
shall file a voluntary petition under any bankruptcy or insolvency law, or any
involuntary petition alleging an act of bankruptcy or insolvency shall be
filed against Tenant under any bankruptcy or insolvency law, or if a petition
shall be filed by or against Tenant under the reorganization provisions of the
United States Bankruptcy Code or under the provisions of any law of like
import, or if a petition shall be filed by Tenant under the arrangement
provisions of the United States Bankruptcy Code or under the provisions of any
law of like import, or if a permanent receiver of Tenant or of or for all or
substantially all of the property of Tenant shall be appointed, then Landlord
shall, (i) at any time after Landlord becomes aware of any such event, if such
event occurs with the acquiescence of Tenant, or (ii) if such event occurs
without the acquiescence of Tenant, at any time after the event continues for
thirty (30) days, in either such case, give Tenant a notice specifying the same
and if the event giving rise to Landlord's notice shall continue for ten (10)
days after such notice is given; Landlord shall give Tenant a notice
terminating this Lease and, upon the giving of such notice of termination, this
Lease the term and estate hereby granted shall terminate with the same effect
as if the date of Landlord's termination notice were the Expiration Date, but
Tenant shall remain liable for damages as provided in Paragraph (c) of this
Article 22. If this Lease and the Term shall cease and expire in accordance
with this Paragraph (b), Landlord may
<PAGE> 14
dispossess or remove Tenant or any other occupant of the Demised Premises, by
summary proceedings or otherwise, and remove their effects and hold the Demised
Premises as if this Lease had not been made.
(c) After a dispossess or removal in accordance with Paragraph (a) or
Paragraph (b) of this Article 22, (i) the Fixed Rent shall be paid up to the
date of such dispossess or removal, (ii) Landlord may relet the Demised
Premises or any part or parts thereof, either in the name of Landlord or
otherwise for a term or terms which may, at the option of Landlord, be less
than or exceed the period which would otherwise have constituted the balance of
the Term and (iii) Tenant shall pay to Landlord, as liquidated damages, any
deficiency between the Fixed Rent due hereunder and the amount, if any, of the
rents collected on account of the new lease or leases of the Demised Premises
for each month of the period which would otherwise have constituted the balance
of the Term (not including any renewal period the commencement of which shall
not have occurred prior to such dispossess or removal). In computing such
liquidated damages there shall be added to said deficiency all expenses which
Landlord incurs in connection with reletting the Demised Premises, including,
without limitation, the cost of keeping the Demised Premised in good order and
the preparation of the same for such reletting, brokerage fees and attorneys'
fees and disbursements. Such liquidated damages shall be paid by Tenant in
monthly installments on the dates specified in this Lease for payment of Fixed
Rent and any suit brought to collect the amount of the deficiency for any month
shall not prejudice in any way the rights of Landlord to collect the deficiency
for any subsequent month by a similar proceeding. Landlord may make such
alterations, repairs, replacements, and decorations in and to the Demised
Premises as Landlord considers advisable and necessary for the purposes of
reletting the Demised Premises, and the making of such alterations and
decorations shall not operate or be construed to release Tenant from liability
for liquidated damages under this Lease. Landlord shall not be liable for
failure to relet the Demised Premises or, in the event that the Demised
Premises are relet, for failure to collect the rent under such reletting.
23. Holding Over. Should Tenant hold over in possession after the
expiration of the Term of this Lease, such holding over shall not be deemed to
extend the Term or renew this Lease, but the tenancy thereafter shall continue
as a tenancy from month to month at the sufferance of Landlord upon the terms
and conditions herein contained and at a rental equal to two (2) times the
Fixed Rent in effect immediately preceding the expiration of the Term.
<PAGE> 15
24. End of Term. Upon the expiration or other termination of the Term,
Tenant shall peaceably and quietly quit and surrender the Demised Premises.
25. Signs. Tenant shall have the right to install, maintain and replace
in, on, over or in front of the Demised Premises or in any part thereof, or on
the roof or exterior walls of any building(s) at the Demised Premises, such
signs, placards and lights as Tenant may desire, provided Tenant shall comply
with any applicable Governmental Regulations and shall obtain any necessary
permits for such purposes. Any installations made by Tenant under this Article
25 shall be promptly removed at Tenant's expense upon the expiration or other
termination of this Lease and any damage to the Improvements caused by such
installation of removal shall be promptly repaired by Tenant at its expense.
26. No Broker. Landlord and Tenant each represent and warrant to the
other that no broker was instrumental in consum-mating this Lease and neither
had any conversations or negotiations with any broker concerning the leasing
of the Demised Premises. Landlord and Tenant each agree to indemnify, defend
and hold harmless the other from and against any claims for brokerage
commissions or other compensation, and all claims, losses, damages,
liabilities, costs and expenses in connection therewith, including, without
limitation, reasonable attorneys' fees and disbursements, which may arise by
through or on account of any act of the indemnifying party.
27. Notices. All notices and other communications which either party is
required or desires to send to the other party hereunder shall be in writing,
mailed (registered or certified mail, return receipt requested, postage
prepaid), be hand delivered or sent by nationally recognized overnight courier,
prepaid. Notices and other communications shall be deemed to have been
received on the earlier of the date of actual receipt or the third (3rd)
regular business day after the day so mailed. Notices shall be addressed as
follows:
If to Landlord, to it at:
Melville Corporation
c/o Thom McAn Shoe Company
67 Millbrook Street
Worcester, MA 01606
Attention: Mr. Ashvin Mehta
with a copy to:
Melville Corporation
<PAGE> 16
One Theall Road
Rye, NY 10580
Attention: Legal Department
If to Tenant, to it at:
The Timberland Company
11 Merrill Industrial Drive
P.O. Box 5050
Hampton, NH 03842-5050
with a copy to:
Any party may, by a notice given in accordance with this Article 27, designate
a different address for notices and other communications.
28. Certificates. Either party shall, without charge, at any time and
from time to time, within ten (10) days after written request therefor, certify
by written instrument duly executed and acknowledged, to the other party and to
any purchaser, or proposed purchaser, or any other person, firm or corporation
specified in such request: (a) That this Lease has not been amended, modified
or supplemented, or if this Lease has been amended, modified or supplemented,
the substance and manner of such amendment, modification or supplement; (b)
that this Lease is the valid and binding obligation of said party and is in
full force and effect in accordance with its terms as then constituted; (c)
whether, to the knowledge of said party, there exists any event that, with the
passage of time or the giving of notice, or both, would constitute a default
under this Lease, and if said party shall have knowledge of such an event,
specifying the nature of same; (d) whether, to the knowledge of said party,
there exists any offsets, counterclaims, or defenses against the enforcement of
any of the terms, covenants and conditions of this Lease as then constituted by
the party requesting the certificate, and if so, specifying same; (e) the
Commencement Date and Expiration Date of this Lease; and (f) any other matters
as may reasonably be requested. Any such certificate may be relied upon by the
party requesting it and any other person, firm or corporation to whom the same
may be delivered, and the contents of such certificate shall be binding on the
party executing same.
29. Arbitration. In any case where this Lease provides for submission
of a dispute or matter to arbitration, the same shall be settled by arbitration
in the State of Kentucky, in accordance
<PAGE> 17
with the rules then obtaining of the American Arbitration Association or any
successor thereto. The arbitrator or arbitrators may grant injunctions or
other relief in such disputes or matters. The decision of the arbitrator or
arbitrators shall be final, conclusive, and binding upon the parties, and a
judgment may be entered thereon in any court having jurisdiction. Landlord and
Tenant each shall pay one-half of the cost and expense of such arbitration, and
each shall separately pay for its own attorneys' fees and expenses.
30. Invalidity of Certain Provisions. If any term, covenant, condition
or provision of this Lease or the application thereof to any person or
circumstance shall, at any time, for any reason or to any extent, be invalid or
unenforceable, the remainder of this Lease and the application of that term or
pro-vision to other persons or circumstances, shall not be affected thereby,
but shall be enforced to the extent permitted by law.
31. Governing Law. Irrespective of the place of execution or
performance, this Lease, the rights and obligations of the parties hereto and
the performance hereof shall be governed by and construed in accordance with
the laws of the State of Kentucky as applied to contracts executed and to be
performed wholly within that State.
32. No Waiver. The failure of Landlord or Tenant to complain of any act
or omission on the part of the other party or to seek redress for the violation
of, or insist on the strict performance of, any term, covenant or condition in
this Lease no matter how long the same may continue, shall not be deemed to be
a waiver by said party of any of its rights hereunder. No waiver by Landlord
or Tenant at any time, express or implied, of any breach of any provision of
this Lease shall be deemed a waiver of a breach of any other provision of this
Lease or a consent to any subsequent breach of the same or any other provision.
No accept-ance by Landlord of any partial payment shall constitute an accord or
satisfaction but shall only be deemed a part payment on account.
33. Interpretation. This Lease shall be construed without regard to any
presumption or other rule requiring construction against the party causing this
Lease to be drafted. All terms and words used in this Lease, regardless of the
number or gender shall be deemed to include any other number and any other
genders, as the context may require. The term "Landlord" as used in this Lease
shall mean only the owner for the time being of Landlord's interest in this
Lease, so that upon any sale of the interest of Landlord in this Lease,
Landlord's successor in interest shall, during the term of its ownership, be
deemed to be the "Landlord" hereunder.
<PAGE> 18
34. Captions. The article headings used in this Lease are for reference
and convenience only, and shall not enter into the construction or
interpretation of this Lease.
35. Entire Agreement. All prior understandings and agreements between
Landlord and Tenant relating to the subject matter of this Lease are merged
into this Lease, which alone contains the entire agreement between the parties.
This Lease may not be modified or cancelled except by a writing executed by
both Landlord and Tenant.
36. Successors and Assigns. Except as provided herein to the contrary,
the covenants and agreements contained in this Lease shall bind and inure to
the benefit of Landlord and Tenant, and their respective successors and
assigns.
37. Right of First Refusal. Provided Tenant shall not be in default of
any of the terms and provisions of this Lease, at any time during the Term, if
Landlord shall receive an offer to purchase the Demised Premises which Landlord
is willing to accept, Tenant shall have the right to purchase the Demised
Premises upon the same terms and conditions as such offer. Tenant shall have a
period of forty-five (45) days from the date of receipt of notice from Landlord
of such offer within which to enter into a purchase and sale agreement with
Landlord for the purchase of the Demised Premises on the same terms and
conditions as such offer.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed as of the day and year first above written.
LANDLORD: Melville Corporation
By: /s/ Arthur V. Richards
--------------------------
Name: Arthur V. Richards
TITLE: Vice President and Secretary
ATTEST:
/s/ Maureen Richards
- --------------------------
Assistant Secretary
<PAGE> 19
TENANT:
THE TIMBERLAND COMPANY
By: /s/ KEITH D. MONDA
-------------------------
Name: Keith D. Monda
Title: SR. VP/CFO
ATTEST
/s/ JANE E. OWENS
- ----------------------------
Jane E. Owens
Assistant Secretary
EXHIBIT A
The Land
All that certain plot, piece or parcel of land, together with the
buildings and improvements thereon erected and all appurtenances, rights,
privileges and easements pertaining thereto, situate, lying and being in
Danville, Kentucky, more particularly bounded and described as follows:
Beginning at an iron pin located at the northwest corner of the Jackson
Chair Company tract and in the south line of American Greetings tract; thence
with American Greetings' South line S. 73 deg. 27 min. W. 1025.7 feet along the
center line of a High Pressure Gas Line easement to a post corner to Boyle
County Industrial Foundation; thence continuing with Boyle County Industrial
Foundation and center line of High Pressure Gas Line S. 53 deg. 02 min. W. 25.0
feet to an iron pin corner to Boyle County Industrial Foundation and Danville
Development Corp; thence with Danville Development Corporation S. 16 deg. 33
min. E 1001.8 feet to an iron pin in the center line of a High Pressure Gas
Line easement and corner to William Stone Dale; thence with William Stone Dale
S. 89 deg. 56 min. E 819.3 feet to an iron pin; thence with Danville
Development Corporation N. 54 Deg. 00 min. E. 125.6 feet to an iron pin; N 39
deg. 00 min. E 180.0 feet to an iron pin; thence with Danville Development
Corporation and Jackson Chair Company N. 16 deg. 33 min W 1100.0 feet to the
point of beginning and containing 27.41 acres, more or less, according to
survey of Charles Thomas, R.L.S. 1918.
<PAGE> 20
EXHIBIT B
EQUIPMENT
All equipment affixed or anchored to the ground or ceiling,
including:
- power conveyors
- high bay racking
- mezzanines
- flow racks.
Office and cafeteria furniture.
Two (2) Toyota trucks.
Two (2) Clark trucks.
Six (6) Lift trucks for high bay storage area.
Batteries and chargers.
Picking carts.
One hundred fifty (150) wooden pallets.
Phone System.
Certain miscellaneous shop tools.
EXHIBIT C
Permitted Encumbrances
1. The terms, covenants and conditions of this lease.
2. Zoning or other laws, ordinances, resolutions, rules regulations and
orders of all boards, bureaus, commissions and bodies, whether Municipal,
County, State or Federal, now or hereafter having, acquiring or asserting
jurisdiction over the Demised Premises or the use and occupancy thereof,
provided the same do not prevent or interfere with the use and occupancy of the
Demised Premises for the purposes the same is being used and occupied on the
Commencement Date.
3. Any state of facts (including, without limitation, any party walls
not the subject of a written agreement) which any accurate survey may show,
provided the same do not prevent or interfere with the use and occupancy of the
Demised Premises for
<PAGE> 21
the purposes the same is being used and occupied on the Commencement Date.
4. All Agreements, easement, covenants and restrictions of record, to
the extent the same are in force on the Commencement Date.
5. Revocable nature of any right to maintain vaults or vault spaces,
basement and subbasement spaces, areas, pipes, water lines, conduits, sidewalk
elevators, marquees or signs, beyond the building lines.
<PAGE> 1
Exhibit 10.9(l)
ENGLISH VERSION OF THE LEASE AGREEMENT
TO BE EXECUTED BY AND BETWEEN SANTIAGO NORTE, S. A.
INDUSTRIAL PARK (PISANO) AND TIMBERLAND DOMINICANA, S. A.
BETWEEN:
SANTIAGO NORTE, S. A. (PISANO) INDUSTRIAL PARK, a corporation
organized and existing under Dominican laws, with main offices at
the section of Ingenio Abajo, Santiago, duly represented herein
by Engineer Jeannette Dominga Dominguez Aristy, a Dominican, of
legal age, married, an agricultural engineer, domiciled and
residing in Santiago de los Caballeros, bearer of Personal ID
Card No. 76147 Series 31, duly renewed, in his capacity as Vice
President of the Board of Directors, to be referred to
hereinafter as "PISANO", Party of the First Part; and
TIMBERLAND DOMINICANA, S. A., a company duly organized under the
laws of the Dominican Republic, with offices at No. 52 Mustafa
Kemal Ataturk Street in the city of Santo Domingo, National
District, duly represented herein by Mister Edmond John Feeley,
an American, of legal age, married, bearer of U.S. Passport
No.012601897, in virtue of the First Resolution passed by the
Board of Directors of the corporation on June 29, 1993, to be
referred to hereinafter as "LESSEE", Party of the Second Part.
Before formulating the lease herein, the parties state the
following:
<PAGE> 2
a. PISANO is in charge of the technical and operational
management of a Free Exportation Zone at Km. 7 1/2 of the
Santiago-Navarrete Highway which operates under the name of "Zona
Franca Santiago-Navarrete", and is ruled by the provisions of Law
8-90 of January 15, l990 to promote the establishment of new free
zones and the growth of existing ones, the organization of which
was duly approved by virtue of Executive Decree No. 27-92 of
January 17, l992; and ratified by virtue of an agreement executed
with the Dominican State on December 17, l992.
b. LESSEE has applied to PISANO after due compliance with
all appropriate requirements to set up an industry at the
Santiago Norte Industrial Park (to be referred to herein as the
PARK) in order to operate a business engaged in the manufacture
and exportation of footwear and leather articles in general under
the provisions of said Law 8-90, of the provisions herein and the
Regulation that is attached as Schedule A to be deemed as an
integral part hereof;
Therefore, and in the understanding that the above preamble is to
be deemed an integral part hereof,
THE FOLLOWING HAS BEEN AGREED AND ENTERED INTO:
FIRST: PISANO leases LESSEE hereby, and LESSEE agrees to lease
the real estate described below for the price, term and under the
<PAGE> 3
conditions provided hereunder:
A one story type A-I building marked as number 2, located on Lot No.
60-Ref.-A-7 of Cadaster District 161 in the Municipality of Santiago,
having a height of 20 feet on the sides and 25 feet in the center,
concrete block walls, reinforced concrete flooring to bear a strength
of up to 15 PSI (feet per square inch) a steel frame supported by
reinforced concrete columns, gauge 26 aluzinc sheet roofing, aluminum windows,
a pinewood and glass door at the entrance, and a loading and unloading ramp
in the front of the building, which building includes the following inner
areas, according to the blueprints attached hereto as Schedule B to be deemed
as an integral part hereof, to wit:
<TABLE>
<S> <C>
Work Area : 13,893.82 square feet
Rest Rooms Area : 380.30 square feet
Office Area : 1,328.86 square feet
Emergency Plant Housing : 269.00 square feet
Mess room Area : 1,883.00 square feet
TOTAL : 17,754.98 SQUARE FEET
</TABLE>
Paragraph: The parties herein agree hereby that formal delivery
and reception of premises shall take place on June 30, l993. The
forty-five (45) day period of grace that has been given to LESSEE
to set up the equipment and machinery , a period during which
LESSEE shall pay no rent at all, shall begin to count as of the
date of said delivery; consequently, the first payment on account
of monthly rent is to be made on August 14, l993 according to the
provisions of Article Third hereinbelow.
Furthermore, the parties herein agree hereby that during the
first three (3) years of this lease, LESSEE shall pay no rent at
all on account of the area provided for the construction of a
mezzanine allowing for the expansion of the manufacturing
operations in the leased premises.
<PAGE> 4
In the event LESSEE decided to expand its business operations
during the term hereof, an additional rental equivalent to
seventy percent (70%) of the original rental price shall be paid
to PISANO on account of the working area exclusively.
SECOND: The lease herein shall be for a term of three (3) years
as of the date of the satisfactory delivery to LESSEE of the
building leased hereunder, which is to take place on June 30,
l993, and shall end automatically on June 30, l996, LESSEE
undertaking hereby to pay the monthly rental price until delivery
of premises to PISANO, were said delivery to take place after the
term agreed hereunder.
Notwithstanding the above, LESSEE may have the lease herein
renewed for an additional period of two (2) years, provided,
however, the following were to take place: a) Both parties were
to agree on the rental price to be paid for the non-used
available space (mezzanine) in the event LESSEE decided not to
expand its operations. Such a payment shall begin to be made upon
the start of the two (2) year period of renewal of the lease
herein; b) LESSEE were to give PISANO one hundred and eighty
(180) days' notice of its interest in renewing the lease prior to
the expiration of the original three-year (3) period stated
above. In this event the monthly rental price shall be
determined according to the procedure stated in article third
<PAGE> 5
herein.
In the eventual case LESSEE were compelled to terminate the
agreement thorugh no fault of PISANO's before the expiration of
the term agreed on, a penalty amounting to six (6) months' rental
price shall be paid to PISANO. Sixty (60) days' advance notice
of any such termination shall be given to PISANO. In any such
case the provisions in article fourth herein shall be applied to
the guarantee deposit.
It is expressly agreed by the parties that LESSEE may not assign
or sub-lease in whole or in part its rights over the rented
premises as provided hereunder without the prior and written
consent of PISANO, except when assignee or sub-lessee were an
affiliate or subsidiary of the parent company of LESSEE, in which
case LESSEE shall advise PISANO its intent to assign the lease
and shall submit PISANO all relevant documentation evidencing the
affiliate or subsidiary character of any such new lessee. PISANO
shall if appropriate, execute within a term not to exceed thirty
(30) days a new lease with the new lessee under the same terms
and conditions herein and for the remaining period of its term.
Respecting the assignment of the rights of LESSEE hereunder and
except in the event above foreseen concerning an assignee or sub-
lessee which were an affiliate or subsidiary of the parent
company of LESSEE prior due authorization by PISANO, the terms
and conditions of the new lease shall be those applicable to
<PAGE> 6
new lessees at the time of the execution of the new
lease. Any assignees shall be duly authorized to operate at the
Santiago Norte Industrial Park and must have been rated
accordingly under Law No. 8-90 on free zones. In no case shall
LESSEE claim to be entitled to any rights acquired over the
building or on account of any goodwill gained.
THIRD: The basic price agreed on under this lease is of US$0.23
(twenty-three cents of a dollar) per square foot per month, that
is to say, a monthly rental price of US$4,083.64 (four thousand
and eighty three dollars and sixty-four cents) to be paid in
advance at the offices of PISANO with no need of any prior
requirement at all.
It is hereby agreed, however, that said basic price shall remain
subject to an annual increase conmensurate with the rate of
inflation in the United States of America on the basis of each
calendar year, i.e., from January to December each year as of the
year l994, using the official report of the Department of
Commerce of the United States as source for the determination of
said inflation rate.
In order to precisely determine the adjustment increase above
stated and its application hereto, an illustrative example is
given in the Internal Regulations.
PISANO accepts, states and acknowledges that LESSEE, in its
<PAGE> 7
capacity as free zone enterprise is under the obligation to
exchange foreign currency through commercial banks to cover the
price of the lease and the cost of services, PISANO thus
undertaking to exchange any considerations paid in dollars of the
United States of America (US$) that were received through
commercial banks hereunder, and to deliver LESSEE such documents
as evidenced that any such exchange has been made on behalf of
LESSEE within a term not to exceed thirty (30) days as of the
date each payment were made. The parties herein agree hereby
that were Law 8-90 of l990 and law 26l of l964 to be amended so
as to allow payment in United States dollars (US$) and free zone
enterprises were relased from their dollar exchange obligation,
the provisions herein shall remain without effect.
Paragraph. In case of failure to effect a monthly rental payment
on the date provided herein or were any other monetary
obligations to become overdue, interest shall accrue thereon at
the rate of one percent (l%) per month and/or fraction thereof,
such interest to be charged to LESSEE automatically and without
need of any prior advice thereof.
FOURTH: LESSEE shall deliver PISANO a guarantee deposit
amounting to six (6) months' rental payment, or TWENTY-FOUR
THOUSAND, FIVE HUNDRED AND ONE U.S. DOLLARS AND EIGHTY-FOUR CENTS
(US$24,50l.84) to be delivered to PISANO in U.S. dollars in the
following manner: a) Fifty (50%) percent at the execution
<PAGE> 8
hereof; b) Fifty (50%) percent l80 days after the execution
hereof, such a term to become due on December twenty-nine (29),
l993.
The exchange obligation foreseen in article third hereinabove
shall apply to such considerations as were delivered as deposit;
thus, LESSEE expressly acknowledges hereby that any eventual
reimbursement of any considerations delivered as deposit, if
appropriate, shall be necessarily made in Dominican pesos for
such amounts as were evidenced by the appropriate exchange
receipts delivered on account of the two installments provided in
this article.
Such deposit as is provided herein shall be returned to LESSEE as
above stated not later than sixty (60) days as of delivery by
LESSEE and reception by PISANO of the leased premises, except for
any deductions that may be applied to said deposit, which would
be the following:
A. Any maintenance repairs that had not been made by LESSEE
during the term hereof or any repairs that needed to be made
because of damages to the rented premises resulting from the
fault of LESSEE.
B. Any considerations owed by LESSEE on account of any of
the services listed in article fifth hereof.
<PAGE> 9
C. Any interest accruing over any considerations owed.
It is understood that LESSEE shall not be entitled to offset any
amounts given in deposit against any rental payments owed by
LESSEE and any such considerations or fractions thereof shall
remain for the benefit of PISANO in the event LESSEE did not
begin its business operations within the term of one hundred and
twenty (120) days following its being rated as a free zone
enterprise as stated in article sixth hereof, except in case of
force majeure duly verified by the parties or for causes which
were not the fault of LESSEE, in which event the above term shall
be suspended but in no case shall LESSEE be released from
complying with each and every one of its obligations hereunder,
specially as to the monthly payment of the rental and the
maintenance price.
It is further understood that the deposit obligation provided in
article fourth hereinabove is not to be deemed as a limitation of
the liability of LESSEE and that, consequently, in the event of
default by LESSEE damages may be claimed by PISANO for a
consideration in excess of said deposit, PISANO being entitled to
claim any additional values that may considered appropriate as a
fair compensation of any direct or indirect damages that may have
been caused by LESSEE.
<PAGE> 10
FIFTH: PISANO shall provide LESSEE the direct and indirect
services listed below:
Direct services
a. Watchmen.
b. Garbage collection
c. Water supply
d. Van parking.
e. Sewer and drainage.
Indirect services:
a. Street lighting
b. Health Clinic
c. Cafeteria-Messroom.
d. Customs clearances.
e. Audio and data communications network; and
f. Electric Power networks.
LESSEE acknowledges hereby respecting the above basic services
that same shall be provided as stated in the Regulations ruling
leases in the PARK which are attached hereto as an integral part
hereof.
Paragraph I. It is expressly agreed that PISANO shall make
<PAGE> 11
LESSEE a monthly charge which LESSEE accepts, amounting to seven
percent (7%) of the monthly rental price of the lease as provided
in article third hereinabove, on account of providing the direct
services of watchmen, garbage collection, street lighting, sewer
and drainage and the payment of the personnel working at customs,
the LESSEE undertaking hereby to pay the above services on a
monthly basis with no delay whatever, in the understanding that
the rates for such services shall be reviewed for their
adjustment as often as necessary. However, the direct services
of water supply and van parking shall be charged as provided in
the rates stated in the internal rules.
Paragraph II. Any considerations due and remaining unpaid on
account of the above services shall accrue interest at the rate
of one (l%) percent per month and/or fraction thereof,and any
such amounts overdue shall be deemed to be a breach hereto.
SIXTH: LESSEE herein shall be solely authorized to set up and
operate in the PARK such business as were provided in the rating
application submitted or in the authorization granted, and that
industrial operations shall be started within a term not to
exceed one hundred and twenty (120) days as of securing said
authorization or rating as free zone enterprise, except in the
event of force majeure duly verified or for causes that were not
<PAGE> 12
the fault of LESSEE, in which event such a term shall be
suspended; however, LESSEE shall in no event be released from
compliance with each and every one of its obligations hereunder,
specifically the obligation to pay the monthly rental and
maintenance price.
Paragraph I. In the event LESSEE were unable to secure within a
term of one hundred and twenty (120) days as of the date of
delivery of the leased premises, its rating as free zone
enterprise due to force majeure or without fault, the lease
herein shall be automatically terminated with no liability for
the parties, and LESSEE shall effect delivery of the premises
within a term of thirty (30) days. The parties herein
acknowledge hereby that in the event foreseen in this paragraph
LESSEE shall pay PISANO such rental price as shall cover the time
during which LESSEE shall have effectively occupied such
premises, while PISANO shall effect delivery of the deposit
amount provided in article fourth hereinabove after duly
effecting whatever deductions were appropriate.
Paragraph II. It is expressly agreed that were LESSEE to be
cancelled its free zone rating under Law 8-90 due to its fault
duly proven, LESSEE shall be under the obligation to vacate and
deliver PISANO the rented premises within a term of ninety (90)
days as of the date of any such cancellation, LESSEE therefore
losing its right to reimbursement of the guarantee deposit
<PAGE> 13
provided in article Foue hereinabove and being compelled to pay
the penalty foreseen in article second hereinabove, as well as
the monthly rental price up until the time it were to actually
and effectively vacate and deliver the rented premises, without
prejudice of any other damages as appropriate.
Paragraph III. It is understood by the parties that LESSEE shall
as soon as possible deposit in the offices of PISANO a copy of
such documentation as was used in support of its free zone rating
application, and a copy of the Resolution by the National Council
of Free Zones within a term of thirty (30) days as of the date of
said Resolution.
SEVENTH: LESSEE shall be entitled to withdraw upon the
expiration hereof, such equiment as had been installed by LESSEE
in the rented premises prior authorization by the General Customs
Directorate, provided it shall leave the premises in the
same condition as they were found, provided, however, any
improvements introduced by LESSEE shall remain for the benefit of
PISANO with no compensation whatever.
EIGHTH: LESSEE shall at its own expense maintain the rented
premises in good state of upkeep, thus undertaking all such
maintenance repairs as were required therefor, as well as such as
were necessary to repair any damages resulting from the fault of
<PAGE> 14
LESSEE.
It is understood that LESSEE shall not be responsible for
repairing any damages resulting from hidden or structural defects
in the rented premises.
Twelve (12) months after delivery of the premises, all
expenditures on account of disrepairs to floorings, doors and
windows shall be covered by LESSEE.
NINTH: LESSEE undertakes to secure insurance policies and
maintain them in force so as to cover the rented premises against
risks, such policies to name PISANO as beneficiary, securing as
well third party liability insurance covering both individuals
and property inside the premises as provided in the
Regulations attached hereto.
LESSEE furhter acknowledges the convenience for its business of
securing insurance against any risk or losses involving
machinery, equipment, raw materials, finished goods and other
items making up the assets of the business.
TENTH: Except for the two (2) year renewal option provided in
Article Second (2) hereinabove, the parties herein agree hereby
that this lease may not be tacitly extended. In the event LESSEE
<PAGE> 15
desired to renew the lease after its agreed three (3) year term
of duration and the two (2) year extension provided
hereinabaove, PISANO shall be given written advice thereof one
hundred and eighty (180) days before the time of said expiration.
Any such renewal shall be approved through an agreement signed by
both parties herein.
ELEVENTH: It is expressly agreed that the working conditions
prevailing in the leased premises shall abide by all such
regulations and rules on health, industrial safety and others as
have been provided by the Departments of Labor, Public Health and
other interested agencies.
TWELFTH: It is expressly agreed hereunder that the business
operations of LESSEE shall be of a continuous nature; therefore,
any temporary suspension of business in excess of seven (7)
working days shall be advised in writing to PISANO within the
next twenty-four (24) hours after any such suspension. Any
discontinuance of business shall be duly justified by LESSEE to
PISANO whether due to monetary, market, financial or labor
reasons, and in this latter instance, due authorization must be
secured from the Secretariat of Labor.
LESSEE herein acknowledges hereby that in the event of any
<PAGE> 16
suspension of business as above stated in no case shall LESSEE be
released from complying with each and every one of its
obligations hereunder. Similarly, LESSEE herein acknowledges that
the basic aim of Law 8-90 on industrial free zones under which
terms it is operating in the Dominican Republic is the creation
of permanent sources of work. In the event of any suspension
lasting over six (6) months in a given calendar year, PISANO
shall be entitled to file for the termination hereof.
THIRTEENTH: In the event of incompliance with any of the
obligations of LESSEE hereunder, PISANO shall advise LESSEE of
any such incompliance through certified letter return
receipt
requested or through bailiff's notice, therein giving LESSEE a
thirty (30) day term to remedy any such incompliance.
Were LESSEE to ignore any such communication, PISANO shall be
entitled to demand the termination hereof further claiming such
damages as might result from any such incompliance.
FOURTEENTH: LESSEE shall repay PISANO all administrative
expenditures incurred in drawing, executing and notarizing the
lease herein, such expenses amounting to ONE THOUSAND, TWO
HUNDRED AND FIFTY UNITED STATES DOLLARS (US$1,250.00).
<PAGE> 17
Paragraph. In the event PISANO had to retain the professional
services of an office of attorneys due to incompliance by LESSEE
with any of its obligations hereunder, LESSEE shall reimburse
PISANO all expenses and reasonable attorneys' fees incurred.
FIFTEENTH: The parties herein expressly agree hereby that in the
event of any disagreements or lawsuits respecting the lease
herein, same shall be submitted to Dominican courts, waivering
their right to resort to any other courts that may be empowered
to hear said disagreements or lawsuits. Furthermore, it is
agreed that for anything not specially contemplated herein, the
parties shall abide by the provisions of Dominican laws.
SIXTEENTH: For all the purposes and consequences hereof the
parties elect their domiciles as follows: PISANO, at its main
offices at Parque Industrial Santiago Norte, and LESSEE, at the
law offices of PEREYRA & BIAGGI, located at 52 Mustafa
Kemal
Ataturk St. in the city of Santo Domingo, National
District, Dominican Republic, where LESSEE shall be served any
legal or extra legal documents concerning the execution hereof.
SEVENTEENTH: The parties herein agree hereby to adscribe
territorial jurisdiction to any of the following courts in the
event of any differences between then:
<PAGE> 18
A) For any matters falling under the jurisdiction or
ratione materiae of a court of peace, to the Court of Peace of
the Third Circumscription of the Municipality of Santiago.
B) For any matters falling under the jurisdiction or
ratione materiae of a Court of First Instance, to the Civil and
Commercial Chamber of the Second Circumscription of the Court
of First Instance of the Judicial District of Santiago.
EIGHTEENTH: This agreement has been executed in both the
Spanish and English languages. The parties herein expressly
agree that in case of any interpretation controversy, the Spanish
version will prevail.
Executed and signed in two originals having the same tenor and
effect, one for each one of the parties, in the city of Santiago
de los Caballeros, Dominican Republic, on the twenty ninth (29)
day of the month of June, nineteen hundred and ninety-three
(l993).
/s/ Jeannette Dominga Dominguez Aristy
PARQUE INDUSTRIAL SANTIAGO NORTE, S. A. (PISANO)
(by) Eng. Jeannette Dominga Dominguez Aristy
Vice President of the Board of Directors
/s/ Edmund John Feeley
TIMBERLAND DOMINICANA, S. A.
(by) Edmond John Feeley
<PAGE> 1
Exhibit 10.9(m)
ENGLISH VERSION OF THE LEASE AGREEMENT TO BE EXECUTED BY AND
BETWEEN COMPONENT FOOTWEAR DOMINICANA, S. A. AND PARQUE
INDUSTRIAL SANTIAGO NORTE, S. A. (PISANO) FOR THE LEASE OF
BUILDING NO. 4 AT ZONA FRANCA INDUSTRIAL SANTIAGO NAVARRETE.
BETWEEN:
SANTIAGO NORTE, S. A. (PISANO) INDUSTRIAL PARK, a corporation
organized and existing under Dominican laws, with main offices at
the section of Ingenio Abajo, Santiago, duly represented herein
by Engineer Federico Idelfonso Dominguez Aristy, a Dominican, of
legal age, marital status married, an agricultural engineer,
domiciled and residing in Santiago de los Caballeros, bearer of
Personal ID Card No. 108239 Series 31, duly renewed, in his
capacity as Chairman of the Board of Directors, to be referred to
hereinafter as "PISANO", Party of the First Part; and
COMPONENT FOOTWEAR DOMINICANA, S. A., a company duly organized
under the laws of the Dominican Republic, with offices at No. 52
Mustafa Kemal Ataturk Street in the city of Santo Domingo,
National District, duly represented herein by Mister Edmund
John Feeley, an American, of legal age, marital status married,
bearer of U.S. Passport No. 012601897, and Mr. David Brett
Gunn, an American, of legal age, marital status married, bearer
of U.S. Passport No. 130418425 in virtue of Resolution passed by
the Board of Directors of the Corporation on November 29, 1993,
to be referred to hereinafter as "LESSEE", Party of the Second Part.
Before formulating the lease herein, the parties state the
following:
a. PISANO is in charge of the technical and operational
management of a Free Exportation Zone at Km. 7 1/2 of the
Santiago-Navarrete Highway which operates under the name of "Zona
Franca Santiago-Navarrete", and is ruled by the provisions of Law
8-90 of January 15, l990 to promote the establishment of new free
zones and the growth of existing ones, the organization of which
was duly approved by virtue of Executive Decree No. 27-92 of
January 17, l992; and ratified by virtue of an agreement executed
with the Dominican State on December 17, l992.
b. LESSEE has requested PISANO before the corresponding
proceeding the lease of an additional building to expand business
operations in the Santiago Norte Industrial Park (to be referred
to hereinafter as THE PARK), all of which shall be ruled by the
provisions of Law 8-90 above cited, by the provisions herein and
the Regulations that are attached hereto as Schedule A to be
deemed as an integral part hereof;
<PAGE> 2
Therefore, and in the understanding that the above preamble is to
be deemed an integral part hereof,
THE FOLLOWING HAS BEEN AGREED AND ENTERED INTO:
FIRST: PISANO leases LESSEE hereby, and LESSEE agrees to lease
the real estate described below for the price, term and under the
conditions provided hereunder:
A one story type A-1 building marked as number 4 located on LotNo. 60
- -REF-A-12 of Cadaster District No. 161 in the Munici-pality of Santiago,
having a height of 20 feet on the sides and 25 feet in the center,
concrete block walls, reinforced concrete flooring to bear a strength of
up to 15 PSI (feet per square inch) a steel frame supported by reinforced
concrete columns, gauge 26 aluzinc sheet roofing, aluminum windows, a pinewood
and glass door at the entrance , and a loading and unloading ramp in the
front of the building, which building includes the following inner areas,
according to the blueprints attached hereto as Schedule B to be deemed as
an integral part hereof, to wit:
<TABLE>
<S> <C>
Work Area : 13,893.82 square feet
Rest Rooms Area : 380.30 square feet
Office Area : 1,328.86 square feet
Emergency Plant Housing : 376.60 square feet
Mess room Area : 1883.00 square feet
TOTAL : 17,862.60 Square feet
</TABLE>
Paragraph: The parties herein agree hereby that formal delivery
and reception of premises shall take place on November 15, 1993.
The sixty (60) day period of grace that has been given to LESSEE
to set up the equipment and machinery , a period during which
LESSEE shall pay no rent at all, but the maintenance fees
indicated herein above, shall begin to count as of the date of
said delivery; During the 60 day period of grace above stated,
PISANO shall by mutual agreement with the LESSEE carry out any
additional works requested according to its needs as indicated in
Exhibit C of the agreement. Furthermore, any construction details
which could not be completed before delivery due to their being
directly or indirectly related to the above mentioned additional
works shall then be completed.
Consequently, the first payment on account of monthly rent is to
be made on January 15, 1994, according to the provisions of
Article Third hereinbelow. Therefore, all payments of rent and
<PAGE> 3
maintenance fees shall be made every fifteenth day of each month.
Furthermore, the parties herein agree hereby that during the
first three (3) years of this lease, LESSEE shall pay no rent at
all on account of the area provided for the construction of a
mezzanine allowing for the expansion of the manufacturing
operations in the leased premises.
In the event LESSEE decided to expand business operations to the
mezzanine area during the term hereof, LESSEE shall effect PISANO
an additional rental payment equal to seventy percent (70%) of
the basic initial rental paid for the productive area, which
measures 13,893.82 square feet.
SECOND: The lease herein shall be for a term of three (3) years
as of the date of the satisfactory delivery to LESSEE of the
building leased hereunder, which is to take place on November 15,
1993, and shall end automatically on November 15, 1996, LESSEE
undertaking hereby to pay the monthly rental price until delivery
of premises to PISANO, were said delivery to take place after the
term agreed hereunder.
Notwithstanding the above stated, LESSEE may renew the lease
herein for an additional two (2) year period, provided however,
that a) in the event LESSEE had not expanded operations to the
mezzanine area during the initial term of amount equal to thirty
percent (30%) of the monthly rental price paid by the enterprise
for the productive area, measuring 13,893.82 square feet; and b)
LESSEE shall advise PISANO its desire to renew the lease at least
one hundred and eighty (180) days before the expiration of the
three (3) year period above stated. In such a case the amout of
the monthly rent shall be determined following the procedure
provided in Article Third herein below".
In the eventual case LESSEE were compelled to terminate the
agreement thorugh no fault of PISANO's before the expiration of
the term agreed on, a penalty amounting to six (6) months' rental
price shall be paid to PISANO. Sixty (60) days' advance notice
of any such termination shall be given to PISANO. In any such
case the provisions in article fourth herein shall be applied to
the guarantee deposit.
It is expressly agreed by the parties that LESSEE may not assign
or sub-lease in whole or in part its rights over the rented
premises as provided hereunder without the prior and written
consent of PISANO, except when assignee or sub-lessee were an
affiliate or subsidiary of the parent company of LESSEE, in which
<PAGE> 4
case LESSEE shall advise PISANO its intent to assign the lease and shall
submit pisano all relevant documentation evidencing the affiliate or subsidiary
character of any such new lessee. PISANO shall, if appropriate, execute
within a term not to exceed thirty (30) days a new lease with the new
lessee under the same terms and conditions herein and for the remaining
period of its term.
Respecting the assignment of the rights of LESSEE hereunder and
except in the event above foreseen concerning an assignee or sub-
lessee which were an affiliate or subsidiary of the parent
company of LESSEE prior due authorization by PISANO, the terms
and conditions of the new lease shall be those applicable to
new lessees at the time of the execution of the new lease.
Likewise, in the event the LESSEE transfers a substantial part of
its assets to a new entity authorized by PISANO to be a
transferee of LESSEE's rights under this Lease, the terms and
conditions of the new lease shall be those applicable to new
lessees at the time of the execution of the new lease. Any
assignees shall be duly authorized to operate at the Santiago
Norte Industrial Park and must have been rated accordingly under
Law No. 8-90 on free zones. In no case shall LESSEE claim to be
entitled to any rights acquired over the building or on account
of any goodwill gained.
THIRD: The basic price agreed on under this lease is of US$0.23
(twenty-three cents of a dollar) per square foot per month, that
is to say, a monthly rental price of FOUR THOUSAND ONE HUNDRED
EIGHT U. S. DOLLARS AND FOURTY CENTS (U$4,108.40) to be paid in
advance at the offices of PISANO with no need of any prior
requirement at all.
It is hereby agreed, however, that said basic price shall remain
subject to an annual increase conmensurate with the rate of
inflation in the United States of America on the basis of each
calendar year, i.e., from January to December each year as of the
year l994, using the official report of the Department of
Commerce of the United States as source for the determination of
said inflation rate.
Therefore, in order to enforce the above stated increase, every
month of January of each year, the contract's lease price will be
increased in advance taking a four percent (4%) as the annual
increase average on the inflation rate, and such percentage will
be adjusted when the Department of Commerce of the United States
officially informs the inflation rate of that country in the
former year. The adjustments can be positive or negative. In the
first case, the resulting surplus will be inmediately demandable
by PISANO to LESSEE, in the event the adjustment were negative,
<PAGE> 5
PISANO shall credit THE LESSE's account for the amount
overcharged.
In order to precisely determine the adjustment increase above
stated and its application hereto, an illustrative example is
given in the Internal Regulations.
PISANO accepts, states and acknowledges that LESSEE, in its
capacity as free zone enterprise is under the obligation to
exchange foreign currency through commercial banks to cover the
price of the lease and the cost of services, PISANO thus
undertaking to exchange any considerations paid in dollars of the
United States of America (US$) that were received through
commercial banks hereunder, and to deliver LESSEE such documents
as evidence that any such exchange has been made on behalf of
LESSEE within a term not to exceed thirty (30) days as of the
date each payment were made. The parties herein agree hereby
that were Law 8-90 of l990 and law 26l of l964 to be amended so
as to allow payment in United States dollars (US$) and free zone
enterprises were relased from their dollar exchange obligation,
the provisions herein shall remain without effect.
Paragraph. In case of failure to effect a monthly rental payment
on the date provided herein or were any other monetary
obligations to become overdue, interest shall accrue thereon at
the rate of one percent (l%) per month and/or fraction thereof,
such interest to be charged to LESSEE automatically and without
need of any prior advice thereof.
FOURTH: LESSEE shall deliver PISANO a guarantee deposit
amounting to three (3) months' rental payment, or TWELVE
THOUSAND, THREE HUNDRED AND TWENTY FIVE U.S. DOLLARS AND TWENTY
CENTS (US$12,325.20) to be delivered to PISANO in U.S. dollars
at the execution hereof.
The exchange obligation foreseen in article third hereinabove
shall apply to such considerations as were delivered as deposit;
thus, LESSEE expressly acknowledges hereby that any eventual
reimbursement of any considerations delivered as deposit, if
appropriate, shall be necessarily made in Dominican pesos for
such amounts as were evidenced by the appropriate exchange
receipts delivered on account of the two installments provided in
this article.
Such deposit as is provided herein shall be returned to LESSEE as
above stated not later than sixty (60) days as of delivery by
PISANO and reception by LESSEE of the leased premises, except for
any deductions that may be applied to said deposit, which would
be the following:
<PAGE> 6
A. Any maintenance repairs that had not been made by LESSEE
during the term hereof or any repairs that needed to be made
because of damages to the rented premises resulting from the
fault of LESSEE.
B. Any considerations owed by LESSEE on account of any of the
services listed in article fifth hereof.
C. Any interest accruing over any considerations owed.
It is understood that LESSEE shall not be entitled to offset any
amounts given in deposit against any rental payments owed by
LESSEE and any such considerations or fractions thereof shall
remain for the benefit of PISANO in the event LESSEE did not
begin its business operations within the term of one hundred and
twenty (120) days following its solicitude before the National
Council of Free Zones for the ampliation of is Free Zone License
as stated in article sixth hereof, except in case of force
majeure duly verified by the parties or for causes which were not
the fault of LESSEE, in which event the above term shall be
suspended but in no case shall LESSEE be released from complying
with each and every one of its obligations hereunder, specially
as to the monthly payment of the rental and the maintenance fees.
It is further understood that the deposit obligation provided in
article fourth hereinabove is not to be deemed as a limitation of
the liability of LESSEE and that, consequently, in the event of
default by LESSEE damages may be claimed by PISANO for
a consideration in excess of said deposit, PISANO being entitled
to claim any additional values that may considered appropriate as
a fair compensation of any direct or indirect damages that may
have been caused by LESSEE.
FIFTH: PISANO shall provide LESSEE the direct and indirect
services listed below:
Direct services
a. Admission Control
b. Garbage collection
c. Water supply
d. Van parking.
e. Sewer and drainage.
Indirect services:
a. Street lighting
b. Health Clinic
<PAGE> 7
c. Cafeteria- Messroom.
d. Firemen Service.
e. Audio and data communications network; and
f. Electric Power networks.
g. Security Facilities Service
LESSEE acknowledges hereby respecting the above basic services
that same shall be provided as stated in the Regulations ruling
leases in the PARK which are attached hereto as an integral part
hereof.
Paragraph I. It is expressly agreed that PISANO shall make
LESSEE a monthly charge which LESSEE accepts, amounting to ten
(10%) of the monthly rental price of the lease as provided in
article third hereinabove, on account of providing the direct
services of Admission Control, garbage collection, street
lighting, sewer and drainage and the payment of the personnel
working as firemen, PISANO undertaking hereby to pay the above
services on a monthly basis with no delay whatever, in the
understanding that such rates as shall rule these services may be
subject to revision by mutual agreement whenever there were
financial reasons justifying any such revision. Direct water
supply and container parking services shall be collected as
provided in Section IV-A, letters c) and d) of the attached
Internal Regulations".
Paragraph II. Any considerations due and remaining unpaid on
account of the above services shall accrue interest at the rate
of one (l%) percent per month and/or fraction thereof,and any
such amounts overdue shall be deemed to be a breach hereto.
SIXTH: LESSEE herein shall be solely authorized to set up and
operate in the PARK such business as were provided in its Free
Zone License or in the ammendments to such License, and that
industrial operations shall be started within a term not to
exceed one hundred and twenty (120) days as of securing said Free
Zone License or in its ammendments, except in the event of force
majeure duly verified or for causes that were not the fault of
LESSEE, in which event such a term shall be suspended; however,
LESSEE shall in no event be released from compliance with each
and every one of its obligations hereunder, specifically the
obligation to pay the monthly rental and maintenance fees.
Paragraph I. In the event LESSEE were unable to secure within a
term of one hundred and twenty (120) days as of the date of
delivery of the leased premises its rating as free zone
enterprise due to force majeure or without fault, the lease
herein shall be automatically terminated with no liability for
<PAGE> 8
the parties, and LESSEE shall effect delivery of the premises
within a term of thirty (30) days. The parties herein
acknowledge hereby that in the event foreseen in this paragraph
LESSEE shall pay PISANO such rental price and manintenance fees,
as shall cover the time during which LESSEE shall have
effectively occupied such premises, while PISANO shall effect
delivery of the deposit amount provided in article fourth
hereinabove after duly effecting whatever deductions were
appropriate.
Paragraph II. It is expressly agreed that were LESSEE to be
cancelled its free zone rating under Law 8-90 due to its fault
duly proven, LESSEE shall be under the obligation to vacate and
deliver PISANO the rented premises within a term of ninety (90)
days as of the date of any such cancellation, LESSEE therefore
losing its right to reimbursement of the guarantee deposit
provided in article 4 hereinabove and being compelled to pay the
penalty foreseen in article second hereinabove, as well as the
monthly rental price up until the time it were to actually and
effectively vacate and deliver the rented premises, without
prejudice of any other damages as appropriate.
Paragraph III. It is understood by the parties that LESSEE shall
as soon as possible deposit in the offices of PISANO a copy of
such documentation as was used in support of its free zone rating
application, or its solicitude for the ammendement of its Free
Zone License intended to enlarge its operations and a copy of the
Resolution by the National Free Exportation Council within a term
of thirty (30) days as of the date of said Resolution.
SEVENTH: LESSEE hereing shall be entitled to withdraw at the
expiration hereof, all and any machinery and equipment,
electrical installations in general, air conditioners, furniture,
and in general, any goods of any kind which were owned by LESSEE
and had been installed by LESSEE in the rented premises prior due
authorization by the General Customs Directorate, provided
however, the premises were left in the same condition they were
found. However, any improvements thereto shall remain for the
benefit of PISANO with no compensation whatever; this will
include any additional doors, windows or bathrooms, air
extractors, inside partitions, any annexities constructed after
due prior approval, any alterations to the structure of the roof,
etc.
EIGHTH: LESSEE shall at its own expense maintain the rented
premises in good state of upkeep, thus undertaking all such
maintenance repairs as were required therefor, as well as such as
were necessary to repair any damages resulting from the fault of
LESSEE.
<PAGE> 9
It is understood that LESSEE shall not be responsible for
repairing any damages resulting from hidden or structural defects
in the rented premises.
Twelve (12) months after delivery of the premises, all
expenditures on account of disrepairs to floorings, doors and
windows shall be covered by LESSEE.
NINTH: LESSEE undertakes to secure insurance policies and
maintain them in force so as to cover the rented premises against
risks, such policies to name PISANO as beneficiary, securing as
well third party liability insurance covering both individuals
and property inside the premises as provided in the
Regulations attached hereto.
LESSEE further acknowledges the convenience for its business of
securing insurance against any risk or losses involving
machinery, equipment, raw materials, finished goods and other
items making up the assets of the business.
TENTH: Except for the two (2) year renewal option provided in
Article Second (2) hereinabove, the parties herein agree hereby
that this lease may not be tacitly extended. In the event LESSEE
desired to renew the lease after its agreed three (3) year term
of duration and the two (2) year extension provided
hereinabaove, PISANO shall be given written advice thereof one
hundred and eighty (180) days before the time of said expiration.
Any such renewal shall be approved through an agreement signed by
both parties herein.
ELEVENTH: It is expressly agreed that the working conditions
prevailing in the leased premises shall abide by all such
regulations and rules on health, industrial safety and others as
have been provided by the Departments of Labor, Public Health and
other interested agencies.
TWELFTH: It is expressly agreed hereunder that the business
operations of LESSEE shall be of a continuous nature; therefore,
any temporary suspension of business in excess of seven (7)
working days shall be advised in writing to PISANO within the
next twenty-four (24) hours after any such suspension. In such
cases, LESSEE shall comply with all local labor provisions
currently in force in the Dominican Republic. Likewise, the
parties herein agree that closing of LESEES operations due to
collective vacations shall not be previously notified by LESSEE
to PISANO.
<PAGE> 10
LESSEE herein acknowledges hereby that in the event of any
suspension of business as above stated in no case shall LESSEE be
released from complying with each and every one of its
obligations hereunder. Similarly, LESSEE herein acknowledges that
the basic aim of Law 8-90 on industrial free zones under which
terms it is operating in the Dominican Republic is the creation
of permanent sources of work. In the event of any suspension
lasting for more than six (6) months in a given calendar year,
PISANO will be entitled to file for the termination hereof.
THIRTEENTH: In the event of incompliance with any of the
obligations of LESSEE hereunder, PISANO shall advise LESSEE of
any such incompliance through certified letter return
receipt
requested or through bailiff's notice, therein giving LESSEE a
thirty (30) day term to remedy any such incompliance.
Were LESSEE to ignore any such communication, PISANO shall be
entitled to demand the termination hereof further claiming such
damages as might result from any such incompliance.
FOURTEENTH: LESSEE shall repay PISANO all administrative
expenditures incurred in drawing, executing and notarizing the
lease herein, such expenses amounting to ONE THOUSAND, TWO
HUNDRED AND FIFTY UNITED STATES DOLLARS (US$1,250.00).
Paragraph. In the event PISANO had to retain the professional
services of an office of attorneys due to incompliance by LESSEE
with any of its obligations hereunder, LESSEE shall reimburse
PISANO all expenses and reasonable attorneys' fees incurred.
FIFTEENTH: The parties herein expressly agree hereby that in the
event of any disagreements or lawsuits respecting the lease
herein, same shall be submitted to Dominican courts, waivering
their right to resort to any other courts that may be empowered
to hear said disagreements or lawsuits. Furthermore, it is
agreed that for anything not specially contemplated herein, the
parties shall abide by the provisions of Dominican laws.
SIXTEENTH: For all the purposes and consequences hereof the
parties elect their domiciles as follows: PISANO, at its main
offices at Parque Industrial Santiago Norte, and LESSEE, at the
law offices of PEREYRA & BIAGGI, located at 52 Mustafa
Kemal Ataturk St. in the city of Santo Domingo, National
District, Dominican Republic, where LESSEE shall be served any
legal or extra legal documents concerning the execution hereof.
<PAGE> 11
SEVENTEENTH: The parties herein agree hereby to adscribe
territorial jurisdiction to any of the following courts in the
event of any differences between then:
A) For any matters falling under the jurisdiction or
ratione materiae of a court of peace, to the Court of Peace of
the Third Circumscription of the Municipality of Santiago.
B) For any matters falling under the jurisdiction or
ratione materiae of a Court of First Instance, to the Civil and
Commercial Chamber of the Second Circumscription of the Court
of First Instance of the Judicial District of Santiago.
EIGHTEENTH: This agreement has been executed in both the
Spanish and English languages. The parties herein expressly
agree that in case of any interpretation controversy, the Spanish
version will prevail.
Executed and signed in two originals having the same tenor and
effect, one for each one of the parties, in the city of Santiago
de los Caballeros, Dominican Republic, on the
thirtieth (30) day of the month of November, nineteen hundred and
ninety-three (l993).
/s/ Federico Idelfonso Dominguez
PARQUE INDUSTRIAL SANTIAGO NORTE, S. A. (PISANO)
(by) Eng. Federico Ildefonso Dominguez Aristy
Chairman of the Board of Directors
/s/ Edmund J. Feeley /s/ David Brett Gunn
COMPONENT FOOTWEAR DOMINICANA, S. A.
(by) Edmund J. Feeley (by) David Brett Gunn
<PAGE> 1
Exhibit 10.9(n)
ENGLISH VERSION OF THE AGREEMENT EXECUTED BY AND
BETWEEN PARQUE INDUSTRIAL SANTIAGO NORTE, S. A. (PISANO)
AND COMPONENT FOOTWEAR DOMINICANA, S. A. FOR THE LEASE OF
BUILDING NO.5 AT ZONA FRANCA INDUSTRIAL SANTIAGO NAVARRETE
BETWEEN:
SANTIAGO NORTE, S. A. (PISANO) INDUSTRIAL PARK, a corporation
organized and existing under Dominican laws, with main offices at
the section of Ingenio Abajo, Santiago, duly represented herein
by Engineer Federico Idelfonso Dominguez Aristy, a Dominican, of
legal age, marital status married, an agricultural engineer,
domiciled and residing in Santiago de los Caballeros, bearer of
Personal ID Card No. 108239 Series 31, duly renewed, in his
capacity as Chairman of the Board of Directors, to be referred to
hereinafter as "PISANO", Party of the First Part; and
COMPONENT FOOTWEAR DOMINICANA, S. A., a company duly organized
under the laws of the Dominican Republic, with offices at No. 52
Mustaf Kemal Ataturk Street in the city of Santo Domingo,
National District, duly represented herein by Mister David Brett
Gunn an American, of legal age, marital status married, bearer
of U.S. Passport No. 130418425, in virtue of Resolution passed by
the Board of Directors of the Corporation on December 15, 1993,
to be referred to hereinafter as "LESSEE", Party of the Second
Part.
Before formulating the lease herein, the parties state the
following:
a. PISANO is in charge of the technical and operational
management of a Free Exportation Zone at Km. 7 1/2 of the
Santiago-Navarrete Highway which operates under the name of "Zona
Franca Santiago-Navarrete", and is ruled by the provisions of Law
8-90 of January 15, l990 to promote the establishment of new free
zones and the growth of existing ones, the organization of which
was duly approved by virtue of Executive Decree No. 27-92 of
January 17, l992; and ratified by virtue of an agreement executed
with the Dominican State on December 17, l992.
b. LESSEE has requested PISANO before the corresponding
proceeding the lease of an additional building to expand business
operations in the Santiago Norte Industrial Park (to be referred
to hereinafter as THE PARK), all of which shall be ruled by the
provisions of Law 8-90 above cited, by the provisions herein and
the Regulations that are attached hereto as Schedule A to be
deemed as an integral part hereof;
Therefore, and in the understanding that the above preamble is to
<PAGE> 2
be deemed an integral part hereof,
THE FOLLOWING HAS BEEN AGREED AND ENTERED INTO:
FIRST: PISANO leases LESSEE hereby, and LESSEE agrees to lease
the real estate described below for the price, term and under the
conditions provided hereunder:
A one story type A-1 building marked as number 5 located on
Lot No. 60-Ref-A-15 of Cadaster District No. 161 in the
Munici-pality of Santiago, having a height of 20 feet on the
sides and 25 feet in the center, concrete block walls,
reinforced concrete flooring to bear a strength of up
to 15 PSI (feet per square inch) a steel frame supported
by reinforced concrete columns, gauge 26 aluzinc sheet
roofing, aluminum windows, a pinewood and glass door at the
entrance , and a loading and unloading ramp in the front of
the building, which building includes the following inner
areas, according to the blueprints attached hereto as
Schedule B to be deemed as an integral part hereof, to wit:
<TABLE>
<S> <C>
Work Area : 13,893.82 square feet
Rest Rooms Area : 380.30 square feet
Office Area : 1,328.86 square feet
Emergency Plant Housing : 376.60 square feet
Mess room Area : 1,883.00 square feet
TOTAL : 17,862.60 Square feet
</TABLE>
Paragraph: The parties herein agree hereby that formal delivery
and reception of premises took place on January 15, 1994. The
sixty (60) day period of grace that has been given to LESSEE to
set up the equipment and machinery , a period during which LESSEE
shall pay no rent at all, but the maintenance fees indicated
herein above, began to count as of the date of said delivery;
During the 60 day period of grace above stated, PISANO shall by
mutual agreement with the LESSEE carry out any additional works
requested according to its needs as indicated in Exhibit C of the
agreement. Furthermore, any construction details which could not
be completed before delivery due to their being directly or
indirectly related to the above mentioned additional works shall
then be completed.
Consequently, the first payment on account of monthly rent is to
be made on March 15, 1994, according to the provisions of Article
Third hereinbelow. Therefore, all payments of rent and
maintenance fees shall be made every fifteenth day of each month.
<PAGE> 3
Furthermore, the parties herein agree hereby that during the
first three (3) years of this lease, LESSEE shall pay no rent at
all on account of the area provided for the construction of a
mezzanine allowing for the expansion of the manufacturing
operations in the leased premises.
In the event LESSEE decided to expand business operations to the
mezzanine area during the term hereof, LESSEE shall effect PISANO
an additional rental payment equal to seventy percent (70%) of
the basic initial rental paid for the productive area, which
measures 13,893.82 square feet.
SECOND: The lease herein shall be for a term of three (3) years
as of the date of the satisfactory delivery to LESSEE of the
building leased hereunder, which is to take place on January 15,
1994, and shall end automatically on January 15, 1997, LESSEE
undertaking hereby to pay the monthly rental price until delivery
of premises to PISANO, were said delivery to take place after the
term agreed hereunder.
Notwithstanding the above stated, LESSEE may renew the lease
herein for an additional two (2) year period, provided however,
that a) in the event LESSEE had not expanded operations to the
mezzanine area during the initial term of this agreement, and
agrees to pay an amount equal to thirty percent (30%) of the
monthly rental price paid by the enterprise for the productive
area, measuring 13,893.82 square feet; and b) LESSEE shall advise
PISANO its desire to renew the lease at least one hundred and
eighty (180) days before the expiration of the three (3) year
period above stated. In such a case the amout of the monthly rent
shall be determined following the procedure provided in Article
Third herein below".
In the eventual case LESSEE were compelled to terminate the
agreement thorugh no fault of PISANO's before the expiration of
the term agreed on, a penalty amounting to six (6) months' rental
price shall be paid to PISANO. Sixty (60) days' advance notice
of any such termination shall be given to PISANO. In any such
case the provisions in article fourth herein shall be applied to
the guarantee deposit.
It is expressly agreed by the parties that LESSEE may not assign
or sub-lease in whole or in part its rights over the rented
premises as provided hereunder without the prior and written
consent of PISANO, except when assignee or sub-lessee were an
affiliate or subsidiary of the parent company of LESSEE, in which
<PAGE> 4
case LESSEE shall advise PISANO its intent to assign the lease
and shall submit
PISANO all relevant documentation evidencing the affiliate or
subsidiary character of any such new lessee. PISANO shall, if
appropriate, execute within a term not to exceed thirty (30) days
a new lease with the new lessee under the same terms and
conditions herein and for the remaining period of its term.
Respecting the assignment of the rights of LESSEE hereunder and
except in the event above foreseen concerning an assignee or sub-
lessee which were an affiliate or subsidiary of the parent
company of LESSEE prior due authorization by PISANO, the terms
and conditions of the new lease shall be those applicable to
new lessees at the time of the execution of the new
lease. Likewise, in the event the LESSEE transfers a substantial
part of its assets to a new entity authorized by PISANO to be a
transferee of LESSEE's rights under this Lease, the terms and
conditions of the new lease shall be those applicable to new
lessees at the time of the execution of the new lease. Any
assignees shall be duly authorized to operate at the Santiago
Norte Industrial Park and must have been rated accordingly under
Law No. 8-90 on free zones. In no case shall LESSEE claim to be
entitled to any rights acquired over the building or on account
of any goodwill gained.
THIRD: The basic price agreed on under this lease is of US$0.23
(twenty-three cents of a dollar) per square foot per month, that
is to say, a monthly rental price of FOUR THOUSAND ONE HUNDRED
EIGHT U. S. DOLLARS AND FOURTY CENTS (U$4,108.40) to be paid in
advance at the offices of PISANO with no need of any prior
requirement at all.
It is hereby agreed, however, that said basic price shall remain
subject to an annual increase conmensurate with the rate of
inflation in the United States of America on the basis of each
calendar year, i.e., from January to December each year as of the
year l995, using the official report of the Department of
Commerce of the United States as source for the determination of
said inflation rate.
Therefore, in order to enforce the above stated increase, every
month of January of each year, the contract's lease price will be
increased in advance taking a four percent (4%) as the annual
increase average on the inflation rate, and such percentage will
be adjusted when the Department of Commerce of the United States
officially informs the inflation rate of that country in the
former year. The adjustments can be positive or negative. In the
first case, the resulting surplus will be inmediately demandable
<PAGE> 5
by PISANO to LESSEE, in the event the adjustment were negative,
PISANO shall credit THE LESSE's account for the amount
overcharged.
In order to precisely determine the adjustment increase above
stated and its application hereto, an illustrative example is
given in the Internal Regulations.
PISANO accepts, states and acknowledges that LESSEE, in its
capacity as free zone enterprise is under the obligation to
exchange foreign currency through commercial banks to cover the
price of the lease and the cost of services, PISANO thus
undertaking to exchange any considerations paid in dollars of the
United States of America (US$) that were received through
commercial banks hereunder, and to deliver LESSEE such documents
as evidence that any such exchange has been made on behalf of
LESSEE within a term not to exceed thirty (30) days as of the
date each payment were made. The parties herein agree hereby
that were Law 8-90 of l990 and law 26l of l964 to be amended so
as to allow payment in United States dollars (US$) and free zone
enterprises were relased from their dollar exchange obligation,
the provisions herein shall remain without effect.
Paragraph. In case of failure to effect a monthly rental payment
on the date provided herein or were any other monetary
obligations to become overdue, interest shall accrue thereon at
the rate of one percent (l%) per month and/or fraction thereof,
such interest to be charged to LESSEE automatically and without
need of any prior advice thereof.
FOURTH: LESSEE shall deliver PISANO a guarantee deposit
amounting to three (3) months' rental payment, or TWELVE
THOUSAND, THREE HUNDRED AND TWENTY FIVE U.S. DOLLARS AND TWENTY
CENTS (US$12,325.20) to be delivered to PISANO in U.S. dollars
at the execution hereof.
The exchange obligation foreseen in article third hereinabove
shall apply to such considerations as were delivered as deposit;
thus, LESSEE expressly acknowledges hereby that any eventual
reimbursement of any considerations delivered as deposit, if
appropriate, shall be necessarily made in Dominican pesos for
such amounts as were evidenced by the appropriate exchange
receipts delivered on account of the two installments provided in
this article.
Such deposit as is provided herein shall be returned to LESSEE as
above stated not later than sixty (60) days as of delivery by
LESSEE and reception by PISANO of the leased premises, except for
any deductions that may be applied to said deposit, which would
<PAGE> 6
be the following:
A. Any maintenance repairs that had not been made by LESSEE
during the term hereof or any repairs that needed to be made
because of damages to the rented premises resulting from the
fault of LESSEE.
B. Any considerations owed by LESSEE on account of any of
the services listed in article fifth hereof.
C. Any interest accruing over any considerations owed.
It is understood that LESSEE shall not be entitled to offset any
amounts given in deposit against any rental payments owed by
LESSEE and any such considerations or fractions thereof shall
remain for the benefit of PISANO in the event LESSEE did not
begin its business operations within the term of one hundred and
twenty (120) days following its solicitude before the National
Council of Free Zones for the ampliation of is Free Zone License
as stated in article sixth hereof, except in case of force
majeure duly verified by the parties or for causes which were not
the fault of LESSEE, in which event the above term shall be
suspended but in no case shall LESSEE be released from complying
with each and every one of its obligations hereunder, specially
as to the monthly payment of the rental and the maintenance fees.
It is further understood that the deposit obligation provided in
article fourth hereinabove is not to be deemed as a limitation of
the liability of LESSEE and that, consequently, in the event of
default by LESSEE damages may be claimed by PISANO for
a consideration in excess of said deposit, PISANO being entitled
to claim any additional values for any direct or indirect damages
that may have been caused by LESSEE.
FIFTH: PISANO shall provide LESSEE the direct and indirect
services listed below:
Direct services
a. Admission Control
b. Garbage collection
c. Water supply
d. Van parking.
e. Sewer and drainage.
Indirect services:
a. Street lighting
b. Health Clinic
<PAGE> 7
c. Cafeteria- Messroom.
d. Firemen Service.
e. Audio and data communications network; and
f. Electric Power networks.
g. Security Service Facilities
LESSEE acknowledges hereby respecting the above basic services
that same shall be provided as stated in the Regulations ruling
leases in the PARK which are attached hereto as an integral part
hereof.
Paragraph I. It is expressly agreed that PISANO shall make
LESSEE a monthly charge which LESSEE accepts, amounting to ten
(10%) of the monthly rental price of the lease as provided in
article third hereinabove, on account of providing the direct
services of Admission Control, garbage collection, street
lighting, sewer and drainage and the payment of the personnel
working as firemen, PISANO undertaking hereby to pay the above
services on a monthly basis with no delay whatever, in the
understanding that such rates as shall rule these services may be
subject to revision by mutual agreement. Direct water supply and
container parking services shall be collected as provided in
Section IV-A, letters c) and d) of the attached Internal
Regulations.
Paragraph II. Any considerations due and remaining unpaid on
account of the above services shall accrue interest at the rate
of one (l%) percent per month and/or fraction thereof,and any
such amounts overdue shall be deemed to be a breach hereto.
SIXTH: LESSEE herein shall be solely authorized to set up and
operate in the PARK such business as were provided in its Free
Zone License or in the ammendments to such License, and that
industrial operations shall be started within a term not to
exceed one hundred and twenty (120) days as of securing said Free
Zone License or in its ammendments, except in the event of force
majeure duly verified or for causes that were not the fault of
LESSEE, in which event such a term shall be suspended; however,
LESSEE shall in no event be released from compliance with each
and every one of its obligations hereunder, specifically the
obligation to pay the monthly rental and maintenance fees.
Paragraph I. In the event LESSEE were unable to secure within a
term of one hundred and twenty (120) days as of the date of
delivery of the leased premises its rating as free zone
enterprise due to force majeure or without fault, the lease
herein shall be automatically terminated with no liability for
the parties, and LESSEE shall effect delivery of the premises
<PAGE> 8
within a term of thirty (30) days. The parties herein
acknowledge hereby that in the event foreseen in this paragraph
LESSEE shall pay PISANO such rental price and manintenance fees,
as shall cover the time during which LESSEE shall have
effectively occupied such premises, while PISANO shall effect
delivery of the deposit amount provided in article fourth
hereinabove after duly effecting whatever deductions were
appropriate.
Paragraph II. It is expressly agreed that were LESSEE to be
cancelled its free zone rating under Law 8-90 due to its fault
duly proven, LESSEE shall be under the obligation to vacate and
deliver PISANO the rented premises within a term of ninety (90)
days as of the date of any such cancellation, LESSEE therefore
losing its right to reimbursement of the guarantee deposit
provided in article 4 hereinabove and being compelled to pay the
penalty foreseen in article second hereinabove, as well as the
monthly rental price up until the time it were to actually and
effectively vacate and deliver the rented premises, without
prejudice of any other damages as appropriate.
Paragraph III. It is understood by the parties that LESSEE shall
as soon as possible deposit in the offices of PISANO a copy of
such documentation as was used in support of its free zone rating
application, or its solicitude for the ammendement of its Free
Zone License intended to enlarge its operations and a copy of the
Resolution by the National Free Exportation Council within a term
of thirty (30) days as of the date of said Resolution.
SEVENTH: LESSEE hereing shall be entitled to withdraw at the
expiration hereof, all and any machinery and equipment,
electrical installations in general, air conditioners, furniture,
and in general, any goods of any kind which were owned by LESSEE
and had been installed by LESSEE in the rented premises prior due
authorization by the General Customs Directorate, provided
however, the premises were left in the same condition they were
found. However, any improvements thereto shall remain for the
benefit of PISANO with no compensation whatever; this will
include any additional doors, windows or bathrooms, air
extractors, inside partitions, any annexities constructed after
due prior approval, any alterations to the structure of the roof,
etc.
EIGHTH: LESSEE shall at its own expense maintain the rented
premises in good state of upkeep, thus undertaking all such
maintenance repairs as were required therefor, as well as such as
were necessary to repair any damages resulting from the fault of
LESSEE.
<PAGE> 9
It is understood that LESSEE shall not be responsible for
repairing any damages resulting from hidden or structural defects
in the rented premises.
Twelve (12) months after delivery of the premises, all
expenditures on account of disrepairs to floorings, doors and
windows shall be covered by LESSEE.
NINTH: LESSEE undertakes to secure insurance policies and
maintain them in force so as to cover the rented premises against
risks, such policies to name PISANO as beneficiary, securing as
well third party liability insurance covering both individuals
and property inside the premises as provided in the
Regulations attached hereto.
LESSEE further acknowledges the convenience for its business of
securing insurance against any losses involving machinery,
equipment, raw materials, finished goods and other items making
up the assets of the business.
TENTH: Except for the two (2) year renewal option provided in
Article Second (2) hereinabove, the parties herein agree hereby
that this lease may not be tacitly extended. In the event LESSEE
desired to renew the lease after its agreed three (3) year term
of duration and the two (2) year extension provided
hereinabaove, PISANO shall be given written advice thereof one
hundred and eighty (180) days before the time of said expiration.
Any such renewal shall be approved through an agreement signed by
both parties herein.
ELEVENTH: It is expressly agreed that the working conditions
prevailing in the leased premises shall abide by all such
regulations and rules on health, industrial safety and others as
have been provided by the Departments of Labor, Public Health and
other interested agencies.
TWELFTH: It is expressly agreed hereunder that the business
operations of LESSEE shall be of a continuous nature; therefore,
any temporary suspension of business in excess of seven (7)
working days shall be advised in writing to PISANO within the
next twenty-four (24) hours after any such suspension. In such
cases, LESSEE shall comply with all local labor provisions
currently in force in the Dominican Republic. Likewise, the
parties herein agree that closing of LESSEE'S operations due to
collective vacations shall not be previously notified by LESSEE
to PISANO.
LESSEE herein acknowledges hereby that in the event of any
<PAGE> 10
suspension of business as above stated in no case shall LESSEE be
released from complying with each and every one of its
obligations hereunder. Similarly, LESSEE herein acknowledges that
the basic aim of Law 8-90 on industrial free zones under which
terms it is operating in the Dominican Republic is the creation
of permanent sources of work. In the event of any suspension
lasting for more than six (6) months in a given calendar year,
PISANO will be entitled to file for the termination hereof.
THIRTEENTH: In the event of incompliance with any of the
obligations of LESSEE hereunder, PISANO shall advise LESSEE of
any such incompliance through certified letter return
receipt
requested or through bailiff's notice, therein giving LESSEE a
thirty (30) day term to remedy any such incompliance.
Were LESSEE to ignore any such communication, PISANO shall be
entitled to demand the termination hereof further claiming such
damages as might result from any such incompliance.
FOURTEENTH: LESSEE shall repay PISANO all administrative
expenditures incurred in drawing, executing and notarizing the
lease herein, such expenses amounting to ONE THOUSAND, TWO
HUNDRED AND FIFTY UNITED STATES DOLLARS (US$1,250.00).
Paragraph. In the event PISANO had to retain the professional
services of an office of attorneys due to incompliance by LESSEE
with any of its obligations hereunder, LESSEE shall reimburse
PISANO all expenses and reasonable attorneys' fees incurred.
FIFTEENTH: The parties herein expressly agree hereby that in the
event of any disagreements or lawsuits respecting the lease
herein, same shall be submitted to Dominican courts, waivering
their right to resort to any other courts that may be empowered
to hear said disagreements or lawsuits. Furthermore, it is
agreed that for anything not specially contemplated herein, the
parties shall abide by the provisions of Dominican laws.
SIXTEENTH: For all the purposes and consequences hereof the
parties elect their domiciles as follows: PISANO, at its main
offices at Parque Industrial Santiago Norte, and LESSEE, at the
law offices of PEREYRA & BIAGGI, located at 52 Mustafa
Kemal Ataturk St. in the city of Santo Domingo, National
District, Dominican Republic, where LESSEE shall be served any
legal or extra legal documents concerning the execution hereof.
<PAGE> 11
SEVENTEENTH: The parties herein agree hereby to adscribe
territorial jurisdiction to any of the following courts in the
event of any differences between then:
A) For any matters falling under the jurisdiction or
ratione materiae of a court of peace, to the Court of Peace of
the Third Circumscription of the Municipality of Santiago.
B) For any matters falling under the jurisdiction or
ratione materiae of a Court of First Instance, to the Civil and
Commercial Chamber of the Second Circumscription of the Court
of First Instance of the Judicial District of Santiago.
EIGHTEENTH: This agreement has been executed in both the
Spanish and English languages. The parties herein expressly
agree that in case of any interpretation controversy, the Spanish
version will prevail.
Executed and signed in two originals having the same tenor and
effect, one for each one of the parties, in the city of Santiago
de los Caballeros, Dominican Republic, on the Sixteenth (16) day
of the month of December, year nineteen hundred and ninety-three
(l993).
PARQUE INDUSTRIAL SANTIAGO NORTE, S. A. (PISANO)
/s/ Federico Idelfonso Dominguez Aristy
(by) Eng. Federico Idelfonso Dominguez Aristy
Chairman of the Board of Directors
COMPONENT FOOTWEAR DOMINICANA, S. A.
/s/ David Brett Gunn
(by) Mr. David Brett Gunn
<PAGE> 1
Exhibit 10.9(o)
MANUFACTURING REAL ESTATE LEASE
THIS LEASE (the "Lease") is made and entered into as of the 8th day of March
1993 by and between Watauga Committee of 100, Inc. (the "Landlord) and The
Timberland Company (the "Tenant"). WITNESSETH In consideration of the rent to
be paid, the mutual covenants and agreements herein contained, and of other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by both parties hereto, Landlord hereby rents unto Tenant,
and Tenant hereby accepts for rent from Landlord, certain premises now or
hereafter existing in High Country Business Center, Boone, North Carolina (the
"Building"), and as further delineated in Exhibit A attached hereto, upon the
terms, covenants, and conditions hereinafter contained.
1. Fundamental Lease Provisions.
1.1 Location: High Country Business Center
220 Industrial Park Road
Boone, North Carolina 28607
1.2 Landlord: Watauga Committee of 100, Inc.
PO Box 2778
Boone, North Caroling 28607
1.3 Tenant: The Timberland Company
11 Merrill Industrial Drive
Hampton, NH 03842-5050
1.4 Premises: Subject to paragraph 9 hereof, 100% of the Building identified
in Exhibit A attached hereto and made a part hereof for all purposes, and
containing 20,500 square feet of rentable area, together with (a) all rights,
easements and appurtenances belonging or appertaining thereto, (b) exclusive
rights to all parking areas identified in Exhibit A, (c) all right, title and
interest of Landlord in common with others in and to any and all roads, alleys
and ways bounding such property, and (d) all buildings and other improvements
thereon (the "Premises").
1.5 Permitted Use: Tenant shall use the Premises for the manufacturing
operations related to its wholesale and retail sale of footwear, apparel and
other related accessories. In addition, the Premises may be used by Tenant for
any other lawful purposes ("Permitted Use"). Landlord warrants and represents
that the Permitted Use will not constitute a violation of any exclusive use
clauses or any other restrictive covenant pertaining to other tenants of
Landlord.
1.6 Term: A period of five (5) years, commencing April 1, 1993 and, unless
otherwise terminated as provided for elsewhere within this Lease, ending March
31, 1998 (the "Term").
<PAGE> 2
1.7 Delivery Date: The Landlord warrants that the Premises shall be ready for
delivery to the Tenant on or before March 1, 1993, with the exception of Bay 1,
which shall be delivered to the Tenant on or before April 1, 1993 (the
"Delivery Date").
1.8 Renewal: The Tenant shall have the option to renew this Lease for
successive term(s) of five (5) years each upon the same terms and conditions
as set forth herein, save for the Rental, which shall be at fair market value
(determined by mutual agreement or appraisal) at the time of renewal. Notice
of the exercise of this option shall be given in writing to the Landlord at
least six (6) months prior to the end of the then current term.
1.9 Base Rent: The Base Rent shall be $2.25 per square foot per annum
($46,125), to be paid in advance, on or before the 1st day of each month, in
equal monthly installments of $3,843.75 each (the "Rent")
1.10 Rent Commencement: Rent shall commence upon the earliest of the following
(the "Commencement Date"):
1.10.1 The date upon which the Tenant's renovations to the Premises are
complete and the Tenant's business commences; or
1.10.2 April 1, 1993.
1.11 Net Net Net Lease: Tenant shall pay all reasonable costs and expenses
associated with the operation of the Building, excepting only those expressly
excluded by this Lease.
1.12 Utilities: This Lease is contingent upon water, gas, electricity,
sanitary and storm sewers and other necessary public utilities (the
"Utilities") being immediately on or contiguous to the Premises and adequate
for Tenant's use and connected to the Premises on or before the delivery or
possession of the Premises. Tenant shall pay for all utilities, including
heating and air conditioning consumed by Tenant and metered in its Premises.
Recognizing that the current heating system within the Premises (the "System")
is not sufficient for the Tenant's needs, the Landlord shall replace the
System, provided, however, that (a) should the Tenant, for any reason other
than law or code enforcement regulation, modify the replacement system, as
quoted, any additional costs incurred will be paid by the Tenant; and (b)
should the Tenant, for any reason other than a default by the Landlord of its
obligations under the Lease, close its Boone, NC operation prior to the end of
the initial Term of this Lease, the Tenant shall reimburse the Landlord for the
cost of the
<PAGE> 3
replacement system, up to $28,875 plus tax, on a pro-rata basis amortized over
the Term.
2. Premises And Term
2.1 Covenants of Landlord's Authority. Landlord represents and covenants that
(a) prior to commencement of the Term it will have good fee title to the land
and to the Premises, (b) the Premises are zoned and otherwise in compliance
with local laws and may be used by Tenant for the Permitted Use; and (c)
subject to Tenant's performance of all of its obligations hereunder, Tenant
shall peacefully and quietly have, hold and enjoy the Premises for the Term of
this Lease. The foregoing are material considerations and inducements to
Tenant in executing the Lease, the breach of which will cause irreparable and
severe harm to Tenant.
2.2 Renewal. Landlord may terminate any option or right to renew by written
notice to Tenant delivered at any time Tenant is in default and continues to be
in default for a period of thirty (30) days following written notice thereof.
No exercise of any option to renew during any period of Tenant's default shall
be effective.
2.3 Failure To Deliver Premises. If Landlord is unable to deliver the Premises
within thirty (30) days of the Delivery Date, then this Lease may, at the
option of Tenant (to be exercised by written notice to the Landlord within
fifteen (15) days of the expiration of the thirty-day period) be canceled as of
the date of such notice. If this Lease is not so canceled, then Tenant agrees
to accept possession of the Premises at such time as Landlord tenders the
Premises to Tenant; provided that Tenant's obligation to pay rent under this
Lease shall be abated during the period prior to the date Landlord tenders the
Premises to Tenant. Upon any cancellation of this Lease pursuant to this
Section, this Lease shall be of no further force and effect and neither party
shall have any right or claim against the other as a result thereof, except the
Landlord shall refund to Tenant any advance payments of rent.
2.4 Surrender of the Premises and Holding Over. At the expiration of the term,
Tenant shall surrender the Premises in good condition as improved during the
term, reasonable wear and tear excepted, and Tenant shall surrender all keys
for the Premises to Landlord at its address. Tenant shall remove all its
trade fixtures and any alterations or improvements as provided herein, before
surrendering the Premises, and shall repair any damage to the Premises which
may have been caused directly by the Tenant's use thereof. Tenant's obligation
to observe or perform this covenant shall survive the expiration or other
termination of this Lease. If Tenant shall default in so surrendering the
Premises, Tenant's occupancy subsequent to such expiration,
<PAGE> 4
whether or not with the consent or acquiescence of Landlord, shall be deemed
to be that of a day to day tenancy at will, subject to all covenants contained
herein.
2.5 Non-disturbance And Attornment. Within thirty (30) days after the
execution date of this Lease, Landlord will obtain from every senior landlord,
mortgagee and holder of a deed of trust upon the Premises, an agreement in
recordable form acceptable to Tenant wherein the senior landlord(s),
mortgagee(s) and holder(s) of deed(s) of trust agree not to disturb Tenant's
possession, deprive Tenant of any rights under this Lease or increase Tenant's
obligations under the Lease ("Non-disturbance and Attornment Agreement").
Landlord shall not further mortgage or encumber the fee or its leasehold estate
from the date of execution of this Lease to the date of recording of a
memorandum of lease by Tenant unless Landlord obtains and delivers to Tenant a
Non-disturbance and Attornment Agreement. Upon the failure of Landlord to
provide Tenant with an acceptable Non-disturbance and Attornment Agreement
pertaining to every senior lease, mortgage and deed of trust in accordance with
this provision, Tenant may terminate the Lease, in addition to all of its other
rights and remedies under applicable law.
2.6 Title Examination. Landlord represents, warrants and covenants that it
has full right and fee title to the Premises. Landlord further represents,
warrants and covenants that there are no tenants or other parties in the
Building who have leases or agreements which prohibit, restrict or interfere
with Tenant's Permitted Use. Tenant may, at Tenant's option, order a title
examination on the Premises prepared by an abstractor or title insurance
company selected by Tenant. Landlord shall provide a current abstract of title
and title insurance policy to the abstractor, if available. In the event that
title abstract shall reflect encumbrances or other conditions not acceptable to
Tenant (the "Defects"), then Landlord, upon notification of the Defects, shall
immediately and diligently proceed to cure the same and shall have a reasonable
time within which to cure the Defects. If, after the exercise of all
reasonable diligence, Landlord is unable or unwilling to clear the Defects,
then Tenant may accept the Defects or Tenant may terminate the Lease and the
parties shall be released from further liability. Tenant's failure to object
in writing to any exception listed on the title abstract within ninety (90)
days of receipt of same shall be deemed to be approval of the title abstract by
Tenant.
2.7 Inspections. Tenant shall also be permitted at any time prior to the rent
commencement date specified in Section 1.10. to enter the Premises to make a
topographic and boundary survey, determine the location and condition of
utilities, perform engineering studies, conduct soil
<PAGE> 5
tests and borings and an environmental audit to determine the suitability for
Tenant's intended use, all at Tenant's expense. If any of the inspections
disclose conditions not satisfactory to Tenant, Tenant may terminate this Lease
and the parties shall be released from further liability, except Tenant shall
be required to promptly restore the Premises to their original condition
following Tenant's work on the Premises. Tenant shall indemnify and hold
Landlord harmless from and against any and all liability arising from any
negligence of Tenant or its agents in performing work on the Premises.
3. Rent
3.1 Tenant shall pay to Landlord, at the Landlord's address or at such other
place as Landlord may from time to time direct, Rent at the annual rate
provided in Section 1., for each year of the Term, in equal monthly
installments in advance on the first day of each month. The Rent for any
Fractional Month shall be apportioned on a per diem basis, calculated on the
basis of a thirty (30) day month.
4. Utility Services
4.1 Utilities. Tenant shall promptly pay for heat and public utilities
rendered or furnished to the Premises from and after the date Tenant assumes
(or is entitled to assume by Landlord's notice of delivery of the Premises)
possession of the Premises (irrespective of whether Tenant shall have opened
for business in the Premises on such date) including, but not limited to, heat,
gas, and electricity and water/sewer. Tenant shall be solely responsible for
making directpayments for utility services consumed upon the Premises, to
utility serviceproviders when due. All payments shall be promptly paid in
accordance with the billing terms of such providers. Tenant shall, at its sole
cost and expense, maintain and repair the structural and non-structural
components of the plumbing, sewer, electric, heating and air conditioning and
other utility systems which are located within the Premises (the "Utility
Systems").
4.2 Furnishing of Utility Services. Interruption or impairment of any such
utility or related service, except occurrences caused by the act or omission of
Landlord or those under the reasonable control of Landlord, shall not give rise
to a right or cause of action by Tenant against Landlord in damages or
otherwise. Landlord shall use its best efforts not to cause interference to
the business of Tenant and to promptly cure such interruption or impairment
which may be within the control of Landlord.
5. Repairs And Maintenance
<PAGE> 6
5.1 Repairs and Maintenance by Tenant. Tenant shall make and incur the costs
of all repairs to the Premises necessary to keep the same in a good state of
repair, ordinary wear and tear, obsolescence, fire, casualty and condemnation
excepted. Tenant shall also maintain and keep in good repair all
air-conditioning, plumbing, heating and electrical installations and floor and
wall surfaces of the Premises, including but not limited to the roof. Tenant
shall at all times keep the Premises and all partitions, doors, floor surfaces,
fixtures, equipment and appurtenances thereof clean and in good order,
condition and repair, including reasonably periodic painting of the interior of
the Premises. In addition to the foregoing, Tenant shall repair, and maintain
fire extinguishers and other fire preventative equipment in the Premises in
accordance with the current or future applicable governmental codes (including,
but not limited to, the Occupational Safety and Health Act, as amended).
Notwithstanding anything to the contrary in the foregoing paragraph, Landlord
shall, as soon as is reasonably practicable in the Spring of 1993, complete a
certain re-paying project previously begun by the Landlord and temporarily
curtailed due to inclement weather.
5.2 Landlord's Right of Inspection. Tenant agrees to permit Landlord and/or
the authorized representatives of Landlord to enter the Premises at reasonable
times during usual business hours for the purpose of inspecting the same or for
the purpose of making emergency repairs to the Premises. Landlord shall
provide to Tenant reasonable prior notice for the purpose of making any
necessary, non-emergency, repairs or new construction to the Premises or
performing any work therein that may be necessary to comply with any laws,
ordinances, rules, regulations or requirements of any governing authority. It
is specifically agreed by Landlord that the aforesaid access is limited to
usual business hours and that access is not permitted during non-business hours
when any alarm system is activated, unless an extreme emergency exists
requiring such access. Nothing herein stated or inferred, except compliance
with all laws, ordinances, rules, regulations and requirements of any governing
authority, shall imply any duty upon the part of Landlord to do any such work.
The performance thereof by Landlord shall not constitute a waiver of any
default by Tenant in failing to perform the same.
5.3 Replacement of Glass. At the commencement of the Term all glass in the
Premises shall be in good condition and undamaged. Tenant shall be responsible
for maintaining, repairing and keeping such glass in good condition.
5.4 Compliance With Americans With Disabilities Act. If the Premises are now,
or at any time during the term of this Lease or any extension or renewal hereof
become, a "Public Accommodation"
<PAGE> 7
under the terms of the Americans with Disabilities Act of 1990, 42 U.S.C.
Section 12101 et seq., and all regulations promulgated thereunder (the "ADA"),
Landlord shall, at its sole cost and expense, be responsible for compliance
with Title III of the ADA to the extent that the ADA imposes obligations on the
procedure and design of the construction of, or any alterations to, the
Premises. Tenant shall, at its sole cost and expense, be responsible for
making any necessary modifications in its policies, practices and procedures in
connection with the operation of Tenant's business in order to comply with the
applicable provisions of the ADA.
6. Taxes, Insurance And Indemnity
6.1 Property Taxes. The Landlord shall be solely responsible for the payment
of all real estate taxes, assessments, fees and other such charges related to
or imposed upon the Building and/or the Premises.
6.2 Tenant's Taxes. The Tenant covenants and agrees to pay promptly when
due, all taxes imposes upon its business operation and its personal property
situated in the Premises.
6.3 Liability Insurance. Tenant shall, at its sole cost and expense, procure
and maintain throughout the Term a Comprehensive Program of Insurance covering
the liability of Tenant for bodily injury, personal injury and property damage
arising out of or in connection with the use or occupancy of the Premises or by
the condition of the Premises. The limits of liability of such insurance shall
not be less than One Million Dollars ($1,000,000) combined single limit, and
shall be written by an insurance company or companies licensed to do business
in the State within which the Premises are situated, with Landlord named as an
additional insured. No such policy(ies) shall be canceled without at least
fifteen (15) days prior notice to Landlord of such intent to cancel. Copies of
such certificates of insurance, and any renewals thereof, shall be provided to
Landlord after each annual renewal. If Tenant fails to comply with the
foregoing requirements, Landlord may, but shall have no obligation, to obtain
such insurance for Tenant and Tenant shall pay to Landlord, on demand and proof
of Landlord's payment thereof, the premium cost so paid.
6.4 Indemnity. The parties herein shall not be liable to the other or to the
other's agents, servants, employees, customers, invitees, or any other
person(s) for any damage to person or property caused by any act, omission or
neglect of the other, its agents, servants or employees, and each party agrees
to indemnify and hold the other harmless from all liability and claims for any
such damage.
<PAGE> 8
6.5 Mutual Release of Liability. Each of the parties hereto hereby releases
the other, to the extent of the releasing party's actual recovery under its
insurance policies, from any and all liability for any loss or damage which may
be inflicted upon the property of such party, unless such loss or damage shall
have arisen out of the negligent or intentionally tortuous act or omission of
the other party, its agents and employees; provided, however, that this release
shall be effective only to the extent that this release shall not affect the
releasing party's insurance coverage or the right of the insurance company to
recover thereunder with respect to such loss or damage.
6.6 Fire Insurance. Tenant agrees that it will not keep, use, sell, or offer
for sale in or upon the Premises any substance which may be prohibited by the
standard form of fire and extended coverage insurance policy generally
available in the state within which the Premises are situated. Tenant agrees
to pay and provide insurance for fire and extended coverage on the Premises, in
an amount equal sufficient for replacement value, with Landlord as a
named insured and with companies licensed to do business in the state within
which the Premises are situated. Tenant shall not knowingly use or occupy the
Premises or any part thereof, or suffer or permit the same to be used or
occupied for any business or purpose deemed extra-hazardous on account of fire
or otherwise.
7. Use Of Premises
7.1 Use of Premises. Tenant covenants and agrees to use the Premises only for
the Permitted Uses and for no other purpose without the prior written consent
of Landlord.
7.2 Signs, Awnings And Canopies. Tenant may erect and maintain on the exterior
of the Premises at least 1 sign which complies with the ordinances of the city
zoning area within which the Premises are situated, and in such locations as
Landlord may approve. Any such approval shall not be unreasonably withheld or
delayed. Tenant shall keep insured and shall maintain such signs in good
condition and repair at all times. If damage is done to Tenant's signs, Tenant
shall promptly repair same or Landlord shall have the right to repair such
signs and bill Tenant for cost of the repairs. Tenant reserves the right to
apply static vinyl decals to windows, doors and other glass located at the
Premises. 8. Relationship Of The Parties.
8.1 Nothing herein contained shall be deemed or construed as treating the
relationship of principal and agent as a partnership or joint venture between
the parties hereto; it being understood and agreed that neither the method of
computing rent nor any
<PAGE> 9
other provision contained herein nor any acts of the parties hereto shall be
deemed to create any relationship between the parties other than that of
Landlord and Tenant.
9. Additions, Alterations And Trade Fixtures
9.1 By Landlord. Landlord shall have the right, at its expense, at any time to
make alterations or additions to the Building in which the Premises are
contained provided, however, that such construction shall not materially and
adversely affect the business of Tenant and shall comply with all related terms
and conditions as same may appear elsewhere within this Lease. Should the
Landlord make any such alterations or additions and should same not be done for
the benefit of the Tenant, such alterations or additions shall, upon
commencement, be excepted from the Premises as such term is used herein.
9.2 By Tenant. Tenant may from time to time, after the Commencement Date, at
its own expense, alter, renovate or improve the Premises and Tenant's signs,
provided the same be performed in good and workmanlike manner, in accordance
with accepted building practices and so as not to weaken or impair the
structural integrity or substantially lessen the value of the Premises. All
such changes, alterations or improvements made by Tenant shall be in compliance
will all related terms and conditions as same may appear elsewhere within this
Lease. All alterations, decorations, additions and improvements made by
Tenant, or made by Landlord on Tenant's behalf as provided in this Lease, shall
become the property of Landlord at the end of Term unless same may be removed
by Tenant without causing significant damage to the Premises. Tenant shall
have the right to remove all removable fixtures, additions, alternations and
improvements belonging to Tenant.
In the event Tenant plans to improve, renovate or alter the Premises and the
estimated cost of such work exceeds $25,000.00, Tenant shall, at Tenant's sole
cost, prepare and present to Landlord plans and specifications for work to be
done to alter and finish the Premises in accordance with Tenant's requirements.
No such work shall be commenced unless and until Landlord has approved such
plans and specifications in writing. Any such work shall be carried out only
in accordance with the approved plans and specifications and Landlord's
approval shall not unreasonably be withheld or delayed. Upon submission of
such plans by Tenant, Landlord may either:
9.2.1 evidence its approval by endorsement of a written document to that
effect; or
<PAGE> 10
9.2.2 refuse such approval in writing to be delivered to Tenant detailing the
basis of such refusal if Landlord's Architect shall reasonably determine that
the same: (A) would subject Landlord to any additional costs, expense or
liability or the Premises to any violation, fine, or penalty; (B) would provide
for or require any installation or work which is or might be unlawful or create
an unsound or dangerous condition or adversely affect the structural soundness
of the Premises and/or the building of which the Premises are a part; or (C)
unreasonably interfere with or abridge the use and enjoyment of any adjoining
space in the building in which the Premises are located.
After approval by Landlord of Tenant's plans and specifications, if same shall
be required, Tenant shall pay any additional architectural or construction
costs incurred in making changes, substitutions or eliminations in such
approved plans and specifications requested by Tenant and approved by Landlord.
Whether or not such Landlord approval shall be required, Tenant shall, at its
sole cost and expense, obtain all necessary building permits and approvals from
the municipal and/or county building inspector, fire marshal, and any other
necessary governmental authority, such permits and approvals being based upon
Tenant's final approved plans and specifications mentioned herein above.
Tenant shall also obtain any necessary permits and approvals from all utility
companies for any additional connections required by Tenant, and pay any fees
resulting therefrom.
9.3 Mechanics', Materialmen's, And Other Liens. Tenant will not permit any
mechanics', materialmen's, or other liens to be placed upon the Premises, any
improvements located therein, or the Building, or any portion thereof resulting
from any work, actions, or request of Tenant. However, in the case of the
filing of any such lien, Tenant shall cause same to be paid, released and/or
discharged of record within thirty (30) days after Tenant's actual knowledge of
same and, in any event, prior to any foreclosure or other enforcement thereof.
10. Damages, Destruction Or Condemnation Of The Premises
10.1 Damages or Destruction By Fire or Other Casualty. If at any time
following the commencement of this Lease, the Premises should be damaged or
destroyed by any casualty or otherwise, except that caused directly by the
gross negligence of the Tenant, so as to, in Tenant's sole but reasonable
determination, significantly interfere with the normal operation of Tenant's
business, this Lease shall continue in full force and effect, and Tenant, at
its expense, shall promptly restore, repair or rebuild the Premises to the same
condition as it existed when the possession of the Premises was first turned
over to the Tenant.
<PAGE> 11
In the event such restoration of the Premises as aforesaid shall not be
reasonably practical, either party's sole remedy against the other shall be
to terminate this Lease as of the date of such casualty. Rent shall abate
from the date of such damage or destruction until the Tenant has repaired
or restored the Premises in the manner and in the condition provided in this
Section.
In the event that only 30% or less of the Premises is rendered un-tenantable or
incapable of use for the normal conduct of Tenant's business therein, a just
and proportionate part of the Rent shall be abated from the date of such damage
until the Tenant has completely repaired same.
In the event that the Premises shall be damaged in whole or in substantial part
and the Tenant shall determine that repair of such damage cannot reasonably be
substantially completed within the 120-day period as herein above provided,
Tenant shall have the option, exercisable within thirty (30) days following
notice of such determination being given to Tenant by Landlord, to terminate
this Lease, effective as of the date of such damage.
Notwithstanding any of the provisions herein to the contrary, the Tenant shall
have no obligation to rebuild the Premises unless the damage or destruction is
a result of a casualty covered by the Tenant's insurance policy and the
insurance proceeds available to the Tenant as a result thereof (i.e., the
amount of such insurance proceeds actually collected, less all costs of
collection and to the extent such proceeds are not required to be paid over by
Tenant to any mortgagee or other third party, including but not limited to the
Landlord) are sufficient to discharge fully the cost of such repair and
restoration.
The Tenant shall, however, be obligated to use any such proceeds so collected
for the renovation or repair of the Premises in accordance with this Section
10.1.
10.2 Loss or Damage. Landlord shall not be liable for any damage to or loss of
property of Tenant or of others located on the Premises, unless such loss or
damage shall be caused by the act or omission to act of Landlord. Landlord
shall not be liable for any injury or damage to persons or property resulting
from fire, explosion, falling plaster, steam, gas, electricity, water, rain or
snow or leaks from any part of the Premises or from the subsurface or from any
other place or by dampness or by any other cause of any kind or nature
whatsoever, unless such loss or damage shall be caused by the negligence or
omission to act of Landlord, or should have been reasonably foreseeable by the
Landlord.
<PAGE> 12
10.3 Condemnation. In the event the entire Premises shall be appropriated
or taken under the power of eminent domain by any public or quasi-public
authority, this Lease shall terminate and expire as of the date of such taking,
and Landlord and Tenant shall thereupon be released from any further liability
hereunder.
In the event more than fifteen percent (15%) of the floor area of the Premises
shall be appropriated or taken under the power of eminent domain by any public
or quasi-public authority, Tenant shall have the right to cancel and terminate
this Lease as of the date of such taking upon giving notice of such election
within thirty (30) days after the receipt by Tenant from Landlord of notice
that said Premises have been so appropriated or taken. In the event of such
cancellation, Landlord and Tenant shall thereupon be released from any further
liability under this Lease.
Immediately after any appropriation or taking, Landlord shall give Tenant
notice thereof. If this Lease shall not be terminated as provided in this
Section then Landlord, at its cost and expense, shall immediately restore the
Premises to a complete unit of like quality and character. All compensation
awarded or paid upon such a total or partial taking of the Premises shall
belong to and be the property of the Landlord without any participation by
Tenant, less and except any proceeds paid and/or received on behalf of the
Tenant or as same may be in regards to Tenant's property or business; provided,
however, that nothing contained herein shall be construed to preclude Tenant
from prosecution of any claim directly against the condemning authority in such
condemnation proceedings for loss of business, and/or stock and/or trade
fixtures, furniture and other personal property belonging to Tenant provided
further, however, that no such claim shall diminish or otherwise adversely
affect Landlord's award or the award(s) of any mortgagee(s).
Anything herein to the contrary notwithstanding, in the event the net proceeds
of any condemnation proceedings available to the Landlord (i.e., net of costs
of collection and amounts, if any, required to be paid by Landlord to any
mortgagee or other third party, including but not limited to the Tenant) are,
in Landlord's opinion, insufficient to restore the Building to a state in which
it can continue to be operated in a reasonable manner, Landlord may, at its
sole discretion, terminate this Lease as of the date of such taking without
liability of any kind or nature to Tenant.
11. Default/Termination Of Lease
11.1 Default; Remedies. In the event
<PAGE> 13
11.1.1 Tenant fails to pay any installment of Rent or other moneys due
hereunder to the Landlord within fifteen (15) days after Tenant receives
Landlord's written notice thereof; or
11.1.2 Tenant fails to fully comply with any material term, condition, or
covenant of this Lease and such failure continues for a period of thirty (30)
days following Tenant's receipt of Landlord's written notice thereof (except in
the event such default is not susceptible of being cured within thirty (30)
days, if Tenant does not commence to cure such default within thirty (30) days
and thereafter diligently pursue the completion of such cure; or
11.1.3 Tenant deserts or vacates the Premises for more than ten (10) business
days; or
11.1.4 Tenant becomes insolvent or the subject of any voluntary Bankruptcy
proceeding or makes an assignment for benefit of creditors; or
11.1.5 Tenant is the subject of a petition for involuntary Bankruptcy under
Title 11 of the U.S. Bankruptcy Code, which petition has not been vacated
within 90 days of notice of filing of said petition.
Then in any of such events, Tenant shall be in Default and Landlord shall have
the option (to the maximum extent permitted by applicable law), in addition to
and not in limitation of any other remedy permitted by law or by this Lease, to
terminate this Lease. In such event, Tenant shall immediately surrender the
Premises to Landlord. If Tenant shall fail to do so, Landlord may, without
further notice and without prejudice to any other remedy Landlord may have for
possession or arrearages in rent, enter upon and take possession of the
Premises and expel or remove Tenant and its effects, without being liable to
prosecution or any claim for damages therefor. In such event of such forcible
eviction, the Tenant agrees to indemnify Landlord, at the same times as
specified herein for payment of rent, for reasonable costs resulting from such
Default and for all loss and damage, if any, which Landlord may suffer by
reason of same. In the event of such termination of this Lease, Tenant shall
be obligated for payment of Rent, in the same amounts and at the same times as
specified elsewhere herein, less the receipts of reletting the Premises until
the earlier of 1) the passing of the original expiration date of this Lease had
such earlier termination not occurred or 2) such time as Landlord shall relet
the Premises upon reasonably satisfactory terms and conditions. Upon reletting
the Premises Tenant shall be released from any further liability or obligation
under the Lease. Landlord shall
<PAGE> 14
be obligated to exercise due diligence to relet said Premises and mitigate
damages to the Tenant.
11.1.6 In the event that Landlord shall be in default of any provision, clause,
section or part of this Lease and Landlord shall fail to cure such default
within thirty (30) days following written notice thereof by Tenant or if such
default is not susceptible of being cured within thirty (30) days, if Landlord
does not commence to cure such default within thirty (30) days and thereafter
diligently pursue and complete such cure), Tenant shall have the option to any
one or more of the following, without any prior written notice, in addition to
and not in limitation of any other remedy permitted by law or this Lease:
11.1.7 To itself cure the default of Landlord and to deduct the cost thereof
from rent, CAM charges or other moneys due to Landlord until such time as the
cost of curing such default shall have been fully reimbursed to Tenant; or
11.1.8 Terminate this Lease, at which time all Tenant's obligations and
liabilities under this Lease will cease, except those which may have accrued
prior to the date of such termination.
Tenant further reserves the right upon thirty (30) days prior written notice to
Landlord to terminate this Lease should any act or omission to act of the
Landlord, in Tenant's reasonable opinion, materially or adversely affect or
interfere with the Tenant's business, provided, however, that the Tenant shall
have first exhausted all other reasonable means of resolving such matter.
Should Tenant terminate this Lease as a result of same, all liabilities and
obligations of Tenant under this Lease will cease, except those which have
accrued prior to the date of such termination.
11.2 Non-Waiver. The mention in this Lease of any particular remedy shall not
preclude Landlord or Tenant from any other remedy Landlord or Tenant might
have, either in law or in equity. The failure of Landlord or Tenant to insist
at any time upon the strict performance of any covenant or agreement or to
exercise any option, right, power, or remedy contained in this Lease shall not
be construed as a waiver or a relinquishment thereof for the future. The
receipt and acceptance by Landlord of rent, nor the payment of same by Tenant,
with knowledge of the breach of any covenant contained in this Lease shall not
be deemed a waiver of such breach.
No provision of this Lease shall be deemed to have been waived by either party
unless such waiver is in writing and signed by both parties hereto.
<PAGE> 15
12. Mortgage Financing and Subordination
12.1 Subordination. This Lease and all of Tenant's rights hereunder are and
shall be subordinate to any mortgages or other security instruments
(collectively, the "Mortgages") which Landlord may at any time place upon the
Building provided that Landlord fulfills the obligation to Tenant under Section
2.6. hereof. Tenant shall, within ten (10) days of receipt of written request
of the Landlord or the holder of any mortgage on the Building, execute any
reasonable documents expressly subordinating this Lease to any mortgages now or
hereafter placed upon the Landlord's interest in the Building, the premises or
future additions thereto provided such subordination complies with this Section
12.1.
12.2 Notices To Mortgagees of Landlord's Default. Tenant shall give prompt
written notice to each mortgagee with whom Tenant has entered into a
subordination agreement of any default of Landlord hereunder, and Tenant shall
allow such mortgagee a reasonable length of time (in any event not to exceed
thirty (30) days from the date of such notice) in which to cure any such
default. Any such notice shall be sent to the Mortgage Loan Department of any
such mortgagee at its home office address, unless Tenant is notified of a
different address for such notice, in which case such address shall be used.
If neither Landlord nor Mortgagee shall cure, then Tenant shall have the right
to terminate this Lease as provided for elsewhere herein.
12.3 Mortgagee's Right To Subordinate. Any mortgagee may, at its option, elect
to subordinate the lien of its mortgage to this Lease by executing and causing
to be recorded in the appropriate public records an instrument evidencing such
subordination.
12.4 Waiver of Landlord's Lien. In the event Tenant, its subtenants or
assigns, acquires and/or leases personal property to be installed or used upon
the Premises subject to retained title, conditional sales contract, chattel
mortgage or other security agreement or lease, Landlord agrees to execute and
deliver to any such secured creditor and/or lessor a waiver of any lien
Landlord may have upon such personal property. Such waiver shall be on a form
provided by Tenant authorizing the secured creditor and/or lessor to enter upon
the property and remove such personal property in the event of default under
the terms of the security agreement and/or lease.
13. Miscellaneous Provisions
<PAGE> 16
13.1 Assignment and Subletting. Tenant shall not assign this Lease nor any
estate or interest therein, nor sublet or license the whole or any part of the
Premises (all of which are herein referred to as "transfer"), except to a
wholly owned subsidiary or affiliate of Tenant, without the express written
consent of Landlord, which consent shall not unreasonably be withheld or
delayed. Tenant may transfer its interest to any wholly owned corporation or
affiliate without such consent, provided that in each case Tenant shall give
notice of such transfer to Landlord. For purposes hereof, "affiliate" shall
include any corporation, partnership or other entity controlled by, under
common control with, or controlling Tenant, control for purposes hereof being
direct or indirect control over fifty per cent (50%) or more of the voting
interests of such entity. Except as hereinafter provided, no such transfer
shall relieve Tenant of its obligations hereunder. In the event that Tenant
assigns this Lease to a corporation or entity having the same or greater net
worth than Tenant, then, in such event, Tenant shall be relieved of its
obligations hereunder. Any such assignee or subtenant of Tenant shall assume
Tenant's obligations hereunder and deliver to Landlord an assumption agreement
in form satisfactory to Landlord prior to occupancy of the Premises by such
assignee. Any consent of Landlord required by this paragraph shall not be
unreasonably withheld or delayed.
13.2 Notice. All notices, consents, approvals, accounting statements and
other communications hereunder shall be in writing and in English and shall be
considered given: (a) upon personal delivery or delivery by telecopier (with
confirmation of telecopier receipt by receiver); (b) three (3) business days
after being deposited with a courier service; or (c) ten (10) business days
after being mailed by regular US Mail, Return Receipt Requested. In each case,
notice shall be addressed to the notified party at its address set forth in
Section 1 above, provided, however, that either party may change its address
for notice by delivering notice of such change to the other party in accordance
with the foregoing, which change of address shall be effective five (5) days
after such notice is received. Notices to the Tenant shall be sent to the
attention of its General Counsel.
13.3 Severability Clause. If any provision of this Lease shall be found to be
void or unenforceable under the laws of any jurisdiction, such invalidity or
unenforceability shall not affect the remaining provisions of this Lease or the
interpretation of this Lease under the laws of any jurisdiction. Such void or
unenforceable provision shall be reformed so that it is valid and enforceable
to the fullest extent possible by law.
<PAGE> 17
13.4 Captions. The captions contained herein are for convenience and
reference only and shall not be deemed as part of this Lease or construed
as in any manner limiting or amplifying the terms and provisions of this Lease
to which they relate.
13.5 Submission of Lease. The submission or acceptance of this Lease for
examination does not constitute an offer or acceptance to lease, and this Lease
becomes effective only upon execution thereof by Landlord and Tenant.
13.6 Entire and Binding Agreement. This Lease contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior written and oral agreements, leases, understandings, or
commitments made by the parties with respect thereto specifically including,
but not limited to that certain lease for a portion of the Premises and dated
July 22, 1992. The terms, covenants and conditions contained herein shall
inure to the benefit of and be binding upon Landlord and Tenant and their
respective successors and assigns, except as may be otherwise expressly
provided in this Lease. All rights of Landlord and Tenant under the various
provisions hereof shall be cumulative.
13.7 No Broker. Landlord agrees to indemnify, defend (with counsel reasonably
acceptable to Tenant) and hold Tenant harmless from and against any and all
claims, costs or damages by any person or firm claiming to have negotiated,
instituted or brought about the Lease on behalf of Landlord.
13.8 Counterparts. This Lease may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original, but
such counterparts together shall constitute one and the same instrument.
13.9 Deductions. Whenever Tenant may deduct costs from rent pursuant to any
section of the Lease, such costs may be deducted from the next accruing rent
payment(s) due under the Lease.
13.10 Governing Law. This Lease is made under, and shall be governed by and
construed in accordance with, the laws of the State of North Carolina.
13.11 Survival of Warranties. The representations, covenants, warranties and
indemnities, of each of the parties, contained in the Lease shall survive the
expiration or earlier termination of the Lease.
14. Validity, Interpretation And Arbitration
<PAGE> 18
14.1 Any dispute not amicably settled between the parties concerning this
Agreement, in particular as to its existence, validity, interpretation,
performance or non-performance, whether arising before or after the expiration,
cancellation or termination of this Agreement, will be settled by arbitration.
14.2 In the event that either party shall request that such arbitration be
conducted, the following shall apply:
14.2.1 The seat of arbitration shall be Charlotte, North Carolina, United
States of America, and conducted in accordance with the rules of the American
Arbitration Association as effective on the date of filing any request for
arbitration.
14.2.2 All proceedings shall be conducted in the English language.
14.2.3 The party desiring arbitration shall give written notice to that effect
to the other party and shall, in such notice, appoint a disinterested person of
recognized competence in the field, involved as arbitrator on its behalf.
14.2.4 Within fifteen (15) days after receipt thereof, the other party shall,
by written notice of the original party, appoint a second disinterested person
of recognized competence in such fields, as arbitrator on its behalf.
14.2.5 The arbitrators thus appointed shall appoint a third disinterested
person of recognized competence in such field, and such three arbitrators
shall, as promptly as possible, determine such matter, provided however, that:
14.2.5.1 If the second arbitrator shall not be appointed as aforesaid, the
first arbitrator shall proceed to determine such matters; and
14.2.5.2 If the two arbitrators are so appointed, but should be unable or fail,
within fifteen (15) days of the second arbitrator's appointment, to so appoint
the third arbitrator, the two arbitrators, on behalf of the parties, shall give
notice of such inability or failure to the parties and shall submit a formal
request to the then President of the Association of the Bar of Charlotte, North
Carolina (or any organization successor thereto).
14.2.5.3 The parties hereto each shall be entitled to present evidence and
argument to the arbitrators.
14.2.6 The determination of the majority of the arbitrators, or of the sole
arbitrator, as the case may be, shall be conclusive
<PAGE> 19
and binding upon the parties and judgment upon the same may be entered in any
court having jurisdiction thereof, provided, however, that the arbitrator(s)
shall give written notice to the parties stating the determination. Such
notice shall be signed by each arbitrator.
14.2.7 If any such dispute shall involve a determination of value or of a fixed
amount of money and if there shall be no determination thereof by a majority of
the arbitrators, then either party hereto shall be entitled to seek a judicial
determination of the matter in a court of competent jurisdiction.
14.2.8 Each of the parties hereto irrevocably submits itself to the
jurisdiction of any court having jurisdiction over the party for the
enforcement of any final decision of arbitration referred to above.
14.2.9 Each party shall pay the fees and expenses of the arbitrator appointed
by such party and one-half of the reasonable fees and expenses of the third
arbitrator, if any. The non-prevailing party shall be obligated to pay the
reasonable attorneys' fees, if any, of the prevailing party within 120 days of
its receipt of the prevailing party's documented invoice for same.
14.2.10 If any such dispute shall involve a question of payment of money, the
intended or implied payor of such moneys shall deposit an amount equal thereto
into a bank savings account, in escrow for the benefit of both parties. Any
interest paid thereon shall be distributed in accordance with the issue
determination as made herein.
15. Environmental Matters
15.1 Except for that which may have been specifically caused, created or
committed by the Tenant during its prior tenancy of a portion of the Premises
(7/22/92 through to the date of this Lease), Landlord represents and warrants
to Tenant as follows:
15.1.1 The Premises do not presently contain and are free from all hazardous
waste and hazardous materials, toxic and non-toxic pollutants and contaminates.
For purposes of this Lease, the terms "Hazardous Waste" and "Hazardous
Materials" are defined by cumulative reference to the following sources as
amended from time to time: (a) the Resource Conservation Recovery Act of 1976,
42 U.S.C. ##691 et seq. (RCRA); (b) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. ##601 et seq. (CERCLA); (c)
Superfund Amendments and Re-authorization Act of 1986, 42 U.S.C. ##6901 et seq.
(SARA, amending CERCLA); (d) regulations of the Environmental Protection
<PAGE> 20
Agency (EPA), as codified in 40 C.F.R. Parts 260-265 and Parts 122-124 and any
other regulations promulgated by the EPA from time to time; (e) applicable
laws of the state in which the Premises are located governing environmental
matters, including without limitation, oil and petroleum products; and (f) any
federal, state or local regulations, rules or orders issued or promulgated
under or pursuant to any of the foregoing or otherwise by any department,
agency or other administrative, regulatory or judicial body.
15.1.2 The Premises and the Building are not (as of the date of the execution
of this Lease) and have not been a site for the use, generation, manufacture,
storage, disposal or transportation of any Hazardous Waste or Hazardous
Materials.
15.1.3 Landlord has not received, and is not aware of, any notification from
any federal, state, county, municipal or other governmental authority relating
to the presence of Hazardous Waste or Hazardous Materials in or near the
Premises or the Building.
15.2 Landlord shall upon demand indemnify, defend (with counsel acceptable to
Tenant) and hold Tenant harmless from and against any and all liability arising
from any and all claims, demands, losses, damages, litigation, recoveries or
governmental action involving any of the following:
15.2.1 Any breach of the representations and warranties contained in this
Section;
15.2.2 The presence or suspected presence of Hazardous Waste or Hazardous
Materials in or about the Premises or the Building, unless its presence is due
solely to the acts of Tenant; and
15.2.3 The migration of Hazardous Waste or Hazardous Materials from the
Premises or the Building to any other property, unless caused solely by the
acts of Tenant.
15.2.4 Interruption, disruption or cessation of Tenant's business on the
Premises arising from Landlord's breach of any of the representations and
warranties contained in this Section.
Without limiting the generality of the foregoing, this indemnification shall
specifically cover fines, penalties, sums paid in settlement of any claims or
litigation, damages sustained by the Tenant (including lost profits),
reasonable attorney's fees, reasonable payments to consultants and experts (to
be acceptable to the Tenant) and costs for investigation, clean up, or
restoration. The indemnity set forth in this Section
<PAGE> 21
15.2. shall survive termination of the Lease.
IN WITNESS WHEREOF, the Landlord and the Tenant have duly executed this Lease
as of the day and year first above written, each acknowledging receipt of an
executed copy hereof.
(Tenant)
The Timberland Company
By: /s/ Fred Conti
Name: Fred Conti
Title: Vice President - Finance
(Landlord)
Watauga Committee of 100, Inc.
(corporate seal)
By: /s/ Paul J. Smith
Name: Paul J. Smith Attest:
Title: President By: /s/ Rachel Rivers-Coffey
Name: Rachel Rivers-Coffey
Title: Secretary
STATE OF NEW HAMPSHIRE :
COUNTY OF ROCKINGHAM :
The foregoing instrument was acknowledged before me this 15th day of March,
1993 by Fred Conti, the duly authorized Vice President - Finance of The
Timberland Company, a Delaware corporation, on behalf of the corporation.
Notary Public/Justice of the Peace
STATE OF NORTH CAROLINA :
COUNTY OF WATAUGA
I, the undersigned authority, certify that Paul J. Smith personally came before
me this day and acknowledged that he (he/she) is the Rachel Rivers-Coffee
Secretary of WATAUGA COMMITTEE OF 100, INC., LANDLORD, a corporation
organized and existing under the laws of the state of North Carolina, and that
by authority duly given and as the act of the corporation, the foregoing
instrument was signed in its name by its _______________ President, sealed with
its corporate seal and attested by ____________ (him/her) as its
_______________ Secretary.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, This 3rd day of March, 1993.
/s/ SUE HARTLEY
---------------
My Commission Expires: June 25, 1995 Notary Public
<PAGE> 1
Exhibit 10.9(p)
L E A S E
THIS INSTRUMENT IS A LEASE, dated as of March 31, 1993 in which the Landlord
and the Tenant are the parties hereinafter named, and which relates to space in
the building (the "Building") known and numbered as 100 Fordham Road,
Wilmington, MA. The parties to this instrument hereby agree with each other as
follows:
ARTICLE I
BASIC LEASE PROVISIONS
1.1 INTRODUCTION. The following terms and provisions set forth basic data
and, where appropriate, constitute definitions of the terms hereinafter listed:
1.2 BASIC DATA.
Landlord: Talbot Operations, Inc.
Landlord's Original Address:
c/o Leggat McCall Properties Management, Inc.
Ten Post Office Square
Boston, MA 02110
Tenant: The Timberland Company, a Delaware corporation
Tenant's Original Address: 11 Merrill Industrial Drive, P.O. Box 5050
Hampton, NH 03842-5050
Guarantor: N/A
Basic Rent: The sum of $408,648.00 ($3.00) per square foot of Premises
Rentable Area) per annum.
Premises Rentable Area: Approximately 136,216 rentable square feet (133,803
useable square feet) located on the 1st floor of the Building.
Permitted Uses: Warehouse.
Escalation Factor: 44.88%, as computed in accordance with the Escalation
Factor Computation.
Building Escalation Factor: 66.93% as computed in accordance with the Building
Escalation Factor Computation.
<PAGE> 2
Initial Term: Two (2) years and one full calendar month commencing on the
Commencement Date and expiring at the close of the day on April 30, 1995.
Security Deposit: Intentionally Omitted.
1.3 ADDITIONAL DEFINITIONS.
Manager: Leggat McCall Properties Management, Inc.
Property Rentable Area: 303,509 rentable square feet.
Building Rentable Area: 203,509 rentable square feet.
Business Days: All days except Saturday, Sunday, New Year's Day, Washington's
Birthday, Patriot's Day, Memorial Day, Independence Day, Labor Day, Columbus
Day, Veterans' Day, Thanksgiving Day, Christmas Day (and the following day when
any such day occurs on Sunday).
Commencement Date: As defined in Section 4.1.
Default of Tenant: As defined in Section 13.1.
Escalation Charges: The amounts prescribed in Sections 8.1 and 9.2.
Escalation Factor Computation: Premises Rentable Area divided by the Property
Rentable Area.
Building Escalation Factor Computation: Premises Rentable Area divided by the
Building Rentable Area.
Force Majeure: Collectively and individually, strike or other labor trouble,
fire or other casualty, governmental preemption of priorities or other controls
in connection with a national or other public emergency or shortages of, or
inability to obtain, fuel, supplies or labor resulting therefrom, or any other
cause, whether similar or dissimilar, beyond Landlord's reasonable control.
Initial Public Liability Insurance: $1,000,000 per person; $3,000,000 per
occurrence (combined single limit) for property damage, bodily injury or death.
Operating Expenses: As set forth in Section 9. 1.
Operating Year: As defined in Section 9.1.
<PAGE> 3
Premises: A portion of the Building as shown on Exhibit A annexed hereto.
Property: The Buildings known as and numbered 100-110 Fordham Road (including
all buildings, including the Building located at such address) Wilmington, MA
together with the land parcels upon which such Buildings are located..
Tax Year: As defined in Section 8.1.
Taxes: As determined in accordance with Section 8. 1.
Tenants Removable Property: As defined in Section 5.2.
Term of this Lease: The Initial Term and any extension thereof in accordance
with the provisions hereof.
Utility Expenses: As defined in Section 9.1.
Exhibits: The following Exhibits are annexed to this Lease and incorporated
herein by this reference:
Exhibit A - Plan showing Premises
Exhibit B - Intentionally Omitted
Exhibit C - Intentionally Omitted
Exhibit D - Intentionally Omitted
Exhibit E - Operating Expenses
ARTICLE II
PREMISES AND APPURTENANT RIGHTS.
2.1 LEASE OF PREMISES. Landlord hereby demises and leases to Tenant for
the Term of this Lease and upon the terms and conditions hereinafter set forth,
and Tenant hereby accepts from Landlord, the Premises.
2.2 APPURTENANT RIGHTS AND RESERVATIONS. (a) Tenant shall have, as
appurtenant to the Premises (i) the non-exclusive right to use, and permit its
invitees to use in common with others, public or common lobbies, hallways,
stairways and elevators and common walkways and driveways necessary for access
to the Building, and if the portion of the Premises on any floor includes less
than the entire floor, the common toilets, corridors and elevator lobby of such
floor and (ii) the exclusive right and easement to use all existing loading
docks adjacent to the Premises; but Tenant shall have no other appurtenant
rights and all such rights shall always be subject to reasonable rules and
regulations from time to time established by Landlord pursuant to Section 14.7
and to the right of Landlord to
<PAGE> 4
designate and change from time to time areas and facilities so to be used.
(b) Excepted and excluded from the Premises are the ceiling,
floor, perimeter walls and exterior windows, except the inner surfaces thereof,
but the entry doors (and related glass and finish work) to the Premises are a
part thereof; and Tenant agrees that Landlord shall have the right to place in
the Premises (but in such manner as to reduce to a minimum interference with
Tenant's use of the Premises) interior storm windows, subcontrol devices (by
way of illustration, an electric sub panel, etc.), utility lines, pipes,
equipment and the like, in, over and upon the Premises. Tenant shall install
and maintain, as Landlord may require, proper access panels in any hung
ceilings or walls as may be installed by Tenant in the Premises to afford
access to any facilities above the ceiling or within or behind the walls.
(c) It is agreed and understood that the 3,212 square foot
mechanical room and the 585 square foot supervisors office immediately adjacent
to the Premises are expressly excluded from the Premises and Landlord expressly
reserves the right to use and access to such spaces at all times.
ARTICLE III
BASIC RENT
3.1 PAYMENT. (a) Tenant agrees to pay to Landlord, or as directed by
Landlord, commencing on the Commencement Date without offset, abatement (except
as provided in Article 12.1), deduction or demand, the Basic Rent. Such Basic
Rent shall be payable in equal monthly installments, in advance, on the first
day of each and every calendar month during the Term of this Lease, at
Landlord's Original Address, or at such other place as Landlord shall from time
to time designate by notice to Tenant, in lawful money of the United States.
Until notice of some other designation is given, Basic Rent and all other
charges for which provision is herein made shall be paid by remittance payable
to the Manager and addressed to the Manager, Agent for 100 Fordham Road, ITF:
Talbot Operations, P.O. Box 1088, Boston, MA 02103-1088 and all remittances so
received as aforesaid, or by any subsequently designated recipient, shall be
treated as a payment to Landlord. In the event that any installment of Basic
Rent is not paid within 5 days after the due date thereof, Tenant shall pay, in
addition to any Escalation Charges or other additional charges due under this
Lease, at Landlord's request an administrative fee equal to 5% of the overdue
payment.
<PAGE> 5
(b) Basic Rent for any partial month shall be pro-rated on a daily
basis, and if the first day on which Tenant must pay Basic Rent shall be other
than the first day of a calendar month, the first payment which Tenant shall
make to Landlord shall be equal to a proportionate part of the monthly
installment of Basic Rent for the partial month from the first day on which
Tenant must pay Basic Rent to the last day of the month in which such day
occurs, plus the installment of Basic Rent for the succeeding calendar month.
(c) Notwithstanding the provisions of Sections 3.1(a) and 3.1(b)
above to the contrary, Basic Rent payable by Tenant for the calendar month of
April, 1993 shall be in the amount of $26,859.67.
ARTICLE IV
COMMENCEMENT AND CONDITION
4.1 COMMENCEMENT DATE. (a) The Commencement Date shall be April 1, 1993.
(b) From and after the date of execution of this Lease by both the
Landlord and the Tenant, Tenant shall be permitted to enter the Premises in
order to install racking and to prepare the Premises to receive product
notwithstanding that the Commencement Date may not have yet occurred. From and
after the date of such entry by Tenant, Tenant shall be bound by all of the
terms, covenants and agreements contained in the Lease except that Tenant shall
not be obligated to pay Basic Rent or Escalation Charges until the occurrence
of the Commencement Date.
4.2 CONDITION OF THE PREMISES. Tenant hereby agrees to accept the
Premises on the Commencement Date in its "As Is" condition as of the date of
this Lease, without representation or warranty by Landlord (except as otherwise
expressly set forth in this Lease) of any kind. It is agreed and understood
that Landlord shall have no obligation to make or pay for any improvements to
the Premises or the Building in order to prepare same for Tenant's use and
occupancy except for the performance of the Landlord's Work (as hereinafter
defined) and the payment of the Light Allowance (as hereafter defined) as
provided in Section 4.4.
4.3 LANDLORD'S WORK. Landlord hereby agrees, at its sole cost and
expense, to perform the Landlord's Work (as hereafter defined). Upon execution
and delivery of the this Lease,
<PAGE> 6
Landlord shall use good faith efforts to commence and thereafter diligently
pursue Landlord's Work to completion. Tenant hereby acknowledges and has
agreed to accept the Premises with existing leaky roof conditions and hereby
releases Landlord from any and all claims, losses, costs or damages sustained
or incurred by Tenant as a result of any damage to Tenant's Removable Property
or any other property located within the Premises as a result of roof leaks.
Tenant hereby agrees to use its best efforts to locate its personal property
and product in portions of the Premises so as to avoid damage to its personal
property and Tenant's Removable Property resulting from the existing leaky roof
conditions. Failure of the Landlord to complete Landlord's Work on or before
the Commencement Date shall not delay the Commencement Date nor shall such
failure affect the validity of this Lease or make Landlord liable to Tenant in
any respect. As used herein, the term "Landlord's Work" shall mean the
following roof repair work:
a) remove all loose gravel;
b) remove approximately 9,000 square feet of the existing roof system;
c) fill areas affected by removal described in (b) with 1" thick fiber
board
d) mechanically fasten 1/2" fiberboard over the entire roof area;
e) install new membrane over entire roof;
f) repair or replace drains or flashing as necessary.
As and to the extent that Landlord's Work involves the disturbance or
removal of asbestos containing materials (ACM), such ACM shall be removed and
disposed of by Landlord in accordance with applicable state and federal laws.
4.4 Tenant has advised Landlord that it intends to install new lamps
throughout the entire Premises. Subject to the terms and conditions
hereinafter set forth, Landlord shall provide Tenant with an allowance (the
"Light Allowance") in an amount not to exceed $3,000.00 to be applied by Tenant
against the cost of installing new lamps throughout the entire Premises.
Landlord's obligation to fund the Light Allowance shall be conditioned upon (i)
Tenant not being in default in the performance or observance of any term,
covenant, provision or condition contained in this Lease to be performed or
observed by the Tenant (ii) the fact that all such amounts shall be applied
toward the cost and expense of providing and installing new lamps throughout
the
<PAGE> 7
Premises as a portion of Tenant's agreement to install new lighting throughout
the entire Premises and (iii) the fact that Landlord shall retain any unused
portion of the Light Allowance not used by Tenant for the purposes stated
herein. Disbursements of the Light Allowance by Landlord shall be made to
Tenant upon submission of paid invoices for lamps installed in the Premises by
Tenant and Tenant's certification that such new lamps have been installed
throughout the Premises in accordance with the terms of this Lease. Tenant
hereby agrees to pay any costs associated with installing new lamps throughout
the Premises in excess of the Light Allowance.
ARTICLE V
USE OF PREMISES
5.1 PERMITTED USE. (a) Tenant agrees that the Premises shall be used and
occupied by Tenant only for Permitted Uses.
(b) Tenant agrees to conform to the following provisions during the
Term of this Lease:
(i) Tenant shall cause all freight to be delivered to or removed from the
Building, the Property and the Premises in accordance with reasonable rules and
regulations established by Landlord therefor;
(ii) Tenant will not place on the exterior of the Premises (including both
interior and exterior surfaces of doors and interior surfaces of windows) or on
any part of the Building or the Property outside the Premises, any signs,
symbol, advertisements or the like visible to public view outside of the
Premises. Landlord will not unreasonably withhold consent for signs or
lettering on the entry doors to the Premises provided such signs conform to
building standards adopted by Landlord and Tenant has submitted a sketch of the
sign to be placed on such entry doors.
(iii) Tenant shall not perform any act or carry on any practice which may
injure the Premises, or any other part of the Building or the Property, or
cause offensive odors or loud noise or constitute a nuisance or menace to any
other tenant or tenants or other persons in the Building;
(iv) Tenant shall, in its use of the Premises, comply with the requirements of
all applicable governmental laws, rules and regulations; and
<PAGE> 8
(v) Tenant shall continuously throughout the Term of this Lease occupy the
Premises for the Permitted Uses and for no other purposes.
5.2 INSTALLATION AND ALTERATIONS BY TENANT. (a) Tenant shall make no
alterations, additions (including, for the purposes hereof, wall-to-wall
carpeting), or improvements in or to the Premises without Landlord's prior
written consent. Any such alterations, additions or improvements shall (i) be
in accordance with complete plans and specifications prepared by Tenant and
approved in advance by Landlord; (ii) be performed in a good and workmanlike
manner and in compliance with all applicable laws; (iii) be performed and
completed in the manner required in Section 5.2(d) hereof; (iv) be made at
Tenant's sole expense and at such times as Landlord may from time to time
designate; and (v) become a part of the Premises and the property of Landlord.
(b) All articles of personal property and all business fixtures,
machinery and equipment and furniture owned or installed by Tenant solely at
its expense in the Premises ("Tenant's Removable Property") shall remain the
property of Tenant and may be removed by Tenant at any time prior to the
expiration of this Lease, provided that Tenant, at its expense, shall repair
any damage to the Building caused by such removal.
(c) Notice is hereby given that Landlord shall not be liable for any
labor or materials furnished or to be furnished to Tenant upon credit, and that
no mechanic's or other lien for any such labor or materials shall attach to or
affect the reversion or other estate or interest of Landlord in and to the
Premises. Whenever and as often as Tenant shall have knowledge (whether such
knowledge is provided by Landlord or by any other party or in any manner) that
any mechanic's lien shall have been filed against the Premises based upon any
act or interest of Tenant or of anyone claiming through Tenant, Tenant shall
forthwith take such actions by bonding, deposit or payment as will remove or
satisfy the lien.
(d) All of the Tenant's alterations, additions and installation of
furnishings shall be coordinated with any work being performed by Landlord and
in such manner as to maintain harmonious labor relations and not damage the
Property or interfere with Building construction or operation and, except for
installation of furnishings, shall be performed by Landlord's general
contractor or, at Landlord's election, provided that the cost of such work is
less than $10,000.00, by contractors or workmen first approved by Landlord.
Installation and moving of furnishings, equipment and the like shall be
performed only with labor compatible with that being employed by Landlord for
work in or to the Building and not to employ or permit the use of any
<PAGE> 9
labor or otherwise take any action which might result in a labor dispute
involving personnel providing services in the Building. Except for work by
Landlord's general contractor, Tenant before its work is started shall: secure
all licenses and permits necessary therefor; deliver to Landlord a statement of
the names of all its contractors and subcontractors and the estimated cost of
all labor and material to be furnished by them; and cause each contractor to
carry workmen's compensation insurance in statutory amounts covering all the
contractor's and subcontractor's employees and comprehensive public liability
insurance and property damage insurance with such limits as Landlord may
reasonably require but in no event less than a combined single limit of Two
Million and No/100ths ($2,000,000.00) Dollars (all such insurance to be written
in companies approved by Landlord and insuring Landlord and Tenant as well as
the contractors), and to deliver to Landlord certificates of all such
insurance. Tenant agrees to pay promptly when due the entire cost of any work
done on the Premises by Tenant, its agents, employees, or independent
contractors, and not to cause or permit any liens for labor or materials
performed or furnished in connection therewith to attach to the Premises or the
Property and immediately (upon Tenant having knowledge of same regardless of
how Tenant shall obtain such knowledge) to discharge any such liens which may
so attach and, at the request of Landlord to deliver to Landlord security
satisfactory to Landlord against liens arising out of the furnishing of such
labor and material. Upon completion of any work done on the Premises by
Tenant, its agents, employees, or independent contractors, Tenant shall
promptly deliver to Landlord attested copies (or to the extent required by
Landlord) originals of lien releases and waivers executed by each contractor,
subcontractor, supplier, materialmen, architect, engineer or other party which
furnished labor, materials or other services in connection with such work and
pursuant to which all liens, claims and other rights of such party with respect
to labor, material or services furnished in connection with such work are
unconditionally released and waived. Tenant shall pay within thirty (30) days
after being billed therefor by Landlord, as an additional charge hereunder, one
hundred percent (100%) of any increase in real estate taxes on the Property not
otherwise billed to Tenant which shall, at any time after commencement of the
Term, result from any alteration, addition or improvement to the Premises made
by or on behalf of Tenant (including Tenant's original installation and
Tenant's subsequent alterations, additions, substitutions and improvements),
whether done prior to or after the commencement of the Term of this Lease.
In any case where Landlord shall require that work or improvements to
be made by Tenant in the Premises be performed by contractors or workmen
designated by Landlord, Landlord shall obtain three competitive bids from
reputable contractors selected
<PAGE> 10
by Landlord for such work and shall consult with Tenant as to the selection of
the contractor performing such work. In any and all events, Tenant shall have
the right to designate the contractor to be used from the three bids so
obtained.
ARTICLE VI
ASSIGNMENT AND SUBLETTING
6.1 PROHIBITION. (a) Tenant covenants and agrees that whether voluntarily,
involuntarily, by operation of law or otherwise, neither this Lease nor the
term and estate hereby granted, nor any interest herein or therein, will be
assigned, mortgaged, pledged, encumbered or otherwise transferred and that
neither the Premises nor any part thereof will be encumbered in any manner by
reason of any act or omission on the part of Tenant, or used or occupied, by
anyone other than Tenant, or for any use or purpose other than a Permitted Use,
or be sublet (which term, without limitation, shall include granting of
concessions, licenses and the like) in whole or in part, or be offered or
advertised for assignment or subletting.
(b) The provisions of paragraph (a) of this Section 6.1 shall not
apply to transactions with an entity into or with which Tenant is merged or
consolidated or to which substantially all of Tenant's assets are transferred
or to any entity which controls or is controlled by Tenant or is under common
control with Tenant, provided that in any of such events (i) the successor to
Tenant has a net worth computed in accordance with generally accepted
accounting principles at least equal to the net worth of Tenant immediately
prior to such merger, consolidation or transfer, (ii) proof satisfactory to
Landlord of such net worth shall have been delivered to Landlord at least 10
days prior to the effective date of any such transaction, and (iii) the
assignee agrees directly with Landlord, by written instrument in form
satisfactory to Landlord, to be bound by all the obligations of Tenant
hereunder including, without limitation, the covenant against further
assignment or subletting.
(c) If this Lease be assigned, or if the Premises or any part thereof
be sublet or occupied by anyone other than Tenant, Landlord may, at any time
and from time to time, collect rent and other charges from the assignee,
subtenant or occupant, and apply the net amount collected to the rent and other
charges herein reserved, but no such assignment, subletting, occupancy,
collection or modification of any provisions of this Lease shall be deemed a
waiver of this covenant, or the acceptance of the assignee, subtenant or
occupant as a tenant or a release of the
<PAGE> 11
original named Tenant from the further performance by the original named Tenant
hereunder. No assignment or subletting hereunder shall relieve Tenant from its
obligations hereunder and Tenant shall remain fully and primarily liable
therefor. No assignment or subletting, or occupancy shall affect Permitted
Uses.
ARTICLE VII
RESPONSIBILITY FOR REPAIRS AND CONDITIONS OF PREMISES;
SERVICES TO BE FURNISHED BY LANDLORD
7.1 LANDLORD REPAIRS. (a) Except as otherwise provided in this Lease,
Landlord agrees to keep in good order, condition and repair the roof, public
areas, exterior walls (including exterior glass), sprinkler system, and
structure of the Building (including plumbing, mechanical and electrical
systems installed by Landlord but excluding any systems installed specifically
for Tenant's benefit or which are used exclusively by Tenant), all insofar as
they affect the Premises, except that Landlord shall in no event be responsible
to Tenant for the condition of glass in the Premises or for the doors (or
related glass and finish work) leading to the Premises, or for any condition in
the Premises or the Building caused by any act or neglect of Tenant, its
agents, employees, invitees or contractors. Landlord shall not be responsible
to make any improvements or repairs to the Building other than as expressly in
this Section 7.1 provided, unless expressly provided otherwise in this Lease.
(b) Landlord shall never be liable for any failure to make repairs
which Landlord has undertaken to make under the provisions of this Section 7.1
or elsewhere in this Lease, unless Tenant has given notice to Landlord of the
need to make such repairs, and Landlord has failed to commence to make such
repairs within a reasonable time after receipt of such notice, or fails to
proceed with reasonable diligence to complete such repairs.
(c) Any services which Landlord is required to furnish pursuant to
the provisions of this Lease may, at Landlord's option be furnished from time
to time, in whole or in part, by employees of Landlord or by the Manager of the
Property or by one or more third persons.
(d) Landlord shall (i) perform repairs and maintenance on the
lighting fixtures located in the parking area or in common areas of the
Property, (ii) remove snow and ice from the parking area and common walkways,
and (iii) perform landscaping duties in common areas of the Property.
<PAGE> 12
7.2 TENANT'S AGREEMENT. (a) Tenant will keep neat and clean and maintain
in good order, condition and repair the Premises and every part thereof
including, without limitation, all HVAC, mechanical, electrical and plumbing
systems which serve the Premises. Throughout the term of this Lease, Tenant
shall maintain in force and effect a maintenance contract with respect to the
HVAC system serving the Premises with an HVAC contractor regularly engaged in
maintenance of HVAC systems similar to the system servicing the Premises, which
contractor and the terms and provisions of the contract therefor shall be
subject to the reasonable approval of Landlord. Without limitation, Tenant
shall continually during the Term of this Lease maintain the Premises in
accordance with all laws (including, without limitation, the Americans with
Disabilities Act), codes and ordinances from time to time in effect and all
directions, rules and regulations of the proper officers of governmental
agencies having jurisdiction, and of the Boston Board of Fire Underwriters, and
shall, at Tenant's own expense, obtain all permits, licenses and the like
required by applicable law. Notwithstanding the foregoing or the provisions of
Article XII, Tenant shall be responsible for the cost of repairs which may be
necessary by reason of damage to the Building caused by any act or neglect of
Tenant or its agents, employees, contractors or invitees (including any damage
by fire or any other casualty arising therefrom).
(b) If repairs are required to be made by Tenant pursuant to the
terms hereof, Landlord may demand that Tenant make the same forthwith, and if
Tenant refuses or neglects to commence such repairs and complete the same with
reasonable dispatch after such demand, Landlord may (but shall not be required
to do so) make or cause such repairs to be made (the provisions of Section
14.18 being applicable to the costs thereof) and shall not be responsible to
Tenant for any loss or damage that may accrue to Tenant's stock or business by
reason thereof. Notwithstanding the foregoing, Landlord may elect to take
action hereunder immediately and without notice to Tenant if Landlord
reasonably believes an emergency to exist.
(c) If the Premises are now, or any time during the Term of this
Lease become a "Public Accommodation" as defined in the Americans with
Disabilities Act of 1990 (421 USC Sec. 12101 et seq.) as amended and all
regulations promulgated thereunder, as amended (the "ADA"), (i) the Landlord
shall be responsible for compliance with Title III of the ADA to the
<PAGE> 13
extent that the ADA imposes obligations on the design or the construction of,
or any alterations to, the Building (exclusive however of such matters as they
pertain to the Premises), (ii) Tenant shall be responsible for compliance with
Title III of the ADA to the extent that the ADA imposes obligations on the
design or the construction of, or any alterations to, the Premises (exclusive
however of those portions of the Building which are not a portion of the
Premises, where compliance shall be the responsibility of Landlord), and (iii)
Tenant shall be responsible for making any necessary modifications in its
policies, practices and procedures in connection with the operation of Tenant's
business in order to comply with the applicable provisions of the ADA.
7.3 FLOOR LOAD - HEAVY MACHINERY. (a) Tenant shall not place a load upon
any floor in the Premises exceeding the floor load per square foot of area
which such floor was designed to carry and which is allowed by law. Landlord
reserves the right to prescribe the weight and position of all business
machines and mechanical equipment, including safes, which shall be placed so as
to distribute the weight. Business machines and mechanical equipment shall be
placed and maintained by Tenant at Tenant's expense in settings sufficient, in
Landlord's judgment, to absorb and prevent vibration, noise and annoyance.
Tenant shall not move any safe, heavy machinery, heavy equipment, freight,
bulky matter or fixtures into or out of the Building without Landlord's prior
consent, which consent may include a requirement to provide insurance, naming
Landlord as an insured, in such amounts as Landlord may deem reasonable.
(b) If such safe, machinery, equipment, freight, bulky matter or
fixtures requires special handling, Tenant agrees to employ only persons
holding a Master Rigger's License to do such work, and that all work in
connection therewith shall comply with applicable laws and regulations. Any
such moving shall be at the sole risk and hazard of Tenant, and Tenant will
exonerate, indemnity and save Landlord harmless against and from any liability,
loss, injury, claim or suit resulting directly or indirectly from such moving.
7.4 BUILDING SERVICES. (a) Intentionally Omitted.
(b) Intentionally Omitted.
(c) Landlord reserves the right to curtail, suspend, interrupt and/or
stop the supply of water, sewage, electrical current, cleaning, and other
services, and to curtail, suspend, interrupt and/or stop use of entrances
and/or lobbies serving access to the Building, without thereby incurring any
liability to Tenant, when necessary by reason of accident or emergency, or for
repairs, alterations, replacements or improvements in the judgment of Landlord
desirable or necessary, or when prevented from supplying such services or use
by strikes, lockouts, difficulty in obtaining materials, accidents or any other
cause beyond Landlord's control, or by laws, orders or inability, by
<PAGE> 14
exercise of reasonable diligence, to obtain electricity, water, gas, steam,
coal, oil or other suitable fuel or power. No diminution or abatement of rent
or other compensation, nor any direct, indirect or consequential damages shall
or will be claimed by Tenant as a result of, nor shall this Lease or any of the
obligations of Tenant be affected or reduced by reason of, any such
interruption, curtailment, suspension or stoppage in the furnishing of the
foregoing services or use, irrespective of the cause thereof. Failure or
omission on the part of Landlord to furnish any of the foregoing services or
use shall not be construed as an eviction of Tenant, actual or constructive,
nor entitle Tenant to an abatement of rent, nor to render the Landlord liable
in damages, nor release Tenant from prompt fulfillment of any of its covenants
under this Lease. To the extent within its control, in exercising its rights
pursuant to this Section 7.4(c), Landlord shall use good faith efforts to avoid
unnecessary interference with Tenant's use of the Premises and shall use good
faith efforts to promptly restore any such service or amenity so curtailed,
interrupted, stopped or suspended. In addition, Landlord shall provide
alternative means of access to the Premises in the event of a stoppage or
suspension of the normal means of access to and egress from the Premises.
7.5 ELECTRICITY AND NATURAL GAS. (a) Tenant shall receive electric
current and natural gas for the Premises from the public utility corporation
serving the Building and Landlord shall permit Landlord's existing wires,
risers, pipes, conduits and other electrical equipment of Landlord to be used
for such purpose. Tenant covenants and agrees that its use of electric current
shall not overburden existing Building systems nor preclude other tenants of
the Building, if any, from obtaining and receiving adequate electrical services
and its total connected load will not exceed the maximum load from time to time
permitted by applicable governmental regulations and the design capacity of
existing systems. Landlord shall not in any way be liable or responsible to
Tenant for any loss or damage or expense which Tenant may sustain or incur if,
during the Term of this Lease, either the quantity or character of electric
current or natural gas is changed or electric current or natural gas is no
longer available or suitable for Tenant's requirements due to a factor or cause
beyond Landlord's control. Tenant shall pay all charges for electricity and
natural gas used or consumed in the Premises in the time and manner provided in
Section 7.5(c).
(b) In order to insure that the foregoing requirements are not
exceeded and to avert possible adverse affect on the Building's electrical
system, Tenant shall not, without Landlord's prior consent, connect any
fixtures, appliances or equipment to the Building's electrical distribution
system other
<PAGE> 15
than Tenant's material handling equipment, typewriters, word processors,
photocopiers, and other similar customary office equipment. From time to time
during the Term of this Lease, Landlord shall have the right to have an
electrical consultant selected by Landlord make a survey of Tenant's electric
usage, the result of which shall be conclusive and binding upon Landlord and
Tenant. In the event that such survey shows that Tenant has exceeded the
requirements set forth in paragraph (a), in addition to any other rights
Landlord may have hereunder, Tenant shall, upon demand, reimburse Landlord for
the costs of such survey.
(c) Tenant shall be responsible for the payment of all utilities used
and consumed in the Premises. Notwithstanding the foregoing, electricity and
natural gas used and consumed in the Premises is currently measured by separate
meters which are in the control of the Landlord. Landlord shall install
separate check meters measuring the electricity and natural gas used and
consumed in the Premises and shall bill Tenant for such use and consumption in
the manner hereinafter provided. Landlord shall bill Tenant monthly in arrears
for electricity and natural gas used and consumption as measured by said check
meters as being used and consumed in the Premises. From time to time, but not
more than once per calendar month, Landlord shall invoice Tenant for
electricity and natural gas used and consumed in the Premises as measured by
such check meters. Tenant shall pay Landlord such amounts as additional rent
hereunder on or before the date which is 30 days after the date of each such
invoice. Payments for electricity and natural gas used and consumed in the
Premises during the last month of the Initial Term hereof shall be payable by
Tenant within thirty days after being invoiced therefor. Landlord shall have
the same rights and remedies against Tenant for failure to pay charges payable
under this Section 7.5(c) as Landlord has against Tenant for failure to pay
Basic Rent and Escalation Charges when due hereunder.
ARTICLE VIII
REAL ESTATE TAXES
8.1 PAYMENTS ON ACCOUNT OF REAL ESTATE TAXES. (a) For the purposes of this
Article, the term "Tax Year" shall mean the twelve-month period commencing on
the July 1 immediately preceding the Commencement Date and each twelve-month
period thereafter commencing during the Term of this Lease; and the term
"Taxes" shall mean real estate taxes, betterments and special assessments
assessed with respect to the Property for any Tax Year.
<PAGE> 16
(b) Tenant shall pay to Landlord, as an Escalation Charge, an amount
equal to the amount of Taxes attributable to each Tax Year, multiplied by the
Escalation Factor, such amount to be apportioned for any fraction of a Tax Year
in which the Commencement Date falls or the Term of this Lease ends.
Notwithstanding anything contained in Section 8.1(a) or this Section 8.1(b) to
the contrary, for purposes of calculating the payment to be made by Tenant
pursuant to this Section 8.1(b), the term "Taxes" applicable to each respective
Tax Year shall exclude real estate taxes for such Tax Year which are in excess
of $.90 (ninety cents) per rentable square foot contained in the Property.
(c) Estimated payments by Tenant on account of Taxes shall be made
monthly and at the time and in the fashion herein provided for the payment of
Basic Rent. The monthly amount so to be paid to Landlord shall be sufficient to
provide Landlord by the time real estate tax payments are due a sum equal to
Tenant's required payments, as estimated by Landlord from time to time, on
account of Taxes for the then current Tax Year. Promptly after receipt by
Landlord of bills for such Taxes, Landlord shall advise Tenant of the amount
thereof and the computation of Tenant's payment on account thereof. If
estimated payments theretofore made by Tenant for the Tax Year covered by such
bills exceed the required payments on account thereof for such Year, Landlord
shall credit the amount of overpayment against subsequent obligations of Tenant
on account of Taxes (or refund such overpayment if the Term of this Lease has
ended and Tenant has no further obligation to Landlord); but if the required
payments on account thereof for such Year are greater than estimated payments
theretofore made on account thereof for such Year, Tenant shall make payment to
Landlord within 30 days after being so advised by Landlord. Landlord shall have
the same rights and remedies for the non-payment by Tenant of any payments due
on account of Taxes as Landlord has hereunder for the failure of Tenant to pay
Basic Rent.
8.2 ABATEMENT. If Landlord shall receive any tax refund or reimbursement
of Taxes or sum in lieu thereof with respect to any Tax Year which is not due
to vacancies in the Building, then out of any balance remaining thereof after
first deducting (i) Landlord's expenses reasonably incurred in obtaining such
refund and (ii) any amounts in excess of $.90 per rentable square foot
contained in the Property, Landlord shall pay to Tenant, provided there does
not then exist a Default of Tenant, an amount equal to the balance remaining of
such refund or reimbursement or sum in lieu thereof (exclusive of any interest)
multiplied by the Escalation Factor; provided, that in no event shall Tenant be
entitled to receive more than the payments made by Tenant on
<PAGE> 17
account of real estate taxes for such Year pursuant to paragraph (b) of Section
8.1.
8.3 ALTERNATE TAXES. (a) If some method or type of taxation shall replace
the current method of assessment of real estate taxes in whole or in part, or
the type thereof, or if additional types of taxes are imposed upon the Property
or Landlord relating to the Property, Tenant agrees that Tenant shall pay a
proportionate share of the same as an additional charge computed in a fashion
consistent with the method of computation herein provided, to the end that
Tenant's share thereof shall be, to the maximum extent practicable, comparable
to that which Tenant would bear under the foregoing provisions.
(b) If a tax (other than Federal or State net income tax) is assessed
on account of the rents or other charges payable by Tenant to Landlord under
this Lease, Tenant agrees to pay the same as an additional charge within ten
(10) days after billing therefor, unless applicable law prohibits the payment
of such tax by Tenant.
ARTICLE IX
OPERATING EXPENSES
9.1 DEFINITIONS. For the purposes of this Article, the following terms
shall have the following respective meanings:
Operating Year: Each calendar year in which any part of the
Term of this Lease shall fall.
Operating Expenses: The aggregate costs or expenses reasonably
incurred by Landlord with respect to the operation, administration, cleaning,
repair, maintenance and management of the Building and/or the Property (but
specifically excluding Utility Expenses) all as set forth in Exhibit E annexed
hereto, provided that, if during any portion of the Operating Year for which
Operating Expenses are being computed, less than all of Building Rentable Area
and/or Property Rentable Area was occupied by tenants or if Landlord is not
supplying all tenants with the services being supplied hereunder, actual
Operating Expenses Allocable to the Building and actual Operating Expenses
Allocable to the Property incurred shall be reasonably extrapolated by Landlord
on an item by item basis to the estimated Operating Expenses Allocable to the
Building and/or Operating Expenses Allocable to the Property that would have
been incurred if the Building were fully occupied for such Operating Year and
such services were being supplied to all tenants, and such
<PAGE> 18
extrapolated amount shall, for the purposes hereof, be deemed to be the
Operating Expenses Allocable to the Building and/or Operating Expenses
Allocable to the Property for such Operating Year. Landlord's determination
as to allocation of Operating Expenses shall be conclusive and binding upon
Landlord and Tenant.
Operating Expenses Allocable to the Building: shall mean those
Operating Expenses described in Exhibit E which Landlord determines are
allocable to the Building and the land parcel upon which it is situated (rather
than those which are allocable to the entire Property which includes all
buildings and land parcels comprising the Property inclusive of the Building
and the land parcel upon which it is situated).
Operating Expenses Allocable to the Property: shall mean those
Operating Expenses described in Exhibit E which Landlord determines are
allocable to the entire Property (rather than those which Landlord determines
to be Operating Expenses Allocable to the Building).
Utility Expenses: The aggregate costs or expenses reasonably
incurred by Landlord with respect to supplying electricity (other than
electricity supplied to those portions of the Building leased to tenants), oil,
steam, gas, water and sewer and other utilities supplied to the Property and
not paid for directly by tenants, provided that, if during any portion of the
Operating Year for which Utility Expenses are being computed, less than all
Property Rentable Area was occupied by tenants or if Landlord is not supplying
all tenants with the utilities being supplied hereunder, actual utility
expenses incurred shall be reasonably extrapolated by Landlord on an
item-by-item basis to the estimated Utility Expenses that would have been
incurred if the Property were fully occupied for such Operating Year and such
utilities were being supplied to all tenants, and such extrapolated amount
shall, for the purposes hereof, be deemed to be the Utility Expenses for such
Operating Year.
9.2 TENANT'S PAYMENTS. (a) Tenant shall pay to Landlord, as an Escalation
Charge, an amount equal to (i) Operating Expenses Allocable to the Building for
each Operating Year multiplied by (ii) the Building Escalation Factor, such
amount to be apportioned for any partial Operating Year in which the
Commencement Date falls or the Term of this Lease ends. In addition, Tenant
shall pay to Landlord as an Escalation Charge, an amount equal to (i) Operating
Expenses Allocable to the Property for each Operating Year multiplied by (ii)
the Escalation Factor, such amount to be apportioned for any partial Operating
Year in which the Commencement Date falls or the Term of this Lease ends.
Notwithstanding the provisions of this
<PAGE> 19
Section 9.2(a) to the contrary, the Tenant's obligation pursuant to this
Section 9.2(a) during the first 12 full calendar months of the Initial Term
shall not exceed $93,568.00 in the aggregate.
(b) Tenant shall pay to Landlord, as an Escalation Charge, an amount
equal to (i) Utility Expenses for each Operating Year multiplied by (ii) the
Escalation Factor, such amount to be apportioned for any partial Operating Year
in which the Commencement Date falls or the Term of this Lease ends.
(c) Estimated payments by Tenant on account of Operating Expenses
Allocable to the Building and Operating Expenses Allocable to the Property
shall be made monthly and at the time and in the fashion herein provided for
the payment of Basic Rent. The monthly amount so to be paid to Landlord shall
be sufficient to provide Landlord by the end of each Operating Year a sum equal
to Tenant's required payments, as estimated by Landlord from time to time
during each Operating Year, on account of Operating Expenses Allocable to the
Building and Operating Expenses Allocable to the Property and Utility Expenses
for such Operating Year. After the end of each Operating Year, Landlord shall
submit to Tenant a reasonably detailed accounting of Operating Expenses
Allocable to the Building and Operating Expenses Allocable to the Property and
Utility Expenses for such Operating Year, and Landlord shall certify to the
accuracy thereof. If estimated payments theretofore made for such Operating
Year by Tenant exceed Tenant's required payment on account thereof for such
Operating Year, according to such statement, Landlord shall credit the amount
of overpayment against subsequent obligations of Tenant with respect to
Operating Expenses Allocable to the Building or Operating Expenses Allocable to
the Property and Utility Expenses (or refund such overpayment if the Term of
this Lease has ended and Tenant has no further obligation to Landlord), but, if
the required payments on account thereof for such Operating Year are greater
than the estimated payments (if any) theretofore made on account thereof for
such Operating Year, Tenant shall make payment to Landlord within thirty (30)
days after being so advised by Landlord. Landlord shall have the same rights
and remedies for the nonpayment by Tenant of any payments due on account of
Operating Expenses Allocable to the Building and Operating Expenses Allocable
to the Property and Utility Expenses as Landlord has hereunder for the failure
of Tenant to pay Basic Rent.
ARTICLE X
INDEMNITY AND PUBLIC LIABILITY INSURANCE
<PAGE> 20
10.1 TENANT'S INDEMNITY. To the maximum extent this agreement may be made
effective according to law, Tenant agrees to defend, indemnity and save
harmless Landlord from and against all claims, loss, liability, costs and
damages of whatever nature arising from any default by Tenant under this Lease
and the following: (i) from any accident, injury, death or damage whatsoever to
any person, or to the property of any person, occurring in or about the
Premises; (ii) from any accident, injury, death or damage occurring outside of
the Premises but on the Property, where such accident, damage or injury results
or is claimed to have resulted from an act or omission on the part of Tenant or
Tenant's agents, employees, invitees or independent contractors; or (iii) in
connection with the conduct or management of the Premises or of any business
therein, or any thing or work whatsoever done, or any condition created (other
than by Landlord) in or about the Premises; and, in any case, occurring after
the date of this Lease, until the end of the Term of this Lease, and thereafter
so long as Tenant is in occupancy of the Premises. This indemnity and hold
harmless agreement shall include indemnity against all costs, expenses and
liabilities incurred in, or in connection with, any such claim or proceeding
brought thereon, and the defense thereof, including, without limitation,
reasonable attorneys' fees and costs at both the trial and appellate levels.
Nothing contained in this Section 10.1 shall be deemed or construed to
exculpate Landlord from its own negligence or the negligence of its agents,
servants or employees. The provisions of this Section 10.1 shall survive the
expiration or any earlier termination of this Lease.
10.2 PUBLIC LIABILITY INSURANCE. Tenant agrees to maintain in full force
from the date upon which Tenant first enters the Premises for any reason,
throughout the Term of this Lease, and thereafter so long as Tenant is in
occupancy of any part of the Premises, a policy of general liability and
property damage insurance (including contractual liability, independent
contractor's hazard and completed operations coverage) under which Landlord,
Manager (and such other persons as are in privity of estate with Landlord as
may be set out in notice from time to time) and Tenant are named as insureds,
and under which the insurer agrees to defend, indemnify and hold Landlord,
Manager, and those in privity of estate with Landlord, harmless from and
against all cost, expense and/or liability arising out of or based upon any and
all claims, accidents, injuries and damages set forth in Section 10.1. Each
such policy shall be non-cancellable and non-amendable with respect to
Landlord, Manager and Landlord's said designees without thirty (30) days' prior
notice to Landlord and shall be in at least the amounts of the Initial Public
Liability Insurance specified in Section 1.3 or such greater amounts as
Landlord shall from time to time request,
<PAGE> 21
and a duplicate original or certificate thereof shall be delivered to Landlord.
10.3 TENANT'S RISK. Except for matters resulting from Landlord's
negligence or the negligence of its agents, servants or employees and to the
maximum extent this agreement may be made effective according to law, Tenant
agrees to use and occupy the Premises and to use such other portions of the
Property as Tenant is herein given the right to use at Tenant's own risk.
Landlord shall have no responsibility or liability for any loss of or damage to
Tenant's Removable Property or for any inconvenience, annoyance, interruption
or injury to business arising from Landlord's making any repairs or changes
which Landlord is permitted by this Lease or required by law to make in or to
any portion of the Premises or other sections of the Property, or in or to the
fixtures, equipment or appurtenances thereof. Tenant shall carry "all-risk"
property insurance on a "replacement cost" basis (including so-called
improvements and betterments), and provide a waiver of subrogation as required
in Section 14.20. The provisions of this Section 10.3 shall be applicable from
and after the execution of this Lease and until the end of the Term of this
Lease, and during such further period as Tenant may use or be in occupancy of
any part of the Premises or of the Building.
10.4 INJURY CAUSED BY THIRD PARTIES. To the maximum extent this agreement
may be made effective according to law, Tenant agrees that Landlord shall not
be responsible or liable to Tenant, or to those claiming by, through or under
Tenant, for any loss or damage that may be occasioned by or through the acts or
omissions of persons occupying adjoining premises or any part of the premises
adjacent to or connecting with the Premises or any part of the Property or
otherwise. The provisions of this Section 10.4 shall survive the expiration or
any earlier termination of this Lease.
ARTICLE XI
LANDLORD'S ACCESS TO PREMISES
11.1 LANDLORD'S RIGHTS. Landlord shall have the right upon 24 hours
advance written or oral notice to Tenant (except in the case of emergency,
where no notice shall be required) to enter the Premises at all reasonable
hours for the purpose of inspecting or making repairs to the same, and Landlord
shall also have the right to make access available at all reasonable hours to
prospective or existing mortgagees, purchasers or tenants of any part of the
Property. In exercising its rights under this
<PAGE> 22
Section 11.1, Landlord hereby agrees that (i) an agent or representative of
Tenant shall be permitted to accompany Landlord's agents during such entry and
(ii) subject to all other applicable provisions of this Lease, such entry shall
be at Landlord's risk.
ARTICLE XII
FIRE, EMINENT DOMAIN, ETC.
12.1 ABATEMENT OF RENT. If the Premises shall be damaged by fire or
casualty, Basic Rent and Escalation Charges payable by Tenant shall abate
proportionately for the period in which, by reason of such damage, there is
substantial interference with Tenant's use of the Premises, having regard to
the extent to which Tenant may be required to discontinue Tenant's use of all
or a portion of the Premises, but such abatement or reduction shall end if and
when Landlord shall have substantially restored the Premises (excluding any
alterations, additions or improvements made by Tenant pursuant to Section 5.2)
to the condition in which they were prior to such damage. If the Premises shall
be affected by any exercise of the power of eminent domain, Basic Rent and
Escalation Charges payable by Tenant shall be justly and equitably abated and
reduced according to the nature and extent of the loss of use thereof suffered
by Tenant. In no event shall Landlord have any liability for damages to Tenant
for inconvenience, annoyance, or interruption of business arising from such
fire, casualty or eminent domain.
12.2 LANDLORD'S RIGHT OF TERMINATION. If the Premises or the Building are
substantially damaged by fire or casualty (the term "substantially damaged"
meaning damage of such a character that the same cannot, in ordinary course,
reasonably be expected to be repaired within sixty (60) days from the time the
repair work would commence), or if any part of the Building is taken by any
exercise of the right of eminent domain, then Landlord shall have the right to
terminate this Lease (even if Landlord's entire interest in the Premises may
have been divested) by giving notice of Landlord's election so to do within 90
days after the occurrence of such casualty or the effective date of such
taking, whereupon this Lease shall terminate thirty (30) days after the date of
such notice with the same force and effect as if such date were the date
originally established as the expiration date hereof.
12.3 RESTORATION. If this Lease shall not be terminated pursuant to
Section 12.2, Landlord shall thereafter use due diligence to restore the
Premises (excluding any alterations,
<PAGE> 23
additions or improvements made by Tenant) to proper condition for Tenant's use
and occupation, provided that Landlord's obligation shall be limited to the
amount of insurance proceeds available therefor. If, for any reason, such
restoration shall not be substantially completed within six months after the
expiration of the 90-day period referred to in Section 12.2 (which six-month
period may be extended for such periods of time as Landlord is prevented from
proceeding with or completing such restoration for any cause beyond Landlord's
reasonable control, but in no event for more than an additional three months),
Tenant shall have the right to terminate this Lease by giving notice to
Landlord thereof within thirty (30) days after the expiration of such period
(as so extended). Upon the giving of such notice, this Lease shall cease and
come to an end without further liability or obligation on the part of either
party unless, within such 30-day period, Landlord substantially completes such
restoration. Such right of termination shall be Tenant's sole and exclusive
remedy at law or in equity for Landlord's failure so to complete such
restoration.
12.4 AWARD. Landlord shall have and hereby reserves and excepts, and
Tenant hereby grants and assigns to Landlord, all rights to recover for damages
to the Property and the leasehold interest hereby created, and to compensation
accrued or hereafter to accrue by reason of such taking, damage or destruction,
and by way of confirming the foregoing, Tenant hereby grants and assigns, and
covenants with Landlord to grant and assign to Landlord, all rights to such
damages or compensation. Nothing contained herein shall be construed to prevent
Tenant from, at its sole cost and expense, prosecuting a separate condemnation
proceeding with respect to a claim for the value of any of Tenant's Removable
Property installed in the Premises by Tenant at Tenant's expense and for
relocation expenses, provided that such action shall not affect the amount of
compensation otherwise recoverable by Landlord from the taking authority.
ARTICLE XIII
DEFAULT
13.1 TENANT'S DEFAULT. (a) If at any time subsequent to the date of this
Lease any one or more of the following events (herein referred to as a "Default
of Tenant") shall happen:
(i) Tenant shall fail to pay the Basic Rent, Escalation Charges or other
sums payable as additional charges hereunder when due; or
<PAGE> 24
(ii) Tenant shall neglect or fail to perform or observe any other
covenant herein contained on Tenant's part to be performed or observed, or
Tenant shall desert or abandon the Premises or the Premises shall become, or
appear to have become vacant (regardless whether the keys shall have been
surrendered or the rent and all other sums due shall have been paid), and
Tenant shall fail to remedy the same within thirty (30) days after notice to
Tenant specifying such neglect or failure, or if such failure is of such a
nature that Tenant cannot reasonably remedy the same within such thirty (30)
day period, Tenant shall fail to commence promptly to remedy the same and to
prosecute such remedy to completion with diligence and continuity; or
(iii) Tenant's leasehold interest in the Premises shall be taken on
execution or by other process of law directed against Tenant; or
(iv) Tenant shall make an assignment for the benefit of creditors or
shall file a voluntary petition in bankruptcy or shall be adjudicated bankrupt
or insolvent, or shall file any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future Federal, State or other statute,
law or regulation for the relief of debtors, or shall seek or consent to or
acquiesce in the appointment of any trustee, receiver or liquidator of Tenant
or of all or any substantial part of its properties, or shall admit in writing
its inability to pay its debts generally as they become due; or
(v) A petition shall be filed against Tenant in bankruptcy or under any
other law seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or future
Federal, State or other statute, law or regulation and shall remain undismissed
or unstayed for an aggregate of sixty (60) days (whether or not consecutive),
or if any debtor in possession (whether or not Tenant) trustee, receiver or
liquidator of Tenant or of all or any substantial part of its properties or of
the Premises shall be appointed without the consent or acquiescence of Tenant
and such appointment shall remain unvacated or unstayed for an aggregate of
sixty (60) days (whether or not consecutive); or
(vi) If a Default of Tenant of the kind set forth in clauses (i) or (ii)
above shall occur and if either (a) Tenant shall cure such Default within the
applicable grace period or (b) Landlord shall, in its sole discretion , permit
Tenant to cure such Default after the applicable grace period has expired, and
an event which would constitute a similar Default if not cured within the
applicable grace period shall occur more than once
<PAGE> 25
within the next 365 days, whether or not such event is cured within the
applicable grace period;
then in any such case (1) if such Default of Tenant shall occur prior
to the Commencement Date, this Lease shall ipso facto, and without further act
on the part of Landlord, terminate, and (2) if such Default of Tenant shall
occur after the Commencement Date, Landlord may terminate this Lease by notice
to Tenant, and thereupon this Lease shall come to an end as fully and
completely as if such date were the date herein originally fixed for the
expiration of the Term of this Lease, and Tenant will then quit and surrender
the Premises to Landlord, but Tenant shall remain liable as hereinafter
provided.
(b) If this Lease shall be terminated as provided in this Article, or
if any execution or attachment shall be issued against Tenant or any of
Tenant's property whereupon the Premises shall be taken or occupied by someone
other than Tenant, then Landlord may, without notice, re-enter the Premises,
either by force, summary proceedings, ejectment or otherwise, and remove and
dispossess Tenant and all other persons and any and all property from the same,
as if this Lease had not been made, and Tenant hereby waives the service of
notice of intention to re-enter or to institute legal proceedings to that end.
(c) In the event of any termination, Tenant shall pay the Basic Rent,
Escalation Charges and other sums payable hereunder up to the time of such
termination, and thereafter Tenant, until the end of what would have been the
Term of this Lease in the absence of such termination, and whether or not the
Premises shall have been relet, shall be liable to Landlord for, and shall pay
to Landlord, as liquidated current damages, the Basic Rent, Escalation Charges
and other sums which would be payable hereunder if such termination had not
occurred, less the net proceeds, if any, of any reletting of the Premises,
after deducting all expenses in connection with such reletting, including,
without limitation, all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, advertising, expenses of employees, alteration costs
and expenses of preparation for such reletting. Tenant shall pay such current
damages to Landlord monthly on the days which the Basic Rent would have been
payable hereunder if this Lease had not been terminated.
(d) At any time after such termination, whether or not Landlord shall
have collected any such current damages, as liquidated final damages and in
lieu of all such current damages beyond the date of such demand, at Landlord's
election Tenant shall pay to Landlord and amount equal to the excess, if any,
of the Basic Rent, Escalation Charges and other sums as hereinbefore
<PAGE> 26
provided which would be payable hereunder from the date of such demand
(assuming that, for the purposes of this paragraph, annual payments by Tenant
on account of Taxes, Utility Expenses and Operating Expenses would be the same
as the payments required for the immediately preceding Operating or Tax Year)
for what would be the then unexpired Term of this Lease if the same had
remained in effect, over the then fair net rental value of the Premises for the
same period.
(e) In the case of any Default by Tenant, re-entry, expiration and
dispossession by summary proceeding or otherwise, Landlord shall use good faith
efforts to mitigate its damages resulting from such action and may (i) re-let
the Premises or any part or parts thereof, either in the name of Landlord or
otherwise, for a term or terms which may at Landlord's option be equal to or
less than or exceed the period which would otherwise have constituted the
balance of the Term of this Lease and may grant concessions or free rent to the
extent that Landlord considers advisable and necessary to re-let the same and
(ii) may make such reasonable alterations, repairs and decorations in the
Premises as Landlord in its sole judgment considers advisable and necessary for
the purpose of reletting the Premises; and the making of such alterations,
repairs and decorations shall not operate or be construed to release Tenant
from liability hereunder as aforesaid. Subject to the terms of this Section
(e), Landlord shall in no event be liable in any way whatsoever for failure to
re-let the Premises, or, in the event that the Premises are re-let, for failure
to collect the rent under such re-letting. Tenant hereby expressly waives any
and all rights of redemption granted by or under any present or future laws in
the event of Tenant being evicted or dispossessed, or in the event of Landlord
obtaining possession of the Premises, by reason of the violation by Tenant of
any of the covenants and conditions of this Lease.
(f) If a Guarantor of this Lease is named in Section 1.2, the
happening of any of the events described in paragraphs (a)(iv) or (a)(v) of
this Section 13.1 with respect to the Guarantor shall constitute a Default of
Tenant hereunder.
(g) The specified remedies to which Landlord may resort hereunder are
not intended to be exclusive of any remedies or means of redress to which
Landlord may at any time be entitled to lawfully, and Landlord may invoke any
remedy (including the remedy of specific performance) allowed at law or in
equity as if specific remedies were not herein provided for.
(h) All costs and expenses incurred by or on behalf of Landlord
(including, without limitation, attorneys' fees and
<PAGE> 27
expenses) in enforcing its rights hereunder or occasioned by any Default of
Tenant shall be paid by Tenant.
13.2 LANDLORD'S DEFAULT. (a) Except as otherwise expressly set forth in
Section 13.2(b) hereof, Landlord shall in no event be in default of the
performance of any of Landlord's obligations hereunder unless and until
Landlord shall have unreasonably failed to perform such obligation within a
period of time reasonably required to correct any such default, after notice by
Tenant to Landlord specifying wherein Landlord has failed to perform any such
obligations.
(b) If repairs are required to be made or provided by Landlord
pursuant to the terms of this Lease and Landlord shall fail to make or perform
same within the time and manner required by all other applicable provisions of
this Lease, Tenant may demand that Landlord commence such repairs within thirty
(30) days after written notice that such repairs are not being performed; and
if Landlord refuses or neglects to commence such repairs within such thirty
(30) day period and shall thereafter fail to complete the same with reasonable
dispatch after such demand, Tenant may make or cause such repairs to be made
and charge Landlord for reasonable repair costs incurred; however, Landlord
shall not be responsible to Tenant for any loss or damage that may accrue to
Tenant's stock business or Tenant's Removable Property by reason thereof.
Notwithstanding the foregoing, Tenant may elect to take action permitted to be
taken hereunder by Tenant immediately (but upon written or oral notice to
Landlord to the extent possible) if Tenant reasonably believes an emergency to
exist. Notwithstanding the foregoing, Tenant shall have no right to make and
shall not make, without the prior written consent of Landlord, repairs to any
portion of the Premises, Building or the Property which are to be made by
Landlord related to the furnishing of base building services, including but not
limited to structural elements of the Building including the roof, mechanical,
electrical, plumbing and general HVAC services (except routine maintenance of
HVAC systems or those matters for which Tenant is responsible under this
Lease). Landlord shall reimburse Tenant for reasonable costs incurred by
Tenant in performing such repair obligations of Landlord in accordance with
this Section 13.2(b) within 45 days after submission of detailed paid invoices
therefor by Tenant.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
<PAGE> 28
14.1 EXTRA HAZARDOUS USE. Tenant covenants and agrees that Tenant will not
do or permit anything to be done in or upon the Premises, or bring in anything
or keep anything therein, which shall increase the rate of property or
liability insurance on the Premises or of the Building above the standard rate
applicable to premises being occupied for Permitted Uses; and Tenant further
agrees that, in the event that Tenant shall do any of the foregoing, Tenant
will promptly pay to Landlord, on demand, any such increase resulting
therefrom, which shall be due and payable as an additional charge hereunder.
14.2 WAIVER. (a) Failure on the part of Landlord or Tenant to complain of
any action or non-action on the part of the other, no matter how long the same
may continue, shall never be a waiver by Tenant or Landlord, respectively, of
any of the other's rights hereunder. Further, no waiver at any time of any of
the provisions hereof by Landlord or Tenant shall be construed as a waiver of
any of the other provisions hereof, and a waiver at any time of any of the
provisions hereof shall not be construed as a waiver at any subsequent time of
the same provisions. The consent or approval of Landlord or Tenant to or of any
action by the other requiring such consent or approval shall not be construed
to waive or render unnecessary Landlord's or Tenant's consent or approval to or
of any subsequent similar act by the other.
(b) No payment by Tenant, or acceptance by Landlord, of a lesser
amount than shall be due from Tenant to Landlord shall be treated otherwise
than as a payment on account of the earliest installment of any payment due
from Tenant under the provisions hereof. The acceptance by Landlord of a check
for a lesser amount with an endorsement or statement thereon, or upon any
letter accompanying such check, that such lesser amount is payment in full,
shall be given no effect, and Landlord may accept such check without prejudice
to any other rights or remedies which Landlord may have against Tenant.
14.3 COVENANT OF QUIET ENJOYMENT. Tenant, subject to the terms and
provisions of this Lease, on payment of the Basic Rent and Escalation Charges
and observing, keeping and performing all of the other terms and provisions of
this Lease on Tenant's 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
Landlord to have title to the Premises superior to Tenant; the foregoing
covenant of quiet enjoyment is in lieu of any other covenant, express or
implied.
14.4 LANDLORD'S LIABILITY. (a) Tenant specifically agrees to look solely
to Landlord's then equity interest in the Property at the time owned, for
recovery of any judgment from Landlord; it
<PAGE> 29
being specifically agreed that Landlord (original or successor) shall never be
personally liable for any such judgment, or for the payment of any monetary
obligation to Tenant. The provision contained in the foregoing sentence is not
intended to, and shall not, limit any right that Tenant might otherwise have to
obtain injunctive relief against Landlord or Landlord's successors in interest,
or to take any action not involving the personal liability of Landlord
(original or successor) to respond in monetary damages from Landlord's assets
other than Landlord's equity interest in the Property.
(b) With respect to any services or utilities to be furnished by
Landlord to Tenant, Landlord shall in no event be liable for failure to furnish
the same when prevented from doing so by Force Majeure, strike, lockout,
breakdown, accident, order or regulation of or by any governmental authority,
or failure of supply, or inability by the exercise of reasonable diligence to
obtain supplies, parts or employees necessary to furnish such services, or
because of war or other emergency, or for any cause beyond Landlord's
reasonable control, or for any cause due to any act or neglect of Tenant or
Tenant's servants, agents, employees, licensees or any person claiming by,
through or under Tenant; nor shall any such failure give rise to any claim in
Tenant's favor that Tenant has been evicted, either constructively or actually,
partially or wholly.
(c) In no event shall Landlord ever be liable to Tenant for any loss
of business or any other indirect or consequential damages suffered by Tenant
from whatever cause.
(d) With respect to any repairs or restoration which are required or
permitted to be made by Landlord, the same shall be made subject to the
provisions of Section 7.1 and may be made during normal business hours and
Landlord shall have no liability for damages to Tenant for inconvenience,
annoyance or interruption of business arising therefrom.
14.5 NOTICE TO MORTGAGEE OR GROUND LESSOR. After receiving notice from any
person, firm or other entity that it holds a mortgage or a ground lease which
includes the Premises, no notice from Tenant to Landlord alleging any default
by Landlord shall be effective unless and until a copy of the same is given to
such holder or ground lessor (provided Tenant shall have been furnished with
the name and address of such holder or ground lessor), and the curing of any of
Landlord's defaults by such holder or ground lessor shall be treated as
performance by Landlord.
14.6 ASSIGNMENT OF RENTS AND TRANSFER OF TITLE. (a) With reference to any
assignment by Landlord of Landlord's interest in
<PAGE> 30
this Lease, or the rents payable hereunder, conditional in nature or otherwise,
which assignment is made to the holder of a mortgage on property which includes
the Premises, Tenant agrees that the execution thereof by Landlord, and the
acceptance thereof by the holder of such mortgage, shall never be treated as an
assumption by such holder of any of the obligations of Landlord hereunder
unless such holder shall, by notice sent to Tenant, specifically otherwise
elect and that, except as aforesaid, such holder shall be treated as having
assumed Landlord's obligations hereunder only upon foreclosure of such holder's
mortgage and the taking of possession of the Premises.
(b) In no event shall the acquisition of Landlord's interest in the
Property by a purchaser which, simultaneously therewith, leases Landlord's
entire interest in the Property back to the seller thereof be treated as an
assumption by operation of law or otherwise, of Landlord's obligations
hereunder, but Tenant shall look solely to such seller-lessee, and its
successors from time to time in title, for performance of Landlord's
obligations hereunder. In any such event, this Lease shall be subject and
subordinate to the lease to such purchaser. For all purposes, such
seller-lessee, and its successors in title, shall be the Landlord hereunder
unless and until Landlord's position shall have been assumed by such
purchaser-lessor.
(c) Except as provided in paragraph (b) of this Section, in the event
of any transfer of title to the Property by Landlord, Landlord shall from and
after the date of such transfer, be entirely freed and relieved from the
performance and observance of all covenants and obligations hereunder which are
to be performed or observed from and after the date of such transfer.
14.7 RULES AND REGULATIONS. Tenant shall abide by rules and regulations
from time to time established by Landlord, it being agreed that such rules and
regulations will be established and applied by Landlord in a non-discriminatory
fashion, such that all rules and regulations shall be generally applicable to
other tenants of the Building of similar nature to the Tenant named herein.
Landlord agrees to use reasonable efforts to insure that any such rules and
regulations are uniformly enforced, but Landlord shall not be liable to Tenant
for violation of the same by any other tenant or occupant of the Building, or
persons having business with them. In the event that there shall be any
conflict between such rules and regulations and the provisions of this Lease,
the provisions of this Lease shall control.
14.8 ADDITIONAL CHARGES. If Tenant shall fail to pay when due any sums
under this Lease designated or payable as an additional charge, Landlord shall
have the same rights and remedies as Landlord has hereunder for failure to pay
Basic Rent.
<PAGE> 31
14.9 INVALIDITY OF PARTICULAR PROVISIONS. If any term or provision of this
Lease, or the application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Lease shall be valid and be
enforced to the fullest extent permitted by Law.
14.10 PROVISIONS BINDING, ETC. Except as herein otherwise provided, the
terms hereof shall be binding upon and shall inure to the benefit of the
successors and assigns, respectively, of Landlord and Tenant and, if Tenant
shall be an individual, upon and to his heirs, executors, administrators,
successors and assigns. Each term and each provision of this Lease to be
performed by Tenant shall be construed to be both a covenant and a condition.
The reference contained to successors and assigns of Tenant is not intended to
constitute a consent to assignment by Tenant, but has reference only to those
instances in which Landlord may later give consent to a particular assignment
as required by those provisions of Article VI hereof.
14.11 RECORDING. Tenant agrees not to record this Lease, but each party
hereto agrees, on the request of the other, to execute a so-called notice of
lease in form recordable and complying with applicable law and reasonably
satisfactory to Landlord's attorneys. In no event shall such document set
forth the rent or other charges payable by Tenant under this Lease; and any
such document shall expressly state that it is executed pursuant to the
provisions contained in this Lease, and is not intended to vary the terms and
conditions of this Lease.
14.12 NOTICES. Whenever, by the terms of this Lease, notices, consents or
approvals shall or may by given either to Landlord or to Tenant, such notices,
consents or approvals shall be in writing and shall be sent by registered or
certified mail, return receipt requested, postage prepaid:
If intended for Landlord, addressed to Landlord at Landlord's Original
Address with a copy Addressed to Landlord at Talbot Operations N.V., c/o
Citibank, N.A., Real Estate Investments Management, 909 Third Avenue, New York,
NY 10043, Attn: Mr. Richard Gamba (or to such other address as may from time to
time hereafter by designated by Landlord by like notice).
If intended for Tenant, addressed to Tenant at Tenant's Original Address,
Attn: General Counsel (or to such other address
<PAGE> 32
or addresses as may from time to time hereafter be designated by Tenant by like
notice.)
All such notices shall be effective when deposited in the United States
Mail within the Continental United States, provided that the same are received
in ordinary course at the address to which the same were sent.
14.13 WHEN LEASE BECOMES BINDING. The submission of this document for
examination and negotiation does not constitute an offer to lease, or a
reservation of, or option for, the Premises, and this document shall become
effective and binding only upon the execution and delivery hereof by both
Landlord and Tenant. All negotiations, considerations, representations and
understandings between Landlord and Tenant are incorporated herein and this
Lease expressly supersedes any proposals or other written documents relating
hereto. this Lease may be modified or altered only by written agreement between
Landlord and Tenant, and no act or omission of any employee or agent of
Landlord shall alter, change or modify any of the provisions hereof.
14.14 PARAGRAPH HEADINGS. The paragraph headings throughout this instrument
are for convenience and reference only, and the words contained therein shall
in no way be held to explain, modify, amplify or aid in the interpretation,
construction, or meaning of the provisions of this Lease.
14.15 RIGHTS OF MORTGAGEE OR GROUND LESSOR. This Lease shall be subordinate
to any mortgage or ground lease from time to time encumbering the Premises,
whether executed and delivered prior to or subsequent to the date of this
Lease, if the holder of such mortgage or ground lease shall so elect. If this
Lease is subordinate to any mortgage or ground lease and the holder thereof (or
successor) shall succeed to the interest of Landlord, at the election of such
holder (or successor) Tenant shall attorn to such holder and this Lease shall
continue in full force and effect between such holder (or successor) and
Tenant. Tenant agrees to execute such instruments of subordination or
attornment in confirmation of the foregoing agreements as such holder may
reasonably request. Tenant hereby agrees that failure of Tenant to execute and
deliver any agreement to be delivered by Tenant pursuant to the terms hereof
shall be deemed a Default of Tenant hereunder entitling Landlord to the same
rights and remedies against Tenant as a failure by Tenant to pay Basic Rent
when due under this Lease.
Landlord hereby covenants and agrees with Tenant that Landlord shall
request a non-disturbance, attornment and recognition agreement for its
existing mortgagee and hereby covenants and agrees to use good faith efforts to
obtain a non-
<PAGE> 33
disturbance, attornment and recognition agreement to be entered into by and
between Landlord, Tenant and the existing mortgagee on the property, all in
form and substance reasonably satisfactory to Landlord, Tenant and the existing
mortgage. Failure of Landlord to obtain such an agreement (provided that
Landlord has complied with its obligations hereunder) shall not affect the
validity of this Lease nor entitle Tenant to any rights, actions or remedies
against Landlord.
14.16 STATUS REPORT. Recognizing that both parties may find it necessary to
establish to third parties, such as accountants, banks, mortgagees, ground
lessors, or the like, the then current status of performance hereunder, either
party, on the request of the other made from time to time, will promptly
furnish to Landlord, or the holder of any mortgage or ground lease encumbering
the Premises, or to Tenant, as the case may be, a statement of the status of
any matter pertaining to this Lease, including, without limitation,
acknowledgement that (or the extent to which) each party is in compliance with
its obligations under the terms of this Lease.
14.17 SECURITY DEPOSIT. Intentionally Omitted.
14.18 REMEDYING DEFAULTS. Landlord shall have the right, but shall not be
required, to pay such sums or to do any act which requires the expenditure of
monies which may be necessary or appropriate by reason of the failure or
neglect of Tenant to perform any of the provisions of this Lease, and in the
event of the exercise of such right by Landlord, Tenant agrees to pay to
Landlord forthwith upon demand all such sums, together with interest thereon at
a rate equal to 3% over the prime rate in effect from time to time at the Bank
of Boston (but in no event greater than 18% per annum), as an additional
charge. Any payment of Basic Rent, Escalation Charges or other sums payable
hereunder not paid when due shall, at the option of Landlord, bear interest at
a rate equal to 3% over the prime rate in effect from time to time at the Bank
of Boston (but in no event greater than 18% per annum) from the date which is 5
days after the due date thereof and shall be payable forthwith on demand by
Landlord, as an additional charge.
14.19 HOLDING OVER. Any holding over by Tenant after the expiration of the
Term of this Lease shall be treated as a daily tenancy at sufferance at a rate
equal to the then fair rental value of the Premises but in no event less than
twice the sum of (i) Fixed Rent and (ii) Escalation Charges in effect on the
expiration date. Tenant shall also pay to Landlord all damages, direct and/or
indirect (including any loss of a tenant or rental income), sustained by reason
of any such holding over. Otherwise, such holding over shall be on the terms
and conditions set forth
<PAGE> 34
in this Lease as far as applicable. The Landlord may, but shall not be required
to, and only on written notice to Tenant after the expiration of the Term
hereof, elect to treat such holding over as an extension of the Term of this
Lease for a period of up to one (1) year, as designated by Landlord, such
extension to be on the terms and conditions set forth in this Section 14.19.
14.20 WAIVER OF SUBROGATION. Insofar as, and to the extent that, the
following provision shall not make it impossible to secure insurance coverage
obtainable from responsible insurance companies doing business in the locality
in which the Property is located (even though extra premium may result
therefrom) Landlord and Tenant mutually agree that any property damage
insurance carried by either shall provide for the waiver by the insurance
carrier of any right of subrogation against the other, and they further
mutually agree that, with respect to any damage to property, the loss from
which is covered by insurance then being carried by them, respectively, the one
carrying such insurance and suffering such loss releases the other of and from
any and all claims with respect to such loss to the extent of the insurance
proceeds paid with respect thereto.
14.21 SURRENDER OF PREMISES. Upon the expiration or earlier termination of
the Term of this Lease, Tenant shall peaceably quit and surrender to Landlord
the Premises in neat and clean condition and in good order, condition and
repair, together with all alterations, additions and improvements which may
have been made or installed in, on or to the Premises prior to or during the
Term of this Lease, excepting only ordinary wear and use and damage by fire or
other casualty for which, under other provisions of this Lease, Tenant has no
responsibility of repair and restoration. Tenant shall remove all of Tenant's
Removable Property and, to the extent specified by Landlord, all alterations
and additions made by Tenant and all partitions wholly within the Premises; and
shall repair any damage to the Premises or the Building caused by such removal.
Any Tenant's Removable Property which shall remain in the Building or on the
Premises after the expiration or termination of the Term of this Lease shall be
deemed conclusively to have been abandoned, and either may be retained by
Landlord as its property or may be disposed of in such manner as Landlord may
see fit, at Tenant's sole cost and expense.
14.22 SUBSTITUTE SPACE. Intentionally Omitted.
14.23 BROKERAGE. Tenant warrants and represents that Tenant has dealt with
no broker in connection with the consummation of this Lease other than Hunneman
Commercial and Lynch, Murphy, Walsh and Partners (collectively, the "Broker"),
and, in the event of any brokerage claims against Landlord predicated upon
<PAGE> 35
prior dealings with Tenant, Tenant agrees to defend the same and indemnify
Landlord against any such claim (except any claim by the Broker which shall be
paid by Landlord pursuant to its agreement with the Broker).
14.24 SPECIAL TAXATION PROVISIONS. Intentionally Omitted.
14.25 HAZARDOUS MATERIALS. (a) Tenant shall not (either with or without
negligence) cause or permit the escape, disposal, release or threat of release
of any biologically or chemically active or other Hazardous Materials (as said
term is hereafter defined) on, in, upon or under the Property or the Premises.
Tenant shall not allow the generation, storage, use or disposal of such
Hazardous Materials in any manner not sanctioned by all applicable laws for the
generation, storage, use and disposal of such Hazardous Materials, nor allow to
be brought into the Property any such Hazardous Materials except for use in the
ordinary course of Tenant's business in compliance with all applicable laws,
and then only after written notice is given to Landlord of the identity of such
Hazardous Materials. Hazardous Materials shall include, without limitation,
any material or substance which is (i) petroleum, (ii) asbestos, (iii)
designated as a "hazardous substance" pursuant to Section 311 of the Federal
Water Pollution Control Act, 33 U.S.C. # 1251 et seq. (33 U.S.C. 1321) or
listed pursuant to # 307 of the Federal Water Pollution Control Act (33 U.S.C.
# 1317), (iv) defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. # 6901 et seq. (42 U.S.C. #
6903), (v) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. # 9601 et seq. (42 U.S.C. # 9601), as amended, or (vi) defined as "oil"
or a "hazardous waste", a "hazardous substance", a "hazardous material" or a
"toxic material" under any other law, rule or regulation applicable to the
Property, including, without limitation, Chapter 21E of the Massachusetts
General Laws, as amended. If any lender or governmental agency shall ever
require testing to ascertain whether or not there has been any release of
Hazardous Materials, then the reasonable costs thereof shall be reimbursed by
Tenant to Landlord upon demand as additional charges but only to the extent
that such requirement results from the acts or omissions of Tenant or Tenant's
agents, servants, employees, invitees or independent contractors. In addition,
Tenant shall execute affidavits, representations and the like, from time to
time, at Landlord's request concerning Tenant's actual knowledge and belief
regarding the presence of Hazardous Materials on the Premises. In all events,
Tenant shall indemnify, defend and save Landlord harmless from any and all
loss, cost, damages, penalties, fines, expenses or fees including, without
limitation, legal fees and other professional
<PAGE> 36
fees and expenses sustained or incurred by Landlord resulting from any release
or threat of release or the presence or existence of Hazardous Materials on the
Premises occurring while Tenant is in possession to the extent caused by or
resulting from the acts or omissions of Tenant or Tenant's agents, servants,
employees, invitees or independent contractors, or elsewhere on the Property if
caused by Tenant or Tenant's agents, servants, employees, invitees or
independent contractors. The covenants and indemnity contained in this Section
14.25(a) shall survive the expiration or earlier termination of the Term of
this Lease. Landlord expressly reserves the right to enter the Premises to
perform regular inspections in accordance with the provisions of Section 11.1
of this Lease. In exercising its right to enter the Premises to perform
regular inspections, Landlord shall use good faith efforts to avoid unnecessary
interference with Tenant's use of the Premises.
(b) As used in this Section 14.25(b), the term "Reports" shall mean
and include the following reports and all appendices and attachments annexed
thereto:
(i) that certain Phase I Environmental Site Assessment for 100
and 110 Fordham Road, Wilmington, Massachusetts M&H Project No.: 15825-E Cetco
Project No.: 880199, dated March 15, 1988 prepared by Teresa M. Martin,
Director, Site Assessments approved by Raymond F. Leather, Manager,
Environmental Engineering by Certified Engineering & Testing Co., Inc., 25
Mathewson Drive, Weymouth, Massachusetts 02189;
(ii) that certain Report of Findings Ground Water Sampling and
Data Summary, Honeywell Facility, 110 Fordham Road, Wilmington, Massachusetts
submitted to Jon D. Pakarinen, Honeywell, Inc., Honeywell Plaza, Minneapolis,
Minnesota 55408 submitted by: Ground Water Technology, Inc., 220 Norwood Park
South, Norwood, Massachusetts 02062 dated July 1989, prepared by Kathleen
Donovan, Geologist, Paola E. Macchiaroli, Hydrogeologist, Project Manager and
Richard G. Kowalski, Senior Hydrologist, District Manager;
(iii) that certain Environmental Site Assessment, Honeywell, Inc.
Facility, 110 Fordham Road, Wilmington, Massachusetts submitted to Honeywell,
Inc., Two Forbes Road, Lexington, Massachusetts 02173 submitted by Ground Water
Technology, Inc., 220 Norwood Park South, Norwood, Massachusetts 02062 dated
April 1988, prepared by Ronda L. Fisher, Geologist, Keith G. Angell, District
Manager and Paola E. Macchiaroli, Geologist, Project Manager;
(iv) those matters referred to in that certain letter dated March
15, 1988 addressed to Mr. Robert Weiland,
<PAGE> 37
Marion Harris, Inc., 110 East 42nd Street, New York, New York 10007 from
Deborah Azrael, Manager, Publications Department, Certified Engineering and
Testing Co., Inc.
Wherever used in this Section 14.25, the phrases "To the best of" a
party's "knowledge" or a party's "actual knowledge" or similar words are used,
such phrases shall mean the actual knowledge of such party making the
representation as of the date of making such representation or statement and
such representation and actual knowledge shall mean that no independent
investigation, inquiry, inspection or examination of the matters referred to
therein have been made with respect to the matter referred to.
Landlord hereby represents and warrants the following:
(i) To the best of Landlord's knowledge and except as otherwise
disclosed in the Reports, the Property (including the Premises) does not
presently contain and is free from all Hazardous Materials except such
Hazardous Materials as are used by other tenants or occupants of the Property
in accordance with their normal business operations;
(ii) Except as otherwise disclosed in the Reports, Landlord has
not transported or caused to be transported any Hazardous Materials to or from
the Property (including the Premises);
(iii) To the best of Landlord's knowledge and except as otherwise
disclosed in the Reports, Landlord has not received and is not aware of any
notification from any Federal, State, County or City agency or authority
relating to Hazardous Materials in or near the Property (including the
Premises) with the exception only of that certain Notice of Responsibility
pursuant to MGL Chapter 21(E), DEQE Case No. 3-1282 issued to Honeywell
Corporation dated January 21, 1988. The representations and warranties of
Landlord made in this Section 14.25(b) are made as of the date of this Lease
and shall survive any expiration or earlier termination of this Lease.
14.26 NET LEASE. This is, and is intended to be, a Net Lease, and
accordingly, except as expressly otherwise provided for herein, all charges,
assessments and impositions made upon the Property and all costs, expenses and
other obligations paid or incurred by Landlord of any kind or nature whatsoever
in insuring, maintaining and/or repairing the Premises or the Building or the
Property or any additions to the Building shall be included in determining
Landlord's costs of which Tenant is obligated to pay a pro rata share or the
entirety, as the case may be, as provided hereinabove.
<PAGE> 38
14.27 GOVERNING LAW. This Lease shall be governed exclusively by the
provisions hereof and by the laws of the Commonwealth of Massachusetts, as the
same may from time to time exist. Tenant and Landlord each hereby consent to
be subject to the jurisdiction of all state and federal courts sitting in The
Commonwealth of Massachusetts in connection with any dispute arising out of
this Lease.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly
executed, under seal, by persons hereunto duly authorized, in multiple copies,
each to be considered an original hereof, as of the date first set forth above.
TENANT: LANDLORD:
THE TIMBERLAND COMPANY TALBOT OPERATIONS, INC.
/s/ John R. Ranelli /s/ Susan Hoffman
By: __________________________ By: ____________________________
John R Ranelli Susan Hoffman
VP, Citibank, as agent
Its: __________________________ Its: _________________________
<PAGE> 39
EXHIBIT E
(ITEMS INCLUDED IN BUILDING/
UTILITY COSTS AND OPERATING EXPENSES)
A. Without limitation, Building Energy/Utility Costs shall
include:
Costs for electricity, fuel, oil, gas, steam, water and sewer use charges and
other utilities supplied to the Property and not paid for directly by tenants.
Building Energy/Utility Costs shall not include Tenant Electricity Expenses, as
defined in Sec. 7.5 of this Lease.
B. Without limitation, Operating Expenses shall include:
1. All expenses incurred by Landlord or Landlord's agents which
shall be directly related to employment of personnel, including amounts
incurred for wages, salaries and other compensation for services, payroll,
social security, unemployment and similar taxes, workmen's compensation
insurance, disability benefits, pensions, hospitalization, retirement plans and
group insurance, uniforms and working clothes and the cleaning thereof, and
expenses imposed on Landlord or Landlord's agents in connection with the
operation, repair, maintenance, cleaning, management and protection of the
Property, and its mechanical systems including, without limitation, day and
night supervisors, property manager, accountants, bookkeepers, janitors,
carpenters, engineers, mechanics, electricians and plumbers and personnel
engaged in supervision of any of the persons mentioned above: provided that,
if any such employee is also employed on other property of Landlord, such
compensation shall be suitably allocated by Landlord among the Property and
such other properties.
2. The cost of services, materials and supplies furnished or used
in the operation, repair, maintenance, cleaning, management and protection of
the Property including, without limitation, fees and assessments, if any,
imposed upon Landlord, or charged to the Property, by any governmental agency
or authority or other duly authorized private or public entity on account of
public safety services, transit, housing, police, fire, sanitation or other
services or purported benefits.
3. The cost of replacements for tools and other similar equipment
used in the repair, maintenance, cleaning and protection of the Property,
provided that, in the case of any such equipment used jointly on other property
of Landlord, such
<PAGE> 40
costs shall be allocated by Landlord among the Property and such other
properties.
4. Premiums for insurance against damage or loss to the Building
from such hazards as shall from time to time be generally required by
institutional mortgages in the Boston area for similar properties, including,
but not by way of limitation, insurance covering loss of rent attributable to
any such hazards, and public liability insurance.
5. Where the Property is managed by Landlord or an affiliate of
Landlord, a sum equal to the amounts customarily charged by management firms in
the Boston area for similar properties, but in no event more than six percent
(6%) of gross annual income, whether or not actually paid, or where managed by
other than Landlord or an affiliate thereof, the amounts accrued for
management, together with, in either case, amounts accrued for legal and other
professional fees relating to the Property, but excluding such fees and
commissions paid in connection with services rendered for securing or renewing
leases and for matters not related to the normal administration and operation
of the Building.
6. If, during the Term of this Lease, Landlord shall make a
capital expenditure, the total cost of which is not properly includable in
Operating Expenses for the Operating Year in which it was made, there shall
nevertheless be included in such Operating Expenses for the Operating Year in
which it was made and in Operating Expenses for each succeeding Operating Year,
and annual charge-off of such capital expenditure. The annual charge-off shall
be determined by dividing the original capital expenditure plus an interest
factor, reasonably determined by Landlord, as being the interest rate then
being charged for long-term mortgages, by institutional lenders on like
properties within the locality in which the Building is located, by the
number of years of useful life of the capital expenditure, and the useful life
shall be determined reasonably by Landlord in accordance with generally
accepted accounting principles and practices in effect at the time of making
such expenditure.
7. Betterment assessments provided the same are apportioned
equally over the longest period permitted by law.
8. Amounts paid to independent contractors for services,
materials and supplies furnished for the operation, repair, maintenance,
cleaning and protection of the Property.
<PAGE> 1
Exhibit 10.11(i)
$100,000,000
CREDIT AGREEMENT
dated as of
May 13, 1993
among
The Timberland Company
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Administrative Agent
<TABLE>
TABLE OF CONTENTS*
<CAPTION>
Page
ARTICLE I ----
DEFINITIONS
<S> <C> <C>
SECTION 1.01 Definitions 1
1.02 Accounting Terms and Determinations 19
1.03 Types of Borrowings 19
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend 20
2.02 Notice of Committed Borrowings 20
2.03 Money Market Borrowings 21
2.04 Notice to Banks; Funding of Loans 24
_________________________
<FN>
*The Table of Contents is not a part of this Agreement.
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
2.05 Notes 25
2.06 Maturity of Loans 26
2.07 Method of Electing Interest Rates 26
2.08 Interest Rates 28
2.09 Facility Fees 32
2.10 Mandatory Termination or
Reduction of Commitments 32
2.11 Optional Termination or
Reduction of Commitments 32
2.12 Optional Prepayments 33
2.13 Mandatory Prepayments 33
2.14 General Provisions as to Payments 34
2.15 Funding Losses 35
2.16 Computation of Interest and Fees 35
2.17 Judgment Currency 35
2.18 Foreign Subsidiary Costs 36
ARTICLE III
ACCEPTANCES
SECTION 3.01 Additional Definitions 37
3.02 Commitments to Create Acceptances 39
3.03 Method of Drawing 39
3.04 Payment of Acceptance Obligations 42
3.05 Conditions to Drawings 42
3.06 Representations and Warranties
with Respect to Acceptances 43
3.07 Default; Mandatory Prepayment 44
3.08 Amendments and Waivers 45
3.09 Extension of Acceptance Facility
Termination Date 45
ARTICLE IV
CONDITIONS
SECTION 4.01 Closing 45
4.02 Borrowings 46
4.03 First Borrowing by Each
Eligible Subsidiary 47
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
SECTION 5.01 Corporate Existence and Power 48
5.02 Corporate and Governmental
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C> <C>
Authorization; No Contravention 48
5.03 Binding Effect 48
5.04 Financial Information 48
5.05 Litigation 49
5.06 Compliance with ERISA 49
5.07 Environmental Matters 49
5.08 Taxes 50
5.09 Subsidiaries 50
5.10 Not an Investment Company 50
5.11 Full Disclosure 50
ARTICLE VI
COVENANTS
SECTION 6.01 Information 51
6.02 Payment of Obligations 54
6.03 Maintenance of Property; Insurance 54
6.04 Conduct of Business and
Maintenance of Existence 54
6.05 Compliance with Laws 55
6.06 Inspection of Property,
Books and Records 55
6.07 Fixed Charge Coverage Ratio 55
6.08 Debt 55
6.09 Minimum Consolidated Tangible
Net Worth 57
6.10 Restricted Payments 57
6.11 Investments 58
6.12 Maintenance of Ownership of
Subsidiaries 58
6.13 Negative Pledge 59
6.14 Consolidations, Mergers and
Sales of Assets 60
6.15 No Prepayment of Note
Agreement Debt 60
6.16 Transactions With Affiliates 60
6.17 Use of Proceeds 61
ARTICLE VII
DEFAULTS
SECTION 7.01 Events of Default 61
7.02 Notice of Default 64
ARTICLE VIII
THE Administrative Agent
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 8.01 Appointment and Authorization 64
8.02 Administrative Agent and Affiliates. 65
8.03 Action by Administrative Agent 65
8.04 Consultation with Experts 65
8.05 Liability of Administrative Agent 65
8.06 Indemnification 66
8.07 Credit Decision 66
8.08 Successor Administrative Agent 66
8.09 Administrative Agent's Fee 67
ARTICLE IX
CHANGE IN CIRCUMSTANCES
SECTION 9.01 Basis for Determining Interest
Rate Inadequate or Unfair 67
9.02 Illegality 68
9.03 Increased Cost and Reduced Return 68
9.04 Taxes 70
9.05 Base Rate Loans Substituted for
Affected Fixed Rate Loans
and Acceptances 72
9.06 HLT Classification 73
ARTICLE X
REPRESENTATIONS AND WARRANTIES
OF ELIGIBLE SUBSIDIARIES
SECTION 10.01 Corporate Existence and Power 74
10.02 Corporate and Governmental
Authorization; Contravention 74
10.03 Binding Effect 74
10.04 Taxes 74
ARTICLE XI
GUARANTY
SECTION 11.01 The Guaranty 75
11.02 Guaranty Unconditional 75
11.03 Discharge Only Upon Payment
In Full; Reinstatement In
Certain Circumstances 76
11.04 Waiver by the Company 76
11.05 Subrogation 76
11.06 Stay of Acceleration 77
</TABLE>
4
<PAGE> 5
<TABLE>
ARTICLE XII
MISCELLANEOUS
<S> <C> <C>
SECTION 12.01 Notices 77
12.02 No Waivers 77
12.03 Expenses; Documentary Taxes;
Indemnification 78
12.04 Sharing of Set-Offs 78
12.05 Amendments and Waivers 79
12.06 Successors and Assigns 79
12.07 Collateral 81
12.08 Confidentiality 81
12.09 Governing Law; Submission to
Jurisdiction 82
12.10 Counterparts; Integration;
Effectiveness 82
12.11 Waiver of Jury Trial 82
</TABLE>
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 - Form of Draft
Exhibit F - Opinion of Counsel for the Company
Exhibit G - Opinion of Special Counsel for the
Administrative Agent
Exhibit H - Form of Election to Participate
Exhibit I - Form of Election to Terminate
Exhibit J - Opinion of Counsel for the Borrower
Exhibit K - Form of Assignment and Assumption Agreement
5
<PAGE> 6
Exhibit L - Form of Request for Extension of
Acceptance Facility Termination Date
CREDIT AGREEMENT
AGREEMENT dated as of May 13, 1993 among THE TIMBERLAND COMPANY, the
BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent.
WHEREAS, the Company wishes to be able to borrow or cause eligible
subsidiaries to borrow under its guaranty up to $100,000,000 on a revolving
credit basis or through the creation and discounting of acceptances; and
WHEREAS, the Banks are willing to make such loans and create and
discount such acceptances, all 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.
"Acceptance" has the meaning set forth in Section 3.01.
"Acceptance Obligation" has the meaning set forth in Section 3.01.
"Additional Permitted Long-Term Debt" means Permitted Long-Term Debt
other than the first $20,000,000 aggregate principal amount of Permitted
Long-Term Debt
6
<PAGE> 7
incurred by the Company and its Subsidiaries and any
refinancings, extensions or renewals thereof.
"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 Agent" means Morgan Guaranty Trust Company of New
York in its capacity as administrative agent for the Banks hereunder, and its
successors in such capacity.
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Administrative Agent
and submitted to the Administrative 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.
"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.
"Assessment Rate" has the meaning set forth in Section 2.08(b).
"Assets Component" means, at any date, an amount equal to the sum of
(i) 85% of the aggregate amount of Eligible Receivables at such
date,
(ii) 60% of the aggregate amount of footwear inventories at such
date that (A) are current or next season inventories (determined on
a basis
7
<PAGE> 8
consistent with the Company's existing inventory accounting system)
and (B) were or would have been identified as finished goods in the
notes to the consolidated financial statements referred to in
Section 5.04(a) (the "Financial Statement Notes"),
(iii) 30% of the aggregate amount of apparel inventories at such
date that (A) are current or next season inventories (determined on
basis consistent with the Company's existing inventory accounting
system) and (B) were or would have been identified as finished
goods in the Financial Statement Notes, and
(iv) 20% of the aggregate amount of inventories at such date that
were or would have been identified as raw materials in the Financial
Statement Notes;
PROVIDED that the sum of the amounts determined pursuant to clauses (ii), (iii)
and (iv) above shall not exceed the amount determined pursuant to clause (i)
above (i.e., the portion of the Assets Component attributable to inventories
shall not exceed 50% of the Assets Component).
"Assignee" has the meaning set forth in Section 12.06(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.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 12.06(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
8
<PAGE> 9
Borrowing or Notice of Interest Rate Election or the provisions of
Article IX 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) the
Assets Component set forth in the certificate that, as of the date two days
prior to such day, was most recently required to be delivered pursuant to
Section 6.01(e) LESS (ii) the sum of (A) the Specified Reduction for such day,
(B) 50% of 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 does not exceed $20,000,000, (C) 100% of 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 $20,000,000 and (D) the aggregate principal amount of
Permitted Short-Term Debt outstanding on such day.
"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
fiscal quarter of the Company next preceding the fiscal quarter of the Company
most recently ended on or prior to such day.
"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.
9
<PAGE> 10
"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.
"Closing Date" means the date on or after the Effective Date on which
the Administrative Agent shall have received the documents specified in or
pursuant to Section 4.01.
"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 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 1992 Form 10-K" means the Company's annual report on Form
10-K for 1992 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
10
<PAGE> 11
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, 1992) 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 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, 1992 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)
11
<PAGE> 12
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 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.
"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 Administrative 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).
"Draft" has the meaning set forth in Section 3.01.
"Drawing" has the meaning set forth in Section 3.01.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 12.10.
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"Election to Participate" means an Election to Participate
substantially in the form of Exhibit H hereto.
"Election to Terminate" means an Election to Terminate substantially
in the form of Exhibit I 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 5.04(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 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,
(c) unless in any of the following cases the relevant account
debtor has previously been approved by the Required Banks (through the
Administrative 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,
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<PAGE> 14
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 Administrative 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 Administrative Agent and as to which an Election to Terminate shall not
have been delivered to the Administrative Agent. Each such Election to
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 Administrative Agent may request. The delivery of an Election to
Terminate shall not affect any obligation of an Eligible Subsidiary theretofore
incurred. The Administrative 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,
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<PAGE> 15
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 Administrative 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 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).
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<PAGE> 16
"Event of Default" has the meaning set forth in Section 7.01.
"Existing Credit Agreement" means the Credit Agreement dated as of
October 4, 1991 among the Company, the banks listed on the signature pages
thereof, Morgan Guaranty Trust Company of New York and The First National Bank
of Boston, as Co-Agents, 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.
"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 of New
York on such day on such transactions as determined by the Administrative
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 9.01(a)) or any combination of the foregoing.
"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
16
<PAGE> 17
or made as a Base Rate Loan pursuant to Section 9.02 or 9.05, 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 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 12.03.
"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 or three 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
17
<PAGE> 18
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, 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 otherwise 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 as the
Borrower may elect in accordance with Section 2.03; 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;
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<PAGE> 19
(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; 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 15 days) as the Borrower may elect in accordance with Section
2.03; 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; and
(b) any Interest Period which would otherwise 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
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<PAGE> 20
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.
"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 Notes or the Acceptance
Obligations) 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 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 Administrative Agent; PROVIDED that any Bank may from time to time by
notice to the Company and the
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<PAGE> 21
Administrative 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 9.01(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).
"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 6.15.
"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.
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"Participant" has the meaning set forth in Section 12.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Long-Term Debt" means Debt (other than Debt permitted
under Section 6.08(b)) of the Company or any of its Subsidiaries that (i) does
not mature or have any required sinking fund or other required payments of
principal (other than (i) 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 (ii) 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 (ii)
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
Acceptances or Debt permitted under Section 6.08(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.
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<PAGE> 23
"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 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, having more than 50% of the Total Aggregate Exposure.
"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.
"Specified Reduction" means, for any day, (i) if such day occurs in
1993, $35,000,000, (ii) if such day occurs in 1994, $40,000,000 and (iii) if
such day occurs in 1995, $45,000,000.
"Subsidiary" means 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 the Company.
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<PAGE> 24
"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 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 March 29, 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.
"Total Aggregate Exposure" means, at any time, the sum of (i) the
aggregate outstanding principal amount of all Loans and (ii) the aggregate
outstanding face amount of all Acceptances then outstanding less the aggregate
face amount of all Acceptances as to which Acceptance Obligations have
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been paid or prepaid pursuant to Section 2.13, 3.04, 3.07 or 9.06.
"Total Committed Exposure" means, with respect to any Bank at any
time, the sum of (i) the aggregate outstanding principal amount of all
Committed Loans made by such Bank and (ii) the aggregate outstanding face
amount of all Acceptances then outstanding created by such Bank less the
aggregate face amount of all such Acceptances as to which Acceptance
Obligations have been paid or prepaid pursuant to Section 2.13, 3.04, 3.07 or
9.06.
"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 Consolidated 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
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
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Administrative Agent that the Company wishes to amend any covenant in
Article VI to eliminate the effect of any change in generally accepted
accounting principles on the operation of such covenant (or if the
Administrative Agent notifies the Company that the Required Banks wish to amend
Article VI 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 IX) 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).
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 such Bank's Total Committed
Exposure 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
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Borrowing may be in the aggregate amount available in accordance with Section
4.02(c) and (d)) 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 Administrative 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.
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
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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 fifth 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 Administrative 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 the
aggregate principal amount of all Money Market Loans outstanding and the
aggregate principal amount of all Permitted Short-Term Debt outstanding
shall at no time exceed $25,000,000,
(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 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 Administrative 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
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telex or facsimile transmission at its offices specified in or pursuant to
Section 12.01 not later than (x) 2:00 P.M. (New York City time) on the fourth
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 Administrative 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 IV
and VII, 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 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
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(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 Administrative 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 Market Borrowing"), a copy of which shall be sent by telex or telecopy
to the Administrative 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:
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(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 the aggregate
principal amount of all Money Market Loans outstanding and the aggregate
principal amount of all Permitted Short-Term Debt outstanding shall not
exceed $25,000,000, 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 Administrative Agent
shall promptly notify each Bank of the contents thereof and of such Bank's
share, if any, of such 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
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therein shall make available its share of such Borrowing, in Federal or other
funds immediately available in New York City, to the Administrative Agent at
its address specified in or pursuant to Section 12.01. Unless the
Administrative Agent determines that any applicable condition specified in
Article IV has not been satisfied, the Administrative Agent will make the funds
so received from the Banks available to the Borrower at the Administrative
Agent's aforesaid address.
(c) Unless the Administrative Agent shall have received notice
from a Bank prior to the date of any Borrowing that such Bank will not make
available to the Administrative Agent such Bank's share of such Borrowing, the
Administrative Agent may assume that such Bank has made such share available
to the Administrative Agent on the date of such Borrowing in accordance with
subsection (b) of this Section 2.04 and the Administrative 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 Administrative Agent, such Bank
and the applicable Borrower severally agree to repay to the Administrative
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 Administrative
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 Administrative 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 Administrative
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
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appropriate modifications to reflect the fact that it evidences solely
Loans of the relevant type. Each 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 4.01(a) or
4.03(a), the Administrative 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 IX), 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;
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(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
(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 Administrative 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
Administrative 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 not 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;
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(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.
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 Administrative 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 Administrative 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
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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%.
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 Administrative 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
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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
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.
"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,
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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 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
three months as the Administrative 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
9.01 shall exist, at a rate per annum equal to the sum of 2% plus
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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 9.01(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 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 Administrative Agent shall determine each interest rate
applicable to the Loans hereunder. The Administrative 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 Administrative Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Administrative 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 9.01
shall apply.
SECTION 2.09. Facility Fees. The Company shall pay to the
Administrative 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
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terminated in their entirety, in proportion to the daily average of the sum of
the aggregate outstanding principal amount of their Loans and the aggregate
face amounts of their Acceptances) 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 and the Acceptance Obligations with respect to the Acceptances shall be
repaid in their entirety, on the daily average of the sum of the aggregate
outstanding principal amount of the Loans and the aggregate face amounts of the
Acceptances. 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 and the Acceptance Obligations
with respect to all Acceptances 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 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
Administrative Agent, (i) terminate the Commitments at any time, if no Loans or
Acceptance Obligations 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 (A) the Total Aggregate Exposure
shall not exceed the Available Amount and (B) for each Bank, the Total
Committed Exposure of such Bank shall not exceed such Bank's Commitment.
SECTION 2.12. Optional Prepayments. (a) Any Borrower may, upon
notice to the Administrative 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
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Borrower bearing interest at the Base Rate pursuant to Section 9.01(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 VII or IX, 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 Administrative 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 Total Aggregate
Exposure on any day shall exceed the Available Amount for such day, the
Borrowers shall prepay Committed Loans (together with interest accrued thereon)
or Acceptance Obligations (and, if, but only if, after all Committed Loans and
Acceptance Obligations shall have been prepaid, the Total Aggregate Exposure
shall continue to exceed such Available Amount, Money Market Loans) to the
extent necessary to cause the Total Aggregate Exposure immediately after such
prepayment to be less than or equal to such Available Amount.
(b) Each prepayment of Loans or Acceptance Obligations required by
this Section 2.13 shall be made with respect to such Group or Groups of Loans,
such Drawing or Drawings 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 Administrative Agent at or before the
time of such
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prepayment and shall be applied to prepay Loans comprising each such Group of
Loans, Acceptance Obligations related to each such Drawing 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, Drawings 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 or such Drawing or
Drawings as the Administrative Agent may determine, until all such Groups of
Fixed Rate Loans and all such Drawings shall have been repaid in full, and
third to such Money Market Borrowing or Borrowings as the Administrative 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
Acceptance Obligations and 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 Administrative Agent at its address
referred to in Section 12.01. The Administrative Agent will promptly
distribute to each Bank its ratable share of each such payment received by the
Administrative Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Domestic Loans or of Acceptance Obligations
or 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
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 Administrative Agent shall have received notice from a
Borrower prior to the date on which
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any payment is due from such Borrower to the Banks hereunder that such Borrower
will not make such payment in full, the Administrative Agent may assume that
such Borrower has made such payment in full to the Administrative Agent on such
date and the Administrative 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 Administrative 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 Administrative 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, VII or IX 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), or if a
Borrower fails to make a Drawing after notice thereof has been given to any
Bank in accordance with Section 3.03, 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 or
Acceptance), 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 Drafts or 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 Administrative
Agent could purchase dollars with such other currency at the Administrative
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 Administrative Agent hereunder or under any Draft or
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 Administrative Agent (as the case may be) of any
sum adjudged to be so due in such other currency such Bank or the
Administrative 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
Administrative 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 Administrative
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
Administrative 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 12.04, such Bank or the Administrative 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 or creating any Acceptance for 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 Administrative Agent). A certificate of such Bank claiming
compensation under this subsection (a) and setting forth the additional amount
or
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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
Administrative 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 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
ACCEPTANCES
SECTION 3.01. ADDITIONAL DEFINITIONS. The following terms, as used
throughout this Agreement, have the following meanings:
"Acceptance" means a Draft drawn on a Bank and accepted by such Bank
as provided in Section 3.03.
"Acceptance Commission" means, with respect to each Acceptance, an
amount determined pursuant to the following formula:
DA x ACR
AC = ----------
1.00 + ACR
AC = Acceptance Commission
DA = Discounted Amount
ACR = Acceptance Commission Rate
"Acceptance Commission Rate" means, with respect to each Acceptance,
the product of (i) the Annualized Acceptance Commission Rate with respect to
such Acceptance and (ii) the Annualization Fraction for such Acceptance.
"Acceptance Date" means any date on which Drafts are accepted by the
Banks in accordance with Section 3.03.
"Acceptance Facility Termination Date" means March 29, 1995, or any
later date to which the Acceptance Facility
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Termination Date shall have been extended pursuant to Section 3.09.
"Acceptance Obligation" means the Borrower's obligation pursuant to
Section 3.04 to pay an accepting Bank the face amount of an Acceptance created
by such Bank at the maturity of such Acceptance or to pay such Bank at an
earlier date, pursuant to Section 2.13, 3.07 or 9.06, an amount equal to the
face amount of such Acceptance less the applicable Prepayment Discount.
"Annualization Fraction" means, with respect to each Acceptance, a
fraction the numerator of which shall be the actual number of days from and
including the applicable Acceptance Date to and including the maturity date of
such Acceptance and the denominator of which shall be 360.
"Annualized Acceptance Commission Rate" means, with respect to each
Acceptance, the Euro-Dollar Margin for the Acceptance Date with respect to such
Acceptance.
"Discount" means, with respect to each Acceptance, an amount equal to
the product of (i) the applicable Discount Rate, (ii) the face amount of such
Acceptance and (iii) the applicable Annualization Fraction.
"Discount Rate" means, with respect to each Acceptance, the discount
rate determined by the Administrative Agent to be the average (rounded upward,
if necessary, to the next higher 1/100 of 1%) of such of the rates per annum
bid by the Banks as shall have been received by 9:30 A.M. (New York City time)
on the date of the applicable Drawing for purchases by them of Eligible
Acceptances which are created by them in approximately the face amount of and
with the same maturity as such Acceptance.
"Discounted Amount" means, with respect to each Acceptance, the face
amount of such Acceptance less the Discount with respect to such Acceptance.
"Draft" means a draft drawn on a Bank by the Borrower pursuant to a
Notice of Drawing during the Drawing Availability Period.
"Drawing" means the creation of Acceptances and the simultaneous
discounting of such Acceptances at the same time by the Banks, severally, in
the manner provided for in Section 3.03.
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"Drawing Availability Period" means the period from the date hereof
to and including the day which is 30 days before the Acceptance Facility
Termination Date.
"Eligible Acceptances" mean bankers' acceptances of the type
described in paragraph 7 of Section 13 of the Federal Reserve Act and eligible
for purchase by Federal Reserve Banks.
"Notice of Drawing" has the meaning set forth in Section 3.03.
"Prepayment Discount" means, with respect to each Acceptance
Obligation, an amount equal to the product of (i) the face amount of the
related Acceptance, (ii) the applicable Prepayment Discount Rate and (iii) a
fraction the numerator of which shall be the actual number of days from and
including the date on which such Acceptance Obligation becomes due pursuant to
Section 2.13, 3.07 or 9.06 to and including the maturity date of the related
Acceptance and the denominator of which shall be 360.
"Prepayment Discount Rate" means, with respect to each Acceptance
Obligation, the sum of (i) the Annualized Acceptance Commission Rate with
respect to the relevant Acceptance and (ii) the lesser of (A) the discount rate
determined by the Administrative Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the rates per annum bid by the
Banks at 10:00 A.M. (New York City time) or as soon thereafter as practicable
on the date on which such Acceptance Obligation becomes due pursuant to Section
2.13, 3.07 or 9.06 for sales by them of Eligible Acceptances which are created
by them in approximately the face amount of and with the same remaining term to
maturity as the relevant Acceptance and (B) the Discount Rate applicable to the
relevant Acceptance.
SECTION 3.02. COMMITMENTS TO CREATE ACCEPTANCES. During the Drawing
Availability Period, each Bank severally agrees, on the terms and conditions
set forth in this Agreement, to accept and discount Drafts drawn upon such Bank
by the Company or any Eligible Subsidiary; provided that (i) each resulting
Acceptance is an Eligible Acceptance, (ii) immediately after each such
Acceptance is so discounted, such Bank's Total Committed Exposure will not
exceed its Commitment and (iii) immediately after each such Acceptance is so
discounted, the aggregate face
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amount of all Acceptances then outstanding less the aggregate face amount of
all such Acceptances as to which the Borrower has theretofore paid or repaid
Acceptance Obligations pursuant to Section 2.12 or 3.04 does not exceed
$15,000,000. Each Drawing under this Section 3.02 shall be in the aggregate
face amount of at least $1,000,000 or any larger multiple of $100,000 and shall
be made from the several Banks ratably in proportion to their respective
Commitments.
SECTION 3.03. Method of Drawing. (a) The applicable Borrower shall
give the Administrative Agent notice (a "Notice of Drawing") at least three
Domestic Business Days before each Drawing, specifying:
(i) the date of such Drawing (the "Acceptance Date"), which shall be
a Domestic Business Day,
(ii) the aggregate face amount of the Drafts to be drawn (which shall
be denominated in United States dollars) in connection with such Drawing,
(iii) the maturity date of such Drafts, which shall be a Domestic
Business Day not less than 30 nor more than 180 days after the
Acceptance Date and no later than the Acceptance Facility Termination
Date,
(iv) the following information:
A. the type of goods being financed,
B. the name of the country (or city and state, in the case of a
domestic shipment) from which the goods have been shipped or are to
be shipped,
C. the name of the country (or city and state, in the case of a
domestic shipment) of the destination of the goods,
D. the shipment date for the goods being shipped, and
E. the aggregate amount of the invoice for such shipment, and
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(v) such additional information as the Administrative Agent or any
Bank may reasonably request.
(b) Upon receipt of a Notice of Drawing, the Administrative Agent
shall promptly notify each Bank of the contents thereof and of such Bank's
ratable share of the aggregate face amount of Drafts to be drawn in connection
with such Drawing. Such Notice of Drawing shall not thereafter be revocable by
any Borrower. Promptly after 9:30 A.M. on the date of each Drawing, the
Administrative Agent shall determine and notify each Bank of the Discount
applicable to the Acceptance created hereunder. Each Bank agrees to use its
best efforts to furnish quotations to the Administrative Agent. If any Bank
does not furnish a timely quotation, the Administrative Agent shall determine
the relevant Discount on the basis of the quotation or quotations by the
remaining Bank or Banks.
(c) Not later than 12:00 Noon (New York City time) on the date of
each Drawing, each Bank shall
(i) prepare a Draft or Drafts, substantially in the form of Exhibit
E hereto, dated the Acceptance Date, in an aggregate face amount equal
to such Bank's ratable share of the aggregate face amount of Drafts to
be drawn in connection with such Drawing and with the maturity date
specified by the applicable Borrower in its Notice of Drawing,
(ii) accept such Draft or Drafts, determine the Discount applicable
to the Acceptance or Acceptances created thereby and discount such
Acceptance or Acceptances at the face amount thereof less the applicable
Discount,
(iii) subtract from the proceeds of discounting such Acceptance or
Acceptances the applicable Acceptance Commission, and
(iv) make available to the Administrative Agent at its address
specified in or pursuant to Section 12.01, in Federal or other funds
immediately available in New York City, an amount equal to the result
obtained in clause (iii) above.
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Unless the Administrative Agent determines that any applicable condition
specified in Section 3.05 has not been satisfied, the Administrative Agent will
make the funds so received from the Banks available to the applicable Borrower
at the Administrative Agent's aforesaid address.
(d) Unless the Administrative Agent shall have received notice from
a Bank prior to the date of a Drawing that such Bank will not accept and
discount Drafts in connection with such Drawing, the Administrative Agent shall
be entitled to assume that such Bank will accept and discount Drafts in
connection with such Drawing and, in reliance on such assumption, the
Administrative Agent may make an amount corresponding to the amount such Bank
is to make available pursuant to subsection (c) above (such Bank's "share" of
such Drawing) available to the applicable Borrower for the account of such
Bank. If the Administrative Agent makes such corresponding amount available to
the applicable Borrower and such Bank does not in fact make its share of such
Drawing available on such date, the Administrative Agent shall be entitled to
recover such corresponding amount on demand from such Bank or the applicable
Borrower, together with interest thereon, for each day during the period from
the date of such Drawing until such sum shall be paid in full, at a rate per
annum equal to the Federal Funds Rate.
(e) To enable the Banks to create Acceptances in the manner
specified in this Section 3.03, each Borrower hereby constitutes and appoints
each Bank, acting by any of such Bank's officers, its true and lawful
attorney-in-fact (i) to sign for and on behalf and in the name of such Borrower
as drawer, Drafts drawn on such Bank payable to the order of such Borrower or
payable to the order of such Bank, (ii) to fill in the amount, date and
maturity date of such Drafts as specified in this Section 3.03, and (iii) in
the case of Drafts payable to the order of a Borrower, to endorse such Drafts
in blank for and on behalf and in the name of such Borrower.
(f) Each Bank may at any time, and from time to time, sell or
otherwise dispose of any or all Acceptances created by it hereunder.
(g) After each Acceptance shall have expired and been paid in full,
the Bank to which such Acceptance shall have been returned shall mark it "paid
in full" and return it to the applicable Borrower, through the Administrative
Agent.
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SECTION 3.04. Payment of Acceptance Obligations. (a) Unless the
applicable Borrower's obligations with respect to an Acceptance have previously
become due and payable pursuant to Section 2.13, 3.07 or 9.06, such Borrower
shall pay an amount equal to the face amount of such Acceptance, on the
maturity date of such Acceptance, to the Administrative Agent for the account
of the accepting Bank.
(b) If any Borrower fails to pay when due any amount payable by such
Borrower with respect to any Acceptance pursuant to subsection (a) of this
Section or Section 2.13, 3.07 or 9.06, such Borrower shall pay interest on such
overdue amount, to the extent permitted by law, for each day until paid at a
rate per annum equal to the sum of 2% plus the Base Rate for such day.
SECTION 3.05. Conditions to Drawings. The obligation of each Bank
to create and discount Acceptances on the occasion of each Drawing is subject
to the satisfaction of the following conditions:
(a) receipt by the Administrative Agent of a Notice of Drawing as
required by Section 3.03;
(b) the fact that, immediately before and after such Drawing, no
Bank's Total Committed Exposure will exceed such Bank's Commitment;
(c) the fact that, immediately before and after such Drawing, the
Total Aggregate Exposure shall not exceed the Available Amount;
(d) the fact that, immediately before and after such Drawing, no
Default shall have occurred and be continuing; and
(e) the fact that the representations and warranties of the
Borrowers contained in this Agreement, including, without limitation, the
representations and warranties in Section 3.06, shall be true on and as
of the date of such Drawing.
Each Drawing hereunder shall be deemed to be a representation and warranty by
the Borrowers on the date of such Drawing as to the facts specified in clauses
(b), (c), (d) and (e) of this Section.
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The obligation of each Bank to create and discount Acceptances on the
occasion of the first Drawing by any Borrower is subject to the additional
condition that the first Borrowing by such Borrower shall have been made.
SECTION 3.06. Representations and Warranties with Respect to
Acceptances. Each Borrower represents, with respect to the Acceptances
included in each Drawing by such Borrower hereunder, that:
(a) the proceeds of such Acceptances will be used by such Borrower
solely to finance goods which are shipped by or to such Borrower, the shipment
thereof and the distribution thereof into the channels of trade;
(b) the aggregate face amount of such Acceptances will not exceed
the c.i.f. value of the goods to be financed thereby;
(c) no financing will be outstanding or will be undertaken with
respect to such goods or shipment other than the financing provided by such
Acceptances;
(d) the date of such Drawing will be within 30 days of the shipment
of such goods;
(e) on the date of such Drawing, if such goods have not been
shipped, the seller of such goods will be under contract to ship such goods;
(f) all exchange, export and import licenses, if required under
applicable law and regulations for the exportation, importation, and payment of
the purchase price and related costs of such goods or shipment, will be
obtained on or before the date of such Drawing;
(g) the maturity date of such Acceptances will be reasonably
commensurate with the anticipated time required for the shipment of such goods
from the country (or state, in the case of a domestic shipment) of origin and
importation into the country (or state, in the case of a domestic shipment) of
destination and the processing of such shipment into the channels of trade on
usual credit terms;
(h) such goods will be shipped (i) across state borders or (ii) for
a distance in excess of 25 miles;
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(i) on the date of such Drawing, such Borrower will be the owner of
all of the goods the shipment of which is being financed by such Acceptances
free and clear of all Liens;
(j) on or prior to the date of such Drawing, such Borrower will be a
party to the contract for the sale or purchase of the goods being financed by
such Acceptances or, if such Borrower is not a party to such contract, the
obligation to purchase or sell such goods and all other incidents of such
contract will have been assigned to such Borrower; and
(k) all the information regarding such goods and shipment set forth
in the Notice of Drawing for such Acceptances pursuant to Section 3.03 will be
true and correct.
SECTION 3.07. Default; Mandatory Prepayment. (a) If one or more
Events of Default shall have occurred and be continuing, the Administrative
Agent shall, if requested by the Required Banks, by notice to the Company
declare the Acceptance Obligations on all Acceptances then outstanding to be,
and such Acceptance Obligations 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) of Section 7.01 with
respect to any Borrower, without any notice to any Borrower or any other act by
the Administrative Agent or the Banks, the Acceptance Obligations on all
Acceptances 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.
(b) If any Borrower becomes obligated to prepay any Acceptance
Obligation upon any mandatory prepayment thereof pursuant to Section 2.13 or
9.06 or upon acceleration thereof pursuant to subsection (a) of this Section
3.07, the amount due and payable by such Borrower shall be equal to the face
amount of the related Acceptances less the applicable Prepayment Discount. At
the time of each such prepayment or acceleration, each Bank shall deliver to
the Company and the Administrative Agent a certificate as to the amount of the
Prepayment Discount applicable to its Acceptances, which certificate shall be
conclusive in the absence of manifest error.
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SECTION 3.08. Amendments and Waivers. Notwithstanding the
provisions of Section 12.05, no amendment or waiver of this Agreement shall,
unless signed by all the Banks, (i) reduce the amount of or postpone the date
fixed for any payment of Acceptance Obligations, (ii) change the manner of pro
rata application of any payments of Acceptance Obligations, (iii) change the
Acceptance Commission Rate or (iv) change the number of Banks which shall be
required for the Banks to take any action under this Section.
SECTION 3.09. Extension of Acceptance Facility Termination Date. On
any date in January or February of 1995 and on any date in any subsequent
January or February prior to the Acceptance Facility Termination Date, the
Company shall notify the Administrative Agent and each Bank if the Company
desires to have the Acceptance Facility Termination Date extended from the
March 29 following such notice (each such March 29 being referred to as an
"Extension Request Date") to the March 29 that is one year after the Extension
Request Date. Any such request by the Company shall be substantially in the
form of Exhibit L hereto. The Banks will make every reasonable effort to
respond to the Company's request (whether affirmatively, by countersigning and
delivering such request to the Company, or negatively) within 25 days of
receipt thereof. If all of the Banks elect, in their sole discretion, to
extend the Acceptance Facility Termination Date and so notify the Company and
the Administrative Agent no later than the relevant Extension Request Date, the
Acceptance Facility Termination Date shall be extended to the March 29 of the
year following such Extension Request Date.
ARTICLE IV
CONDITIONS
SECTION 4.01. Closing. The closing hereunder shall occur upon
receipt by the Administrative Agent of the following documents, 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 F hereto and
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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
Administrative Agent, substantially in the form of Exhibit G hereto and
covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;
(d) evidence satisfactory to the Administrative 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; and
(e) all documents the Administrative Agent may reasonably request
relating to the existence of the Company, the corporate authority for and the
validity of this Agreement, the Drafts and the Notes, and any other matters
relevant hereto, all in form and substance satisfactory to the Administrative
Agent.
The Administrative 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 4.02. 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 May 31, 1993;
(b) receipt by the Administrative 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, no
Bank's Total Committed Exposure will exceed such Bank's Commitment;
(d) the fact that, immediately before and after such Borrowing, the
Total Aggregate Exposure shall not exceed the Available Amount;
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(e) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing; and
(f) 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), (e) and (f) of this Section.
SECTION 4.03. 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 Administrative 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 Administrative Agent of an opinion of counsel for
such Eligible Subsidiary acceptable to the Administrative Agent,
substantially in the form of Exhibit J hereto and covering such
additional matters relating to the transactions contemplated hereby as
the Required Banks may reasonably request; and
(c) receipt by the Administrative 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
Drafts and Notes of such Eligible Subsidiary, and any other matters
relevant thereto, all in form and substance satisfactory to the
Administrative 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.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants that:
SECTION 5.01. 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 5.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Company of this
Agreement, its Drafts 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 creation or imposition of any Lien on
any asset of the Company or any of its Subsidiaries.
SECTION 5.03. Binding Effect. This Agreement constitutes a valid
and binding agreement of the Company and its Drafts and its Notes, when
executed and delivered in accordance with this Agreement, will constitute valid
and binding obligations of the Company.
SECTION 5.04. Financial Information.
(a) The consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of December 31, 1992 and the related consolidated
statements of operations, changes in stockholders' equity and cash flow for the
fiscal
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year then ended, reported on by Deloitte & Touche and set forth in the
Company's 1992 Form 10-K, a copy of which has been delivered to each of the
Banks, fairly present, 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, 1992 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 5.05. 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 or which in any
manner draws into question the validity of this Agreement, the Drafts or the
Notes.
SECTION 5.06. 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 presently 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 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 5.07. 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
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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 5.08. 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 5.09. Subsidiaries. Each of the Company's Subsidiaries is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of 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 5.10. Not an Investment Company. The Company is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 5.11. Full Disclosure. All information heretofore furnished
by the Company to the Administrative
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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 Administrative 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, taken as a whole, or the ability of the Company to
perform its obligations under this Agreement, the Notes and the Drafts.
ARTICLE VI
COVENANTS
The Company agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note or any Acceptance Obligation
remains unpaid:
SECTION 6.01. 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
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;
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(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 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 6.07 through 6.11, inclusive, and Sections 6.13
and 6.15 on the date of such financial statements, (ii) setting forth
in reasonable detail the calculations of the Assets Component, 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 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
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(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 or the chief
accounting officer of the Company setting forth calculations in reasonable
detail of the Company's best estimate of the Assets Component, 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 termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given
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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
Administrative Agent, at the request of any Bank, may reasonably request.
SECTION 6.02. 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 accepted accounting
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principles, appropriate reserves for the accrual of any of the same.
SECTION 6.03. 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 Administrative Agent, information presented in reasonable
detail as to the insurance so carried.
SECTION 6.04. 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 6.04 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 6.12(ii).
SECTION 6.05. Compliance with Laws. The Company will comply, and
cause each Subsidiary to comply, in all
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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 thereunder) except
where the necessity of compliance therewith is contested in good faith by
appropriate proceedings.
SECTION 6.06. 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 6.07. Fixed Charge Coverage Ratio. The Fixed Charge
Coverage Ratio for any period of four consecutive fiscal quarters will not be
less than 2.5 to 1.0.
SECTION 6.08. 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 Acceptances and
Notes, provided that for a single thirty-day period in each twelve-month
period beginning after March 31, 1993, which thirty-day period is
designated by the Company by notice to the Administrative Agent and each
of the Banks at least two Domestic Business Days before the commencement
of such period, the sum of (x) the Total Aggregate Exposure and (y) the
aggregate outstanding principal amount of Debt permitted under clause
(g) of this Section shall not exceed (i) for the period beginning
April 1, 1993 and ending March 31, 1994, $20,000,000, (ii) for the period
beginning April 1, 1994 and ending March 31, 1995, $18,000,000 and
(iii) for the period beginning April 1, 1995 and ending March 31, 1996,
$16,000,000;
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(b) Debt outstanding on the date of this Agreement 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 6.11;
(d) Debt of the Company owing to the Outdoor Footwear Company,
provided that the Outdoor Footwear Company is a Wholly-Owned Subsidiary
at the time such Debt is outstanding;
(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 in an aggregate principal amount at any
time outstanding not to exceed $17,000,000, provided that for a single
thirty-day period in each twelve-month period beginning after
March 31, 1993, which thirty-day period is designated by the Company by
notice to the Administrative Agent and each of the Banks at least three
Domestic Business Days before the commencement of such period, the sum
of (x) the aggregate outstanding principal amount of such Permitted
Short-Term Debt and (y) the Total Aggregate Exposure shall not exceed
(i) for the period beginning April 1, 1993 and ending March 31, 1994,
$20,000,000, (ii) for the period beginning
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April 1, 1994 and ending March 31, 1995, $18,000,000 and (iii) for the
period beginning April 1, 1995 and ending March 31, 1996, $16,000,000;
(h) Debt denominated in English pounds sterling, French francs or
German deutschemarks and having a maturity, at the time such Debt is
incurred, of not more than one year from the date such Debt is incurred,
provided that the aggregate principal amount of such Debt outstanding
at any time shall not exceed (i) for such Debt denominated in English
pounds sterling, #4,000,000, (ii) for such Debt denominated in French
francs, FF20,000,000 and (iii) for such Debt denominated in German
deutschemarks, DM5,000,000;
(i) Permitted Long-Term Debt in an aggregate principal amount at any
time outstanding not to exceed 50% 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 $1,000,000 at
any time outstanding.
SECTION 6.09. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Consolidated
Tangible Net Worth will at no time be less than the sum of (i) $70,000,000 and
(ii) 80% of Aggregate Positive Consolidated Net Income. 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, 1992 and ending on or prior to the date as of which
compliance with this Section 6.09 is determined (with no deduction for
consolidated net losses for any such fiscal quarter).
SECTION 6.10. 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 6.10 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 6.10.
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SECTION 6.11. Investments. Neither the Company nor any Consolidated
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 6.08(d)
or 6.08(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.
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 6.12. 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'
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qualifying shares, (ii) the sale to one or more third parties in a single
transaction of all of the capital stock of The Timberland Company of Australia
Pty., Ltd. or Timberland Footwear & Clothing New Zealand Limited, PROVIDED that
no transfer of assets of the Company or any of its other Subsidiaries to The
Timberland Company of Australia Pty., Ltd. or Timberland Footwear & Clothing
New Zealand Limited, as the case may be, other than sales of inventory in the
ordinary course of business, shall have been made on or prior to the date of
such sale or shall be made in connection with such sale, (iii) mergers
permitted pursuant to the proviso to Section 6.14 and (iv) grants or sales by
The Outdoor Footwear Company of shares of its non-voting common stock to its
employees consistent with past practice.
SECTION 6.13. 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 6.13, 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, (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 6.08; and
(i) Liens not otherwise permitted by the foregoing clauses of this
Section securing Debt in an aggregate principal amount at any time
outstanding not to exceed $2,000,000.
SECTION 6.14. 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 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 and
(B) immediately after giving effect to such merger, no Default shall have
occurred and be continuing.
SECTION 6.15. No Prepayment of Note Agreement Debt. (a) The
Company will not, and will not permit any of its Subsidiaries to, voluntarily
prepay any 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").
(b) The Company will not consent to any amendment of the final
maturity of any Debt outstanding under any Note Agreement to a date prior to
the Termination Date.
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SECTION 6.16. 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
6.16 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 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 6.17. 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 VII
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DEFAULTS
SECTION 7.01. 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 or any Acceptance Obligation 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 6.07 to 6.15, inclusive, and 6.17;
(c) any Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by
clause (a) or (b) above) for 30 days after written notice thereof has
been given to the Company by the Administrative 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 Debt 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
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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 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
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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 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 Administrative 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
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Borrower, without any notice to any Borrower or any other act by the
Administrative 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 7.02. Notice of Default. The Administrative Agent shall
give notice to the Company under Section 7.01(c) promptly upon being requested
to do so by any Bank and shall thereupon notify all the Banks thereof.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
SECTION 8.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Administrative Agent to take such action as agent
on its behalf and to exercise such powers under this Agreement, the Acceptances
and the Notes as are delegated to the Administrative Agent by the terms hereof
or thereof, together with all such powers as are reasonably incidental thereto.
SECTION 8.02. Administrative Agent and Affiliates. Morgan Guaranty
Trust Company of New York shall have the same 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 Administrative 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 Administrative
Agent hereunder.
SECTION 8.03. Action by Administrative Agent. The obligations of
the Administrative Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Administrative Agent
shall not be required to take any action with respect to any Default, except as
expressly provided in Section 3.07(a) or Article VII.
SECTION 8.04. Consultation with Experts. The Administrative Agent
may consult with legal counsel (who may
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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 8.05. Liability of Administrative Agent. Neither the
Administrative 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 Administrative 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 or Drawing 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 or IV, except receipt of
items required to be delivered to the Administrative Agent; or (iv) the
validity, effectiveness or genuineness of this Agreement, the Drafts, the
Acceptances, the Notes or any other instrument or writing furnished in
connection herewith. The Administrative 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 8.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Administrative Agent, its
affiliates and their respective directors, officers, agents and employees (to
the extent 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 8.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative 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
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enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Administrative 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 8.08. Successor Administrative Agent. The Administrative
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 Administrative Agent with the consent of the
Borrower, which consent shall not be unreasonably withheld. If no successor
Administrative Agent shall have been so appointed by the Required Banks, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent gives notice of resignation, then the retiring
Administrative Agent may, on behalf of the Banks and without the consent of the
Borrower, appoint a successor Administrative 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 Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation hereunder as Administrative 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 Administrative Agent.
SECTION 8.09. Administrative Agent's Fee. The Company shall pay to
the Administrative Agent for its own account fees in the amounts and at the
times previously agreed upon between the Company and the Administrative Agent.
ARTICLE IX
CHANGE IN CIRCUMSTANCES
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SECTION 9.01. 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 Administrative 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 Administrative
Agent that the Adjusted CD Rate or the Adjusted Interbank Offered Rate,
as the case may be, as determined by the Administrative 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 Administrative Agent shall forthwith give notice thereof to the Company and
the Banks, whereupon until the Administrative 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 Administrative Agent,
unless the applicable Borrower notifies the Administrative 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 9.02. 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
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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 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 or create
Eligible Acceptances pursuant to this Agreement and such Bank shall so notify
the Administrative Agent, the Administrative Agent shall forthwith give notice
thereof to the other Banks and the Company, whereupon until such Bank notifies
the Company and the Administrative 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, or to
create Acceptances pursuant to this Agreement, 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 Administrative 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 9.03. 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
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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) 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 bankers' acceptances or the London interbank market
any other condition affecting its Fixed Rate Loans, its Notes or its obligation
to make Fixed Rate Loans or its creation of or obligation to create Acceptances
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
creating any Acceptance, 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 or Acceptances with respect thereto, by an amount deemed by
such Bank to be material, or, for any reason beyond the control of such Bank,
any Acceptance created by it hereunder does not comply at the time of its
creation with the applicable regulations of the Board of Governors of the
Federal Reserve System governing bankers' acceptances and for such reason is
not an Eligible Acceptance, then, within 15 days after demand by such Bank
(with a copy to the Administrative 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
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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 Administrative 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
Administrative 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 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
9.03 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 9.04. Taxes. (a) Any and all payments by any Borrower to
or for the account of any Bank or the Administrative Agent hereunder or under
any Note or with respect to any Acceptance 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 Administrative Agent,
taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Bank or the Administrative 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 or
with respect to any Acceptance to any Bank or the Administrative Agent, (i) the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable
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under this Section 9.04) such Bank or the Administrative 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 Administrative Agent, at its address referred to in
Section 12.01, 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 with respect to any Acceptance 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 or Draft
(hereinafter referred to as "Other Taxes").
(c) The Company agrees to indemnify each Bank and the Administrative
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 9.04) paid by such Bank or the
Administrative 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 Administrative 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 Administrative 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
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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 9.04(a).
(e) For any period with respect to which a Bank has failed to
provide the Company with the appropriate form pursuant to Section 9.04(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 9.04(a) with
respect to Taxes imposed by the United States; provided, however, 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 9.04, then such Bank will
change the jurisdiction of its Applicable Lending Office so as to 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 9.05. Base Rate Loans Substituted for Affected Fixed Rate
Loans and Acceptances. If (i) the obligation of any Bank to make Euro-Dollar
Loans to any Borrower or create Acceptances for the account of any Borrower
pursuant to this Agreement has been suspended pursuant to Section 9.02 or (ii)
any Bank has demanded compensation under Section 9.03 or 9.04 with respect to
its CD Loans or Euro-Dollar Loans to any Borrower or its Acceptances for the
account of any Borrower and the Company shall, by at least five Euro-Dollar
Business Days' prior notice to such Bank through the Administrative Agent, have
elected that the provisions of this Section 9.05 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:
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(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 all funds that would otherwise be advanced by such
Bank to such Borrower as discounted proceeds of Acceptances shall be advanced
instead as Base Rate Loans, 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.
SECTION 9.06. HLT Classification. If, after the date hereof, the
Administrative Agent determines that, or the Administrative Agent is advised by
any Bank that such Bank has received notice from any governmental authority,
central bank or comparable agency having jurisdiction over such Bank that,
Loans hereunder are classified as a "highly leveraged transaction" (an "HLT
Classification") , the Administrative Agent shall promptly give notice of such
HLT Classification to the Company and the other Banks. The Administrative
Agent, the Banks and the Company shall commence negotiations in good faith to
agree on the extent to which fees, interest rates and/or margins hereunder
should be increased so as to reflect such HLT Classification. If the Company
and the Required Banks agree on the amount of such increase or increases, this
Agreement may be amended to give effect to such increase or increases as
provided in Section 12.05. If the Company and the Required Banks fail to so
agree within 60 days after notice is given by the Administrative Agent as
provided above, then the Administrative Agent shall, if requested by the
Required Banks, by notice to the Company terminate the Commitments
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and they shall thereupon terminate and the Borrowers shall (i) repay each
outstanding Fixed Rate Loan at the end of the Interest Period applicable
thereto, (ii) repay each outstanding Base Rate Loan immediately and (iii)
prepay each outstanding Acceptance Obligation immediately. The Banks
acknowledge that an HLT Classification is not a Default or an Event of Default
hereunder.
ARTICLE X
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 10.01. 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 10.02. Corporate and Governmental Authorization;
Contravention. The execution and delivery by it of its Election to Participate
and its Drafts and Notes, and the performance by it of this Agreement and its
Drafts and 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 or 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 10.03. Binding Effect. This Agreement constitutes a valid
and binding agreement of such Eligible Subsidiary and its Drafts and its Notes,
when executed and delivered in accordance with this Agreement, will constitute
valid and binding obligations of such Eligible Subsidiary.
SECTION 10.04. Taxes. Except as disclosed in such Election to
Participate, there is no income, stamp or
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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 Drafts
or Notes, or is imposed on or by virtue of the execution, delivery or
enforcement of its Election to Participate or of its Drafts or Notes.
ARTICLE XI
GUARANTY
SECTION 11.01. 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 (including, but not limited to, with respect to any Draft).
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 11.02. 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 Draft or Note, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this Agreement
or any Draft or 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 Draft or Note;
(iv) any change in the corporate existence, structure or ownership of
any Eligible Subsidiary, or any insolvency, bankruptcy, reorganization or
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<PAGE> 87
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 Draft or 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
Administrative Agent, any Bank or any other Person, whether in connection
herewith or any unrelated transactions, provided that nothing herein shall
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 Draft or
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 (including, but not limited to, with respect to any Draft); or
(vii) any other act or omission to act or delay of any kind by any
Eligible Subsidiary, the Administrative 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 11.03. 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 (including, but not
limited to, with respect to any Draft) 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.
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<PAGE> 88
SECTION 11.04. 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 11.05. 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.
SECTION 11.06. 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 Drafts or 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 Administrative Agent made
at the request of the Required Banks.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. 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 Administrative 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, such other address or telex or facsimile transmission number
as such party may hereafter specify for the purpose by notice to the
Administrative 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
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<PAGE> 89
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 Administrative Agent
under Article II, Article III or Article IX shall not be effective until
received.
SECTION 12.02. No Waivers. No failure or delay by the
Administrative Agent or any Bank in exercising any right, power or privilege
hereunder or under any Note or with respect to any Acceptance 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.
SECTION 12.03. Expenses; Documentary Taxes; Indemnification. (a)
The Company shall pay (i) all out-of-pocket expenses of the Administrative
Agent, including fees and disbursements of special counsel for the
Administrative Agent, in connection with the preparation and administration of
this Agreement, the Notes, the Drafts and the Acceptances, 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 out-of-pocket expenses
incurred by the Administrative 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 Administrative 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 its actions as Administrative Agent hereunder) 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;
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<PAGE> 90
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 12.04. 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 or the Acceptance Obligations owing to 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 or Acceptance Obligations owing to such other Bank, the
Bank receiving such proportionately greater payment shall purchase such
participations in the Notes held by or Acceptance Obligations owing to 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 and Acceptance Obligations owing to 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
fullest extent it may effectively do so under applicable law, that any holder
of a participation in a Note or Acceptance Obligation, 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 12.05. Amendments and Waivers. Subject to Section 3.08, 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 Administrative Agent are
affected thereby, by the Administrative 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
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<PAGE> 91
fees hereunder, except as provided below, (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 or (iv) change the percentage of
the Commitments or of the Total Aggregate Exposure, or the number of Banks,
which shall be required for the Banks or any of them to take any action under
this Section 12.05 or any other provision of this Agreement; PROVIDED, FURTHER,
that this Agreement may be amended to give effect to any increased fees,
interest rates and/or margins agreed upon pursuant to Section 9.06 or to reduce
or rescind any such increases previously agreed upon pursuant to Section 9.06,
if such amendment is in writing and is signed by the Company and the Required
Banks; 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 or the
Acceptance Obligations of such Eligible Subsidiary with respect to any
outstanding Acceptances, (y) accelerate the stated maturity of any outstanding
Loan of such Eligible Subsidiary or of the Acceptance Obligations with respect
to any Acceptance created for the account of such Eligible Subsidiary or (z)
change this PROVISO.
SECTION 12.06. 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 notice to the Company and the
Administrative 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 or Acceptance Obligations. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrowers and the Administrative Agent, such Bank shall remain responsible for
the performance of its obligations hereunder, and the Borrowers and the
Administrative 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
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<PAGE> 92
not agree to any modification, amendment or waiver of this Agreement described
in clause (i), (ii) or (iii) of Section 3.08 or clause (i), (ii) or (iii) of
Section 12.05 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 IX 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 K hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Company and the Administrative 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, such consent shall not be unreasonably
withheld 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 Administrative Agent and the Borrowers shall make appropriate
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
Administrative Agent an administrative fee for processing such assignment in
the amount of $2,000. 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 Administrative Agent certification as to exemption from
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<PAGE> 93
deduction or withholding of any United States federal income taxes in
accordance with Section 9.04.
(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 9.03 or
9.04 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 9.02, 9.03 or 9.04
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 12.07. Collateral. Each of the Banks represents to the
Administrative 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 12.08. Confidentiality. The Administrative 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 Administrative 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
Acceptance or (vi) subject to provisions similar to those contained in this
Section, to any prospective Participant or Assignee.
SECTION 12.09. Governing Law; Submission to Jurisdiction. This
Agreement, each Draft, each Acceptance 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
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<PAGE> 94
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 12.10. 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
Administrative 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 Administrative Agent in form
satisfactory to it of telegraphic, telex or other written confirmation from
such party of execution of a counterpart hereof by such party).
SECTION 12.11. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE
ADMINISTRATIVE 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.
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
/s/ Carden N. Welsh
By____________________
Title: Treasurer
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<PAGE> 95
11 Merrill Industrial Drive
P.O. Box 5050
Hampton, N.H. 03842-5050
Attention: Chief Financial Officer
Telex number: 6817513 TIMBERLAND
HMPT
Facsimile transmission
number: 603-926-9239
<TABLE>
<CAPTION>
Commitments
- -----------
<S> <C>
$ 22,500,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
/s/ Charles R. Pardue
By __________________________
Title: Associate
$ 22,500,000 ABN AMRO BANK N.V.
/s/ Karen Van Beers
By_________________________
Title: Vice President
$ 20,000,000 THE FIRST NATIONAL BANK OF
BOSTON
/s/ Amy B. Lyons
By_________________________
Title: Vice President
$ 20,000,000 BARCLAYS BANK PLC
/s/ Russell Gorman
By_________________________
Title: Director
$ 15,000,000 THE NORTHERN TRUST COMPANY
</TABLE>
95
<PAGE> 96
<TABLE>
<S> <C> /s/ Greg Ward
By__________________________
Title: Second Vice President
_________________
Total Commitments
$ 100,000,000
=================
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent
/s/ Charles R. Pardue
By_________________________
Title: Associate
60 Wall Street
New York, New York 10260-0060
Attention: Credit Administration
Telex number: 177615
Facsimile transmission
number: (212) 648-5355
</TABLE>
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
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<PAGE> 97
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 13, 1993 among The Timberland Company, the banks listed on the
signature pages thereof and Morgan Guaranty Trust Company of New York, as
Administrative 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 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]
____________________
*To be deleted in case of Notes executed and delivered by the Company.
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<PAGE> 98
By____________________
Title:
<TABLE>
LOANS AND PAYMENTS OF PRINCIPAL
<CAPTION>
Type Amount Amount of
of of Principal Notation
Date Loan Loan Repaid Made By
<S> <C> <C> <C> <C>
</TABLE>
EXHIBIT B
FORM OF NOTICE OF COMMITTED BORROWING
-------------------------------------
Morgan Guaranty Trust Company
of New York, as Administrative Agent
under the Credit Agreement referred
to below
60 Wall Street
New York, New York 10260-0060
Attention: Credit Administration
Re: $100,000,000 Credit Agreement dated as of
May 13, 1993 among The Timberland Company,
the Banks listed on the signature pages thereof
and Morgan Guaranty Trust Company of New York,
as Administrative Agent (the "Credit Agreement")
------------------------------------------------
Dear Sirs:
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: __________**
___________________
*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.
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<PAGE> 99
Type of Borrowing (choose one):
[Base Rate]/[CD]/[Euro-Dollar]
Initial Interest Period: __________***
Dated: __________ __, 199_
Very truly yours,
[BORROWER]
By:________________________
Title:****
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
To: [Name of Bank]
From: [Name of Borrower] (the "Borrower")
Re: $100,000,000 Credit Agreement dated as of May 13, 1993 among The
Timberland Company, the Banks listed on the signature pages thereof
and Morgan Guaranty Trust Company of New York, as Administrative
Agent (the "Credit Agreement").
-------------------------------------------------------------------
__________________
**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 or three months, for a Euro-Dollar Borrowing; 30, 60 or 90
days, for a CD Borrowing; does not apply for a Base Rate Borrowing.
****For the Company, the President, the Executive Vice President, the
Senior Vice President - Finance and Administration, the Vice President -
Finance or the Treasurer only.
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<PAGE> 100
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***
- ---------------- ---------------
$
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______________________
____________________
*Must be at least five 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 (LIBOR Auction) or 15 days (Absolute Rate
Auction), subject to the provisions of the definition of Interest Period.
****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.
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<PAGE> 101
Authorized Officer*******
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: ____________________*
<TABLE>
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:
<CAPTION>
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
<S> <C> <C> <C>
_________________________
<FN>
*******For the Company, the President, the Executive Vice President, the
Senior Vice President - Finance and Administration, the Vice President -
Finance or the Treasurer only.
*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 15 days
(Absolute Rate Auction), as specified in the related Invitation. No more than
five bids are permitted for each Interest Period.
</TABLE>
101
<PAGE> 102
$
$
[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 13, 1993 among The Timberland Company, the Banks listed on the
signature pages thereof and Morgan Guaranty Trust Company of New York, as
Administrative 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
EXHIBIT E
FORM OF DRAFT
-------------
(Front Side)
[Consecutive Numbers]
_______________________________________________________________________________
****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%).
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<PAGE> 103
_______________________*___________, 19
At__________**___________ days after the date hereof
Pay to the Order of [Name of Bank or Borrower]
--------------------------------------
____________________________________________________Dollars
[Name of Bank] [Name of Borrower]
By ____________________________
FORM OF DRAFT
(Reverse Side)
ELIGIBILITY CERTIFICATE
The transactions which give rise to this instrument are
the shipments of________________________ to _______________________
to____________________.
[Name of Bank]
By _______________________________
Authorized Officer
EXHIBIT F
---------
_____________________
*Insert date of acceptance.
**Insert number of days up to 180 days.
103
<PAGE> 104
OPINION OF
COUNSEL FOR THE COMPANY
-----------------------
[Closing Date]
To the Banks and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
This opinion is being furnished to you pursuant to Section 4.01(b) of
the Credit Agreement dated as of May 13, 1993 (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 Administrative 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 11, 12 and 13
below.
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<PAGE> 105
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.
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 each of the Credit Agreement,
each Note and each Draft provides that it is 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, 8 and 10 below,
we have assumed that each of the Credit Agreement, each Note and each Draft
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
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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 Credit
Agreement, the Notes and the Drafts 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.
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<PAGE> 107
9. The execution and delivery of Drafts in accordance with the
provisions of the Credit Agreement have been duly authorized by the Company.
10. Subject to the qualifications stated in the penultimate paragraph
hereof, if a Draft had been executed and delivered on behalf of the Company in
accordance with the provisions of the Credit Agreement, such Draft would
constitute the legal, valid and binding obligation of the Company and would be
enforceable against the Company in accordance with the terms thereof.
11. 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.
12. 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 Agreement, the Notes or the Drafts,
except for such filings as do not affect the validity or enforceability of the
Credit Agreement, the Notes and the Drafts.
13. 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 of any of its Subsidiaries which places
in question the validity or enforceability of the Credit Agreement, the Notes
or the Drafts. 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
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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 each of the Credit Agreement and each of the Notes
being delivered to the Banks today is, and that a Draft, executed and delivered
by the Company in accordance with the provisions of the Credit Agreement today,
would be, legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with its 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, the Notes and the Drafts 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
an 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 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.
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<PAGE> 109
Very truly yours,
EXHIBIT G
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE Administrative Agent
--------------------------------------
[Closing Date]
To the Banks and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260-0060
Dear Sirs:
We have participated in the preparation of the Credit Agreement (the
"Credit Agreement") dated as of May 13, 1993, 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
Administrative Agent (the "Administrative Agent"), and have acted as special
counsel for the Administrative Agent for the purpose of rendering this opinion
pursuant to Section 4.01(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
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<PAGE> 110
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 Drafts and Notes are within the Company's corporate
powers and have been duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement of
the Company and its Notes constitute, and, upon execution and delivery thereof
in the manner contemplated by the Credit Agreement, its Drafts will 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 or furnished to any other person without our prior written
consent.
Very truly yours,
EXHIBIT H
FORM OF ELECTION TO PARTICIPATE
-------------------------------
, 19
MORGAN GUARANTY TRUST COMPANY
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<PAGE> 111
OF NEW YORK, as Administrative Agent
for the Banks named in the Credit
Agreement dated as of May 13, 1993
among The Timberland Company, such
Banks and such Administrative Agent
(the "Credit Agreement")
Dear Sirs:
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 X 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 12.09 thereof, as if the
undersigned were a signatory party thereto.
[Tax disclosure pursuant to Section 10.04]
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:
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<PAGE> 112
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 Administrative Agent
By _______________________________
Title:
EXHIBIT I
FORM OF ELECTION TO TERMINATE
-----------------------------
, 19
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
for the Banks named in the Credit
Agreement dated as of May 13, 1993
among The Timberland Company, such
Banks and such Administrative Agent
(the "Credit Agreement")
Dear Sirs:
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<PAGE> 113
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 Draft or Note heretofore incurred.
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 terminated as of the date hereof.
THE TIMBERLAND COMPANY
By ___________________________
Title:
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<PAGE> 114
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 Administrative
Agent
By __________________________
Title:
EXHIBIT J
OPINION OF
COUNSEL FOR THE BORROWER
(BORROWINGS BY ELIGIBLE SUBSIDIARIES)
-------------------------------------
[Dated as provided in
Section 4.03 of the
Credit Agreement]
To the Banks and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
9 West 57th Street
New York, New York 10019
Dear Sirs:
I am counsel to [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation (the "Borrower"), and give this opinion pursuant to
Section 4.03(b) of the Credit Agreement (the "Credit Agreement") dated as of
May 13, 1993 among The Timberland Company (the "Company"), the banks listed on
the signature pages thereof and Morgan Guaranty Trust Company of New York, as
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<PAGE> 115
Administrative 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.
2. The execution and delivery by the Borrower of its Election to
Participate and its Drafts and Notes and the performance by the Borrower of the
Credit Agreement and its Drafts and 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, and, upon execution and delivery thereof
in the manner contemplated by the Credit Agreement, its Drafts will 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 Drafts or Notes, or is imposed on or by virtue of the
execution,
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<PAGE> 116
delivery or enforcement of its Election to Participate or of its
Drafts or Notes.
Very truly yours,
EXHIBIT K
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 Administrative
Agent (the "Administrative 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 13, 1993 among the Company, the
Assignor and the other Banks party thereto, as Banks, and the Administrative
Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans and create Acceptances 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;
WHEREAS, Acceptances created by the Assignor under the Credit
Agreement in the aggregate face amount of $________ are outstanding at the date
hereof; and
WHEREAS, except with respect to the outstanding Acceptances, 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"),
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<PAGE> 117
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. Except as provided in Section 4 below, 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 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 Administrative 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.
___________
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<PAGE> 118
*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.
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. OUTSTANDING ACCEPTANCES; EFFECT ON AVAILABILITY OF
COMMITMENTS. The parties hereto agree that the Assignee is not participating
in and is not subject to any liability in respect of Acceptances that are
outstanding under the Credit Agreement as of the date hereof. The Company
hereby confirms its understanding that as a result of such non-participation,
so long as any such Acceptance remains outstanding, (i) the Assignee's Total
Committed Exposure expressed as a percentage of its Commitment (its "Percentage
Utilization") shall be proportionately lower than the Percentage Utilization of
the Banks that are not parties to this Assignment Agreement; (ii) the
Assignor's Percentage Utilization shall be proportionately higher than the
Percentage Utilization of the Banks that are not parties to this Assignment
Agreement; and (iii) because, in accordance with the terms of the Credit
Agreement, Committed Borrowings and Drawings are made from the several Banks
ratably in proportion to their respective Commitments, the Borrower shall be
unable to use the unused Commitments of the Assignee and the Banks that are not
parties to this Agreement at any time when the Assignor's Percentage
Utilization is equal to 100%.
SECTION 5. CONSENT OF THE COMPANY AND THE ADMINISTRATIVE AGENT.
This Agreement is conditioned upon the consent of the Company and the
Administrative Agent pursuant to Section 12.06(c) of the Credit Agreement. The
execution of this Agreement by the Company and the Administrative Agent is
evidence of this consent. Pursuant to Section 12.06(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
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<PAGE> 119
the Assignee to evidence the assignment and assumption provided for herein.
SECTION 6. 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 Draft or 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 7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 8. 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]
Title:
[ASSIGNEE]
By ___________________________
Title:
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<PAGE> 120
THE TIMBERLAND COMPANY
By ___________________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By ___________________________________
Title:
EXHIBIT L
FORM OF REQUEST FOR EXTENSION OF
ACCEPTANCE FACILITY TERMINATION DATE
------------------------------------
________ __, 19__
To each of the Banks parties
to the Credit Agreement
described below
Dear Sirs:
We refer to the Credit Agreement dated as of May 13, 1993 among The
Timberland Company, the Banks listed on the signature pages thereof and Morgan
Guaranty Trust Company of New York, as Administrative Agent (the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein as therein
defined.
In accordance with Section 3.09 of the Credit Agreement, the Company
hereby requests your consent to extend the Acceptance Facility Termination Date
for one year from __________, 19__, to __________, 19__. If such an
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<PAGE> 121
extension is acceptable to you, please so indicate by signing in the
indicated space below.
The above described extension of the Acceptance Facility Termination
Date shall become effective if and when the Administrative Agent shall have
received counterparts hereof signed by each of the Banks no later than
__________, 19__.
This instrument shall be construed in accordance with and governed by
the laws of the State New York.
Very truly yours,
THE TIMBERLAND COMPANY
[Title]
The undersigned hereby
consents to the extension
of the Acceptance Facility
Termination Date requested
above.
[NAME OF BANK]
By__________________________
[Title]
121
<PAGE> 1
Exhibit 10.11(ii)
EXECUTION COPY
AMENDMENT NO. 1 TO CREDIT AGREEMENT
AMENDMENT dated as of November 15, 1993 to the Credit Agreement dated
as of May 13, 1993 among THE TIMBERLAND COMPANY (the "Borrower"), the BANKS
listed on the signature pages thereof (the "Banks") and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Administrative Agent (the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore entered into a Credit
Agreement dated as of May 13, 1993 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as
hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Agreement shall
have the meaning assigned to such term in the Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Agreement shall from and after the date hereof refer to the
Agreement as amended hereby.
SECTION 2. Amendment of Section 1.01 of the Agreement. Section 1.01
of the Agreement is hereby amended by:
(a) amending the definition of "Permitted Long-Term Debt" contained
therein to read in its entirety as follows:
"'Permitted Long-Term Debt' means (i) Debt outstanding under the
Chase Credit Agreement and (ii) Debt (other than Debt permitted under
Section 6.08(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 (x) 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 (y) the principal component of rental
payments with respect to not more than
<PAGE> 2
$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."; and
(b) adding, following the definition of "CD Reference Banks"
contained therein, the following new definition:
"'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 6.15, be amended, modified or supplemented from
time to time.".
SECTION 3. Amendment to Section 6.08(a) of the Agreement. Section
6.08(a) of the Agreement is hereby amended by inserting, immediately before the
semicolon at the end thereof, the following proviso:
", and provided further that the sum of (1) the aggregate outstanding
principal amount of all Loans to Eligible Subsidiaries and (2) the aggregate
outstanding face amount of all Acceptances drawn by Eligible Subsidiaries then
outstanding less the aggregate face amount of all such Acceptances as to which
Acceptance Obligations have been paid or prepaid pursuant to Section 2.13,
3.04, 3.07 or 9.06 shall at no time exceed $17,000,000".
SECTION 4. Amendment to Section 6.15 of the Agreement. Section 6.15
of the Agreement is hereby amended to read in its entirety as follows:
"SECTION 6.15. Restrictions on Prepayments of and Amendments to
Certain Debt. (a) The Company will not, and will not permit any of its
Subsidiaries to, voluntarily repay or prepay (i) any Debt
<PAGE> 3
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"), or (ii) except with the proceeds of the issuance by
the Company of Permitted Long-Term Debt or shares of its common stock, 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, the Total
Aggregate Exposure of each Bank is zero.
(b) The Company will not consent to (i) any amendment of the
final maturity of any Debt outstanding under any Note Agreement to a date prior
to the Termination Date, (ii) any amendment of the amount or date of any
required repayment or prepayment of any Debt outstanding under the Chase Credit
Agreement, 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 Termination Date or (iii) 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 additional, greater or more stringent
restrictions on the Company and (B) could adversely affect the Banks.".
SECTION 5. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 6. Counterparts; Effectiveness. This Amendment 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 Amendment shall become effective as of the date hereof when
the Administrative Agent shall have received duly executed counterparts hereof
signed by the Borrower and the Required Banks (or, in the case of any party as
to which an executed counterpart shall not have been received, the
Administrative Agent shall have received telegraphic, telex or other written
confirmation from such party of execution of a counterpart hereof by such
party).
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
THE TIMBERLAND COMPANY
/s/ Carden N. Welsh
By _____________________
Title: Treasurer
MORGAN GUARANTY TRUST COMPANY
<PAGE> 4
OF NEW YORK
/s/ Charles Pardue
By _____________________
Title: Associate
ABN AMRO BANK N.V.
Marilyn Tressell
By _____________________
Title: Vice President
/s/ Carolyn Van Putten
By _____________________
Title: Ass't Vice President
THE FIRST NATIONAL BANK
OF BOSTON
/s/ Amy B. Lyons
By ______________________
Title: Vice President
BARCLAYS BANK PLC
No Signature
By ______________________
Title:
THE NORTHERN TRUST COMPANY
/s/ Greg Werd
By ______________________
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as
Administrative Agent
/s/ Charles Pardue
By _____________________
Title: Associate
<PAGE> 1
Exhibit 10.12
CREDIT AGREEMENT
dated as of
November 15, 1993
among
THE TIMBERLAND COMPANY
the Banks signatory hereto
and
THE CHASE MANHATTAN BANK, N.A.
as Agent
<TABLE>
Table of Contents
<S> <C>
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS
Section 1.01. Definitions 1
Section 1.02. Accounting Terms 13
ARTICLE 2. THE CREDIT
Section 2.01. The Revolving Credit Loans 13
Section 2.02. The Term Loans 14
Section 2.03. The Notes 14
Section 2.04. Purpose 14
Section 2.05. Borrowing Procedures 15
Section 2.06. Prepayments and Conversions 15
Section 2.07. Interest Periods: Renewals 15
Section 2.08. Changes of Commitments 16
Section 2.09. Certain Notices 16
Section 2.10. Minimum Amounts 17
Section 2.11. Interest 17
Section 2.12. Fees 17
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
Section 2.13. Payments Generally 18
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.01. Additional Costs 18
Section 3.02. Limitation of Types of Loans 20
Section 3.03. Illegality 21
Section 3.04. Certain Conversions pursuant to
Sections 3.01 and 3.03 21
Section 3.05. Certain Compensation 22
Section 3.06. Indemnification for Taxes 23
Section 3.07. Foreign Subsidiary Costs 24
ARTICLE 4. CONDITIONS PRECEDENT
Section 4.01. Documentary Conditions
Precedent 25
Section 4.02. Additional Conditions
Precedent 25
Section 4.03. Deemed Representations 26
Section 4.04. First Borrowing by
Each Eligible Subsidiary 26
Section 4.05. Representations of
Eligible Subsidiaries 27
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
Section 5.01. Incorporation, Good Standing and
Due Qualification 28
Section 5.02. Corporate Power and
Authority; No Conflicts 28
Section 5.03. Legally Enforceable
Agreements 28
Section 5.04. Litigation 28
Section 5.05. Financial Statements 29
Section 5.06. Taxes 29
Section 5.07. ERISA 29
Section 5.08. Subsidiaries and
Ownership of Stock 30
Section 5.09. Credit Arrangements 30
Section 5.10. No Default on Outstanding
Judgments or Orders 30
Section 5.11. Governmental Regulation 30
Section 5.12. Environmental Matters 30
Section 5.13. Full Disclosure 31
ARTICLE 6. AFFIRMATIVE COVENANTS
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 6.01. Reporting Requirements 31
Section 6.02. Payment of Obligations 34
Section 6.03. Maintenance of Property;
Insurance 34
Section 6.04. Conduct of Business and
Maintenance of Existence 35
Section 6.05. Compliance with Laws 35
Section 6.06. Inspection of Property, Books
and Records 35
Section 6.07. Maintenance of Ownership of
Subsidiaries 36
ARTICLE 7. NEGATIVE COVENANTS
Section 7.01. Debt 36
Section 7.02. Restricted Payments 37
Section 7.03. Investments 38
Section 7.04. Negative Pledge 38
Section 7.05. Consolidations, Mergers and
Sales of Assets 39
Section 7.06. No Prepayment of Note
Agreement Debt; Amendments
to Debt Documentation 40
Section 7.07. Transactions with Affiliates 40
Section 7.08 Borrowing Base Compliance 40
ARTICLE 8. FINANCIAL COVENANTS
Section 8.01. Fixed Charge Coverage Ratio 41
Section 8.02. Minimum Consolidated Tangible
Net Worth 41
ARTICLE 9. EVENTS OF DEFAULT
Section 9.01. Events of Default 41
Section 9.02. Remedies 43
ARTICLE 10. THE AGENT; RELATIONS AMONG BANKS AND BORROWER
Section 10.01. Appointment, Powers and
Immunities of Agent 43
Section 10.02. Reliance by Agent 44
Section 10.03. Defaults 44
Section 10.04. Rights of Agent as a Bank 45
Section 10.05. Indemnification of Agent 45
Section 10.06. Documents 46
Section 10.07. Non-Reliance on Agent and
Other Banks 46
Section 10.08. Failure of Agent to Act 46
Section 10.09. Resignation or Removal of Agent 46
Section 10.10. Amendments Concerning Agency
Function 47
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Section 10.11. Liability of Agent 47
Section 10.12. Transfer of Agency Function 47
Section 10.13. Non-Receipt of Funds by the Agent 48
Section 10.14. Withholding Taxes 48
Section 10.15. Several Obligations and
Rights of Banks 48
Section 10.16. Pro Rata Treatment of Loans, Etc 49
Section 10.17. Sharing of Payments Among Banks 49
ARTICLE 11. GUARANTY
Section 11.01. The Guaranty 49
Section 11.02. Guaranty Unconditional 50
Section 11.03. Discharge Only upon Payment
in Full; Reinstatement in Certain
Circumstances 50
Section 11.04. Waiver by the Company 51
Section 11.05. Subrogation 51
Section 11.06. Stay of Acceleration 51
ARTICLE 12. MISCELLANEOUS
Section 12.01. Amendments and Waivers 51
Section 12.02. Usury 52
Section 12.03. Expenses 52
Section 12.04. Survival 52
Section 12.05. Assignments; Participations 52
Section 12.06. Notices 53
Section 12.07. Setoff 53
Section 12.08. Jurisdiction; Immunities 54
Section 12.09. Judgment Currency 54
Section 12.10. Confidentiality 55
Section 12.11. Table of Contents: Headings 55
Section 12.12. Severability 55
Section 12.13. Counterparts 55
Section 12.14. Integration 56
Section 12.15. Governing Law 56
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A Promissory Note
Exhibit B Authorization Letter
Exhibit C Election to Participate
Exhibit D Election to Terminate
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Exhibit E Opinion of Counsel for the Company
Exhibit F Opinion of Counsel for Each Eligible Subsidiary
</TABLE>
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
Schedule I Subsidiaries of the Company
Schedule II Credit Arrangements
</TABLE>
CREDIT AGREEMENT dated as of November 15,
1993 among THE TIMBERLAND COMPANY, a corporation
organized under the laws of the State of Delaware (the
"Company"), each of the banks which is a signatory
hereto (individually a "Bank" and collectively the
"Banks") and THE CHASE MANHATTAN BANK, N.A., a national
banking association organized under the laws of the
United States of America, as agent for the Banks (in
such capacity, together with its successors in such
capacity, the "Agent").
The Company desires that the Banks extend
credit as provided herein, and the Banks are prepared
to extend such credit. Accordingly, the Company, the
Banks and the Agent agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. Definitions. As used
in this Agreement the following terms have the
following meanings (terms defined in the singular to
have a correlative meaning when used in the plural and
vice versa);
"Additional Costs" shall have the meaning set
forth in Section 3.01(a).
"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
<PAGE> 6
policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" means The Chase Manhattan Bank, N.A.
"Aggregate Positive Consolidated Net Income"
means the aggregate amount of consolidated net income
for each fiscal quarter commencing on or after December
31, 1992 and ending on or prior to the date as of which
Aggregate Positive Consolidated Net Income is
determined (with no deduction for consolidated net
losses for any such fiscal quarter).
"Agreement" means this Credit Agreement, as
amended or supplemented from time to time. References
to Articles, Sections, Exhibits, Schedules and the like
refer to the Articles, Sections, Exhibits, Schedules
and the like of this Agreement unless otherwise
indicated.
"Alternative Currency" means Sterling,
Deutschemarks, Lira or Francs.
"Alternative Currency Equivalent" means with
respect to an amount of Dollars on any date in relation
to any specific Alternative Currency, the amount of
such Alternative Currency that may be purchased with
such amount of Dollars at the Spot Exchange Rate with
respect to Dollars on such date.
"Alternative Currency Loan" means any Loan
denominated in an Alternative Currency.
"Authorization Letter" means the letter
agreement executed by any Borrower in the form of
Exhibit B.
"Banking Day" means any day on which
commercial banks are not authorized or required to
close in New York City and whenever such day relates to
a Eurocurrency Loan or notice with respect to any
Eurocurrency Loan, a day on which dealings in Dollar
deposits are also carried out in the London interbank
market.
"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 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 assigns, and "Borrowers"
means all of the foregoing.
<PAGE> 7
"Borrowing" means a Loan or group of Loans of
a single type as to which a single Interest Period is
in effect.
"Borrowing Request" means a request by a
Borrower in accordance with Section 2.05.
"Cash Flow" means for any periods, the sum of
(a) consolidated net income of the Company and its
Consolidated Subsidiaries for such period, plus (b) to
the extent deducted in determining such consolidated
net income, the sum of Consolidated Interest Expense,
consolidated taxes, consolidated depreciation and
goodwill amortization for such periods, minus
Consolidated Capital Expenditures for such period.
"Capital Expenditures" means for any period,
the Dollar amount of gross expenditures (including
obligations under Capital Leases made for fixed assets,
real property, plant and equipment, and all renewals,
improvements and replacement thereto (but not repairs
thereof)) incurred during such period.
"Capital Lease" means any lease which has
been or should be capitalized on the books of the
lessee in accordance with generally accepted accounting
principles.
"Closing Date" means the date this Agreement
has been executed by the Company, the Banks and the
Agent.
"Code" means the Internal Revenue Code of
1986, as amended from time to time.
"Commitment" means with respect to each Bank,
the obligation of such Bank to make Loans under this
Agreement in the aggregate principal amount following,
as such amount may be reduced or otherwise modified
from time to time:
<TABLE>
<S> <C>
The Chase Manhattan Bank, N.A.: $20,000,000;
Fleet Bank of Massachusetts, N.A.: $15,000,000;
IBJ Schroder Bank and Trust Company: $15,000,000;
Total: $50,000,000.
</TABLE>
"Company" means The Timberland Company, a
Delaware corporation, and its successors and assigns.
"Consolidated Capital Expenditures" means
Capital Expenditures of the Company and its
Consolidated Subsidiaries on a consolidated basis.
"Consolidated EBITR" means, for any period,
the sum of (a) consolidated net income of the Company
and its Consolidated Subsidiaries for such period, plus
(b) to the extent deducted in
<PAGE> 8
determining such consolidated net income, the sum of (i) Consolidated
Interest Expense, (ii) Consolidated Rental Expense and
(iii) 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, 1992)
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 any
Subsidiary whose accounts are or are required to be
consolidated with the accounts of the Company in
accordance with generally accepted accounting
principles.
"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 the
purposes of this definition "Intangible Assets" means
the amount (to the extent reflected in determining such
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, 1992 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 expenses, 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.
"Conversion Date" means May 15, 1996;
provided that if such date is not a Banking Day, the
Conversion Date shall be the next succeeding Banking
Day (or if such next succeeding Banking Day falls in
the next calendar month, the next preceding Banking
Day).
<PAGE> 9
"Debt" means, with respect to any Person at
any date, without duplication: (a) all obligations of
such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or
other similar instruments, (c) 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, (d) all obligations of
such Person as lessee which are capitalized in
accordance with generally accepted accounting
principles, (e) all non-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, (f) 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 (g) all Debt of
others Guaranteed by such Person.
"Default" means any event which constitutes
an Event of Default or which with the giving of notice
or lapse of time, or both, would become an Event of
Default.
"Default Rate" means, with respect to an
amount of any Loan not paid when due, a rate per annum
equal to: (a) if such Loan is a Variable Rate Loan, a
variable rate 2% above the rate of interest thereon;
(b) if such Loan is a Eurocurrency Loan, a fixed rate
2% above the rate of interest in effect thereon
(including any Interest Margin).
"Denomination Date" means in relation to any
Borrowing in an Alternative Currency, the date that is
three Banking Days prior to the date such Borrowing is
made.
"Deutschemarks" and the sign "DM" means
lawful money of Germany.
"Dollars" and the sign "$" mean lawful money
of the United States of America.
"Dollar Equivalent" means, with respect to an
amount of any Alternative Currency on any date, the
amount of Dollars that may be purchased with such
amount of such Alternative Currency at the Spot
Exchange Rate with respect to such Alternative Currency
on such date.
"Election to Participate" means an Election
to Participate substantially in the form of Exhibit C
hereto.
"Election to Terminate" means an Election to
Terminate substantially in the form of Exhibit D
hereto.
<PAGE> 10
"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 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,
conversions, 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 from time to time, or
any successor statute including any rules and
regulations promulgated thereunder.
"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(c) of the Code.
"Eurocurrency Loan" means any Loan when and
to the extent the interest rate therefor is determined
on the basis of the definition "Fixed Base Rate."
"Event of Default" has the meaning given such
term in Section 9.01.
"Facility Documents" means this Agreement and
the Notes.
"Federal Funds Rate" means, for any day, the
rate per annum (expressed on a 365/366 day basis of
calculation, if the
<PAGE> 11
rate on Variable Rate Loans is so
calculated) equal to the weighted average of the rates
on overnight federal funds transactions as published by
the Federal Reserve Bank of New York for such day (or
for any day that is not a Banking Day, for the
immediately preceding Banking Day).
"Fixed Base Rate" means with respect to any
Interest Period for a Eurocurrency Loan, the rate per
annum (rounded upwards if necessary to the nearest 1/16
of 1%) quoted at approximately 11:00 a.m. London time
by the principal London branch of the Agent two Banking
Days prior to the first day of such Interest Period for
the offering to leading banks in the London interbank
market of Dollar deposits or deposits in an Alternative
Currency, as the case may be, in immediately available
funds, for a period, and in an amount, comparable to
the Interest Period and principal amount of the
Eurocurrency Loan which shall be made by the Banks and
outstanding during such Interest Period.
"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" means, for any Eurocurrency Loan
for any Interest Period therefor, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of
1%) determined by the Agent to be equal to the quotient
of (i) the Fixed Base Rate for such Loan for such
Interest Period, divided by (ii) one minus the Reserve
Requirement for such Loan for such Interest Period.
"Francs" and the sign "FF" means lawful money
of France.
"Funded Debt" means all Debt for money
borrowed which by its terms matures more than one year
from the date as of which such Funded Debt is incurred,
and any Debt for money borrowed maturing within one
year from such date which is renewable or extendable at
the option of the obligor to a date beyond one year
from such date (whether or not heretofore renewed or
extended), including any such indebtedness renewable or
extendable at the option of the obligor under, or
payable from the proceeds of other indebtedness which
may be incurred pursuant to, the provisions of any
revolving credit agreement or other similar agreement.
<PAGE> 12
"Guarantee" means any obligation, contingent
or otherwise, of any 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 (a) 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 (b)
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 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.
"Interest Margin" means (a) if the Company's
ratio of Debt to Cash Flow is equal to or greater than
2.25 to 1.00, a rate of 125 basis points over the Fixed
Rate for Eurocurrency Loans; (b) if the Company's ratio
of Debt to Cash Flow is less than 2.25 to 1.00 a rate
of 100 basis points over the Fixed Rate for
Eurocurrency Loans; and (c) if at any time on or after
December 31, 1994, the Company's ratio of Debt to Cash
Flow is less than 2.00 to 1.00, at a rate of 75 basis
points over the Fixed Rate for Eurocurrency Loans. The
above ratio will be tested at the end of the Company's
fiscal year for the year then ended and will be in
effect with respect to any Borrowing, conversion or
renewal made subsequent to the receipt by the Agent of
the certificate described in Section 6.01(e) hereof.
"Interest Period" means, with respect to any
Eurocurrency Loan, the period commencing on the date
such Loan is made, converted from another type of Loan
or renewed, as the case may be, and ending, as any
Borrower may select pursuant to Section 2.07, on the
numerically corresponding day in the first, second,
third, or sixth, or (as available from the Banks)
fourth, fifth, seventh, eighth, ninth or twelfth
calendar month thereafter, provided that each such
Interest Period which commences on the last Banking Day
of a calendar month (or on any day for which there is
no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last
Banking Day of the appropriate calendar month.
<PAGE> 13
"Investments" means any investment in any
Person, whether by means of share purchase, capital
contribution, loan, time deposit or otherwise.
"Lending Office" means, for each Bank and for
each type of Loan, the lending office of such Bank (or
of an affiliate of such Bank) designated as such for
such type of Loan on its signature page hereof or such
other office of such Bank (or of an affiliate of such
Bank) as such Bank may from time to time specify to the
Agent and the Company as the office by which its Loans
of such type are to be made and maintained.
"Lien" means with respect to any asset, any
mortgage, deed of trust, lien (statutory or otherwise),
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.
"Lira" means lawful money of Italy.
"Loan" or "Loans" means any loan made by a
Bank pursuant to Section 2.01 or Section 2.02.
"Material Debt" means Debt (other than the
Notes) 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 Plan" means at any time a Plan or
Plans having an aggregate amount of Unfunded
Liabilities in excess of $500,000.
"Morgan Credit Agreement" means the Credit
Agreement, dated as of May 13, 1993, among the Company,
the banks listed therein and Morgan Guaranty Trust
Company of New York, as Agent, and unless otherwise
provided herein, as amended from time to time.
"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
<PAGE> 14
purposes any Person which ceased to be a member of the
ERISA Group during such five year period.
"Note" means a promissory note of the
Borrower in the form of Exhibit A hereto evidencing the
Loans made by a Bank hereunder.
"PBGC" means the Pension Benefit Guaranty
Corporation and any entity succeeding to any or all of
its functions under ERISA.
"Permitted Long-Term Debt" means Debt (other
than Debt permitted under Section 7.01(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 (i)
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 (ii) 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 six month 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 or (c)
does not exceed $2,500,000 principal amount in the
aggregate.
"Permitted Short-Term Debt" means Debt (other
than the Loans or loans and acceptances made under the
Morgan Credit Agreement or Debt permitted under Section
7.01(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, partnership,
corporation, business trust, joint stock company,
trust, unincorporated association, joint venture,
governmental authority or other entity of whatever
nature.
"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 Code and
either (i) is maintained, or contributed to, by any
member of the ERISA Group for
<PAGE> 15
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 that rate of interest from
time to time announced by the Agent at its principal
office as its prime commercial lending rate.
"Principal Office" means the principal office
of the Agent, presently located at One Chase Manhattan
Plaza, New York, New York 10081.
"Prohibited Transaction" means any
transaction set forth in Section 406 of ERISA or
Section 4975 of the Code.
"Regulation D" means Regulation D of the
Board of Governors of the Federal Reserve System as the
same may be amended or supplemented from time to time.
"Regulation U" means Regulation U of the
Board of Governors of the Federal Reserve System as the
same may be amended or supplemented from time to time.
"Regulatory Change" means, with respect to
any Bank, any change after the date of this Agreement
in United States federal, state, municipal or foreign
laws or regulations (including Regulation D) or the
adoption or making after such date of any
interpretations, directives or requests applying to a
class of banks including such Bank of or under any
United States federal, state, municipal or foreign laws
or regulations (whether or not having the force of law)
by any court or governmental or monetary authority
charged with the interpretation or administration
thereof.
"Reportable Event" means any of the events
set forth in Section 4043(b) of ERISA as to which
events the PBGC by regulation has not waived the
requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such
event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section
302 of ERISA shall be a Reportable Event regardless of
any waivers given under Section 412(d) of the Code.
"Required Banks" means, at any time while no
Loans are outstanding, Banks having at least 51% of
the aggregate amount of the Commitments and, at any
time while Loans are outstanding, Banks holding at
least 51% of the aggregate principal amount of the
Loans.
"Reserve Requirement" means, for any
Eurocurrency Loan for any Interest Period therefor, the
average maximum rate at
<PAGE> 16
which reserves (including any
marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period
under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding
$1,000,000,000 against, in the case of Eurocurrency
Loans, "Eurocurrency liabilities" (as such term is used
in Regulation D). Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member
banks by reason of any Regulatory Change against any
category of extensions of credit or other assets which
include Variable Rate 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.
"Revolving Credit Loans" means Loans made by
the Banks pursuant to Section 2.01 hereof.
"Spot Exchange Rate" means, on any day, (a)
with respect to any Alternative Currency, the spot rate
at which Dollars are offered on such day by the Agent
in London for such Alternative Currency at
approximately 11:00 a.m. (London time), and (b) with
respect to Dollars in relation to any specified
Alternative Currency, the spot rate at which such
specified Alternative Currency is offered on such day
by the Agent in London for Dollars at approximately
11:00 a.m. (London time). For purposes of determining
the Spot Exchange Rate in connection with an
Alternative Currency Borrowing, such Spot Exchange Rate
shall be determined as of the Denomination Date for
such Borrowing with respect to transactions in the
applicable Alternative Currency that will settle on the
date of such Borrowing.
"Sterling" or "[pound symbol]" means lawful money of the
United Kingdom.
<PAGE> 17
"Subsidiary" means, as to any Person, any
corporation or other entity of which at least a
majority of the securities or other ownership interests
having ordinary voting power (absolutely or
contingently) for the election of directors or other
persons performing similar functions are at the time
owned directly or indirectly by such Person.
"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 Investments" 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 A-1 or higher by Standard &
Poor's Corporation or P-1 or higher by Moody's
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. 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 15, 1999;
provided that if such date is not a Banking Day, the
Termination Date shall be the next succeeding Banking
Day (or, if such next succeeding Banking Day falls in
the next calendar month, the next preceding Banking
Day).
"Term Loans" means the Revolving Credit Loans
converted to term loans pursuant to Section 2.02
hereof.
"Total Aggregate Exposure" means, at any
time, the aggregate principal amount outstanding (a)
under the Morgan Credit Agreement (including the face
amount of any Acceptances (as defined therein) not yet
paid or prepaid pursuant to the
<PAGE> 18
terms thereof) or (b) under any extensions, renewals or refinancings
of the obligations under the Morgan Credit Agreement.
"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 any member
of the ERISA Group to the PBGC or any other Person
under Title IV of ERISA.
"Variable Rate" means, for any day, the
higher of (a) the Federal Funds Rate for such day plus
1/4 of 1% or (b) the Prime Rate for such day.
"Variable Rate Loan" means any Loan when and
to the extent the interest rate for such Loan is
determined in relation to the Variable Rate.
"Wholly-Owned Consolidated 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 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. 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 8 to eliminate the effect of any
change in
<PAGE> 19
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 8 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.
ARTICLE 2. THE CREDIT.
Section 2.01. The Revolving Credit Loans. (a)
Subject to the terms and conditions of this Agreement,
each of the Banks severally and not jointly agrees to
make loans to the Company and its Eligible Subsidiaries
(as specified in the Borrowing Request with respect
thereto) from time to time from and including the date
hereof to and including the Conversion Date, in an
aggregate principal amount up to but not exceeding at
any one time outstanding, the amount of its Commitment.
The Borrowers shall be permitted to make only six
Borrowing Requests during any calendar year and each
Borrowing under this Section shall be made by the Banks
ratably in accordance with their Commitments. A
conversion under Section 2.06 or a renewal under
Section 2.07 shall not constitute a Borrowing Request
and Loans of multiple types requested on the same day
shall not constitute separate Borrowing Requests. The
Revolving Credit Loans may be outstanding as Variable
Rate Loans or Eurocurrency Loans (each a "type" of
Loan). Eurocurrency Loans may be denominated in
Dollars or in one or more Alternative Currencies and
all Variable Rate Loans shall be denominated only in
Dollars. Subject to the terms hereof, the Borrowers
may borrow, pay or prepay and reborrow Revolving Credit
Loans hereunder prior to the Conversion Date. Each
type of Loan of each Bank shall be made and maintained
at such Bank's Lending Office for such type of Loans.
(b) Notwithstanding anything herein to the
contrary, on the Closing Date, subject to the terms and
conditions of this Agreement, the Borrower shall make
an initial Borrowing as set forth in Borrowing Request
delivered on such date, which shall be for an interest
period ending January 3, 1994 and shall bear interest
at a rate of 4.75% per annum.
(c) Any Revolving Credit Loans may be made in the
Alternative Currency specified in the applicable
Borrowing Request given pursuant to Section 2.05 in an
amount equal to the Alternative Currency Equivalent of
the Dollar amount specified in such Borrowing Request,
as determined by the Agent as of the Denomination Date
for such Borrowing (which determination shall be
conclusive absent manifest error). For purposes of
determining the amount outstanding under any Bank's
Commitment, each Alternative Currency Loan shall be the
Dollar Equivalent for such Loan as of the Denomination
Date.
<PAGE> 20
Section 2.02. The Term Loans. (a) On the
Conversion Date the Revolving Credit Loans shall be
converted to Term Loans in an aggregate principal
amount equal to the aggregate principal amount of the
Revolving Credit Loans outstanding on such date. The
Term Loans may be outstanding as Variable Rate Loans or
Eurocurrency Loans. After the Conversion Date all Term
Loans shall remain denominated in the currency in which
they were denominated on the Conversion Date until the
Termination Date.
(b) The Term Loans shall be due and
payable on the Termination Date.
Section 2.03. The Notes. The Loans of each
Bank shall be evidenced by promissory notes in favor of
such Bank in the form of Exhibit A, dated the date of
this Agreement, duly completed and executed by the
applicable Borrower. Each Bank shall, and is hereby
authorized by the Borrowers to, endorse on the schedule
attached to each Note held by such Bank, or otherwise
record in such Bank's internal records, an appropriate
notation evidencing the date, amount and currency of
each Loan evidenced by such Note, and each payment or
prepayment of principal; provided that the failure of
any Bank to make such notation or any error therein
shall not affect the obligations of the applicable
Borrower to repay the Loans made by such Bank.
Section 2.04. Purpose. The Borrowers shall
use the proceeds of the Loans for working capital,
future capital expenditures and for general corporate
purposes of the Borrowers. Such proceeds shall not be
used for the purpose, whether immediate, incidental or
ultimate, of buying or carrying "margin stock" within
the meaning of Regulation U.
Section 2.05. Borrowing Procedures. The
applicable Borrowers shall give the Agent notice (a
"Borrowing Request") of each Borrowing to be made under
Section 2.01 as provided in Section 2.09; provided that
not more than six Borrowing Requests shall be given to
the Agent during any calendar year. Not later than
2:00 p.m. New York City time on the date of such
Borrowing, each Bank shall, through its Lending Office
and subject to the conditions of this Agreement, make
the amount of the Loan to be made by it on such day in
the currency in which such Loan is to be made available
to the Agent, at the Principal Office and in
immediately available funds for the account of the
applicable Borrowers. The amount so received by the
Agent shall, subject to the conditions of this
Agreement, be made available to the Borrowers, in
immediately available funds, by the Agent crediting an
account of the Borrowers designated by the Borrowers
and maintained with the Agent at the Principal Office.
<PAGE> 21
Section 2.06. Prepayments and Conversions.
(a) Subject to the terms of this Agreement the
Borrowers shall have the right to make prepayments of
principal, or to convert one type of Loan into another
type of Loan, at any time or from time to time;
provided that: (i) the applicable Borrower shall give
the Agent notice of each such prepayment or conversion
as provided in Section 2.09; and (ii) Eurocurrency
Loans may be prepaid or converted only on the last day
of an Interest Period for such Loans.
(b) If at any time the amount of the
Revolving Credit Loans outstanding hereunder exceeds
the Commitments, the Borrowers shall immediately repay
the Loans in an amount equal to such excess. For the
purposes of this clause (b) the amount outstanding
under any Alternative Currency Loan at any time shall
be the Dollar Equivalent thereof as of the Denomination
Date.
(c) The Term Loans shall be prepaid
in twelve equal payments in a principal amount equal to
1/12 of the amount outstanding on the Conversion Date,
on the last day of each February, May, August and
November, commencing on the first such date after the
Conversion Date, with the last such payment to be made
on the Termination Date.
Section 2.07. Interest Periods: Renewals.
(a) In the case of each Eurocurrency Loan, the
applicable Borrower shall select an Interest Period of
any duration in accordance with the definition of
Interest Period in Section 1.01, subject to the
following limitations: (i) no Interest Period may
extend beyond the Termination Date; (ii)
notwithstanding clause (i) above, no Interest Period
shall have a duration less than one month, and if any
such proposed Interest Period would otherwise be for a
shorter period, such Interest Period shall not be
available; (iii) if an Interest Period would end on a
day which is not a Banking Day, such Interest Period
shall be extended to the next Banking Day, unless such
Banking Day would fall in the next calendar month in
which event such Interest Period shall end on the
immediately preceding Banking Day; and (iv) only seven
Interest Periods of each Bank may be outstanding at any
one time.
(b) Upon notice to the Agent as provided in Section
2.09, a Borrower may renew any Eurocurrency Loan on the
last day of the Interest Period therefor as the same
type of Loan with an Interest Period of the same or
different duration in accordance with the limitations
provided above. If the Borrower shall fail to give
notice to the Agent of such a renewal, (a) in the case
of a Eurocurrency Loan denominated in Dollars such
Eurocurrency Loan shall automatically become a Variable
Rate Loan on the last day of the current Interest
Period and (b) in the case of a Eurocurrency Loan
denominated in an Alternative Currency, such
<PAGE> 22
Eurocurrency Loan shall automatically become a
Eurocurrency Loan denominated in the same Alternative
Currency having an Interest Period of one month.
Section 2.08. Changes of Commitments. The Company
shall have the right to reduce or terminate the amount
of unused Commitments at any time or from time to time,
provided that: (a) the Company shall give notice of
each such reduction or termination to the Agent as
provided in Section 2.09; and (b) each partial
reduction shall be in an aggregate amount at least
equal to $5,000,000. The Commitments once reduced or
terminated may not be reinstated.
Section 2.09. Certain Notices. Borrowing Requests
issued by a Borrower to the Agent with respect to each
Borrowing pursuant to Section 2.05, and each notice of
prepayment or conversion pursuant to Section 2.06, and
each notice of renewal pursuant to Section 2.07(b), and
each notice of reduction or termination of the
Commitments pursuant to Section 2.08 shall be
irrevocable and shall be effective only if received by
the Agent not later than 11:00 a.m. New York City time,
and (a) in the case of Borrowings and prepayments of,
conversions into and, in the case of Eurocurrency
Loans, renewals of (i) Variable Rate Loans, given on
the day of such Borrowing; or (ii) Eurocurrency Loans,
given three Banking Days prior thereto; (b) in the case
of reductions or termination of the Commitments, given
three Banking Days prior thereto. Each such notice
shall specify the Borrower or Borrowers, the Loans to
be borrowed, prepaid, converted or renewed and the
currency and the amount (subject to Section 2.10) and
type of the Loans to be borrowed, or converted, or
prepaid or renewed (and, in the case of a conversion,
the type of Loans to result from such conversion and,
in the case of a Eurocurrency Loan, the Interest Period
therefor) and the date of the Borrowing or prepayment,
or conversion or renewal (which shall be a Banking
Day). Each such notice of reduction or termination
shall specify the amount of the Commitments to be
reduced or terminated. The Agent shall promptly notify
the Banks of the contents of each such notice.
Section 2.10. Minimum Amounts. Except for
Borrowings which exhaust the full remaining amount of
the Commitments, prepayments or conversions which
result in the prepayment or conversion of all Loans of
a particular type or conversions made pursuant to
Section 3.04, each Borrowing, prepayment, conversion
and renewal of principal of Revolving Credit Loans of a
particular type shall be, (a) in the case of a Variable
Rate Loan in an amount at least equal to $100,000 in
the aggregate for all Banks, (b) in the case of
Eurocurrency Loans denominated in Dollars in an amount
equal to $3,000,000 or any larger integral multiple of
$100,000 and (c) in the case of Eurocurrency Loans
denominated in an Alternative
<PAGE> 23
Currency in an amount equal to the Dollar Equivalent of
$3,000,000 or any larger integral multiple of $100,000.
(Borrowings, prepayments, conversions or renewals of or
into Loans of different types or, in the case of Eurocurrency
Loans, having different Interest Periods at the same
time hereunder shall be deemed separate Borrowings,
prepayments, conversions and renewals for the purposes
of the foregoing minimum amounts, one for each type of
Interest Period).
Section 2.11. Interest. (a) Interest shall
accrue on the outstanding and unpaid
principal amount of each Loan for the period from and
including the date of such Loan to but excluding the
date such Loan is due, at the following rates per
annum: (i) for a Variable Rate Loan, at a variable rate
per annum equal to the Variable Rate; and (ii) for a
Eurocurrency Loan, at a fixed rate equal to the Fixed
Rate plus the applicable Interest Margin. If any
principal amount shall not be paid when due (at stated
maturity, by acceleration or otherwise), interest shall
accrue on such amount from and including such due date
to but excluding the date such amount is paid in full
at the Default Rate.
(b) The interest rate on each Variable Rate
Loan shall change when the Variable Rate changes.
Interest on the Loans shall be calculated on the basis
of a year of 360 days for the actual number of days
elapsed. Promptly after the determination of any
interest rate provided for herein or any change
therein, the Agent shall notify the applicable
Borrowers and the Banks.
(c) Accrued interest shall be due and payable
in arrears upon any payment of principal or conversion
and (i) for each Variable Rate Loan, on the last day of
each quarter, commencing the first such date after such
Loan; and (ii) for each Eurocurrency Loan, on the last
day of the Interest Period with respect thereto and in
the case of Eurocurrency Loans having an Interest
Period longer than three months, at the end of each
three month period; provided that interest accruing at
the Default Rate shall be due and payable from time to
time on demand of the Agent.
Section 2.12. Fees. (a) The Company
shall pay to the Agent for the account of each Bank a
commitment fee on the daily average unused Commitment
of such Bank for the period from and including November
23, 1993 to the earlier of the date the Commitments are
terminated or the Conversion Date at a rate per annum
equal to 3/8%, calculated on the basis of a year of 360
days for the actual number of days elapsed. The
accrued commitment fee shall be due and payable in
arrears upon any reduction or termination of the
Commitments, on the last day of
<PAGE> 24
each March, June, September and December, commencing on the first such
date after the Closing Date, and on the Conversion
Date.
(b) The Company shall pay to the Agent as
compensation for its services hereunder an agency fee
as set forth in that certain letter dated September 23,
1993 between the Agent and the Company.
Section 2.13. Payments Generally. All
payments under this Agreement or the Notes shall be
made in immediately available funds. In the case of
Loans denominated in Dollars payment shall be made in
Dollars not later than 1:00 p.m. New York City time on
the relevant dates specified above at the Principal
Office for the account of the applicable Lending Office
of each Bank. In the case of Loans denominated in an
Alternative Currency payment shall be made in such
Alternative Currency on the relevant payment date not
later than 1:00 p.m. at the Lending Office designated
by the Agent for the account of the applicable Lending
Office of each Bank. Each such payment made after such
time on such due date is to be deemed to have been made
on the next succeeding Banking Day. The Agent, or any
Bank for whose account any such payment is to be made,
may (but shall not be obligated to) debit the amount of
any such payment which is not made by such time to any
ordinary deposit account of the Borrower with the Agent
or such Bank, as the case may be, and any Bank so doing
shall promptly notify the Agent and the Company. A
Borrower shall, at the time of making each payment
under this Agreement or any Notes, specify to the Agent
the principal or other amount payable by such Borrower
under this Agreement or the Notes to which such payment
is to be applied (and in the event that it fails to so
specify, or if a Default or Event of Default has
occurred and is continuing, the Agent may apply such
payment as it may elect in its sole discretion (subject
to Section 10.16)). If the due date of any payment
under this Agreement or any Notes would otherwise fall
on a day which is not a Banking Day, such date shall be
extended to the next succeeding Banking Day and
interest shall be payable for any principal so extended
for the period of such extension. Each payment
received by the Agent hereunder or under any Note for
the account of a Bank shall be paid promptly to such
Bank, in immediately available funds, for the account
of such Bank's Lending Office.
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.01. Additional Costs. (a) Each Borrower
shall pay directly to each Bank from time to time on
demand such amounts as such Bank may determine to be
necessary to compensate it for any costs which such
Bank determines are attributable to its making or
maintaining any Eurocurrency Loans under this Agreement
or its Notes or its obligation to make any such Loans
hereunder, or any reduction in any amount receivable by
such Bank hereunder in respect of any such Loans or
such obligation (such increases in costs and reductions
in amounts receivable being herein called "Additional
Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts
payable to such Bank under this Agreement or its
<PAGE> 25
Notes in respect of any of such Loans (other than taxes
imposed on the overall net income of such Bank or of
its Lending Office for any of such Loans by the
jurisdiction in which such Bank has its principal
office or such Lending Office); or (ii) imposes or
modifies any reserve, special deposit, deposit
insurance or assessment, minimum capital, capital ratio
or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or
other liabilities of, such Bank (including any of such
Loans or any deposits referred to in the definition of
"Fixed Base Rate" in Section 1.01); or (iii) imposes
any other condition affecting this Agreement or its
Notes (or any of such extensions of credit or
liabilities). Each Bank will notify the Company of any
event occurring after the date of this Agreement which
will entitle such Bank to compensation pursuant to this
Section 3.01(a) as promptly as practicable after it
obtains knowledge thereof and determines to request
such compensation. Such notice will set forth in
reasonable detail the calculation of any Additional
Costs due hereunder. If any Bank requests compensation
from the Company under this Section 3.01(a), or under
Section 3.01(c), the Company may, by notice to such
Bank (with a copy to the Agent), require that such
Bank's Loans of the type with respect to which such
compensation is requested be converted in accordance
with Section 3.04.
(b) Without limiting the effect of
the foregoing provisions of this Section 3.01, in the
event that, by reason of any Regulatory Change, any
Bank either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the
amount of a category of deposits or other liabilities
of such Bank which includes deposits by reference to
which the interest rate on Eurocurrency Loans is
determined as provided in this Agreement or a category
of extensions of credit or other assets of such Bank
which includes Eurocurrency Loans or (ii) becomes
subject to restrictions on the amount of such a
category of liabilities or assets which it may hold,
then, if such Bank so elects by notice to the Company
(with a copy to the Agent), the obligation of such Bank
to make or renew, and to convert Loans of any other
type into, Loans of such type hereunder shall be
suspended until the date such Regulatory Change ceases
to be in effect (and all Loans of such type held by
such Bank then outstanding shall be converted in
accordance with Section 3.04).
<PAGE> 26
(c) Without limiting the effect of
the foregoing provisions of this Section 3.01 (but
without duplication), each Borrower shall pay directly
to each Bank from time to time on request such amounts
as such Bank may determine to be necessary to
compensate such Bank for any costs which it determines
are attributable to the maintenance by it or any of its
affiliates pursuant to any law or regulation of any
jurisdiction or any interpretation, directive or
request (whether or not having the force of law and
whether in effect on the date of this Agreement or
thereafter) of any court of governmental or monetary
authority of capital in respect of its Loans hereunder
or its obligation to make Loans hereunder (such
compensation to include, without limitation, an amount
equal to any reduction in return on assets or equity of
such Bank to a level below that which it could have
achieved but for such law, regulation, interpretation,
directive or request). Each Bank will notify the
Company if it is entitled to compensation pursuant to
this Section 3.01(c) as promptly as practicable after
it determines to request such compensation. Such
notice will set forth in reasonable detail the
calculation of any amounts due hereunder.
(d) Determinations and allocations
by a Bank for purposes of this Section 3.01 of the
effect of any Regulatory Change pursuant to subsections
(a) or (b), or of the effect of capital maintained
pursuant to subsection (c), on its costs of making or
maintaining Loans or its obligation to make Loans, or
on amounts receivable by, or the rate of return to, it
in respect of Loans or such obligation, and of the
additional amounts required to compensate such Bank
under this Section 3.01, shall be conclusive, provided
that such determinations and allocations are made on a
reasonable basis.
Section 3.02. Limitation of Types of
Loans. Anything herein to the contrary
notwithstanding, if:
(a) the Agent determines (which
determination shall be conclusive) that quotations of
interest rates for the relevant deposits referred to in
the definition of "Fixed Base Rate" in Section 1.01 are
not being provided in the relevant amounts or for the
relevant maturities for purposes of determining the
rate of interest for any type of Eurocurrency Loans as
provided in this Agreement; or
(b) the Required Banks determine
(which determination shall be conclusive) and notify
the Agent that the relevant rates of interest referred
to in the definition of "Fixed Base Rate" in Section
1.01 upon the basis of which the rate of interest for
any type of Eurocurrency Loans is to be determined do
not adequately cover the cost to the Banks of making or
maintaining such Loans;
<PAGE> 27
then the Agent shall give the Company and each Bank
prompt notice thereof, and so long as such condition
remains in effect, the Banks shall be under no
obligation to make or renew Loans of such type or to
convert Loans of any other type into Loans of such type
and the Borrowers shall, on the last day(s) of the then
current Interest Period(s) for the outstanding Loans of
the affected type, either prepay such Loans or convert
such Loans into another type of Loans in accordance
with Section 2.06.
Section 3.03. Illegality Notwithstanding
any other provision in this Agreement,
in the event that it becomes unlawful for any Bank or
its Lending Office to (a) honor its obligation or make
or renew Eurocurrency Loans hereunder or convert Loans
of any type into Loans of such type, or (b) maintain
Eurocurrency Loans hereunder or (c) in the case of a
Borrowing denominated in an Alternative Currency, there
shall have occurred a change in national or
international financial, political or economic
conditions (including the imposition of or any change
in exchange controls) or any currency exchange rates
would make it impracticable for any Bank to make Loans
denominated in such Alternative Currency, then such
Bank shall promptly notify the Company thereof (with a
copy to the Agent) and such Bank's obligation to make
or renew Eurocurrency Loans and to convert other types
of Loans into Loans of such type or to make Loans
denominated in such Alternative Currency hereunder
shall be suspended until such time as such Bank may
again make, renew, or convert and maintain such
affected Loans and such Bank's outstanding Eurocurrency
Loans or Alternative Currency, as the case may be,
shall be converted in accordance with Section 3.04.
Section 3.04. Certain Conversions
pursuant to Sections 3.01 and 3.03. If the Loans
of any Bank of a particular type (Loans of such
type being herein called "Affected Type" or "Affected
Loans") are to be converted pursuant to Section 3.01 or
3.03, such Bank's Affected Loans shall be automatically
converted into Variable Rate Loans (and in the case of
Loans denominated in an Alternative Currency, to
Variable Rate Loans denominated in Dollars in the
Dollar Equivalent amount on the last day(s) of the then
current Interest Period(s) for the Affected Loans or,
in the case of a conversion required by Section 3.01(b)
or 3.03, on such earlier date as such Bank may specify
to the applicable Borrowers with a copy to the Agent)
and, unless and until such Bank gives notice as
provided below that the circumstances specified in
Section 3.01 or 3.03 which give rise to such conversion
no longer exist:
(a) to the extent that such Bank's
Affected Loans have been converted to Variable Rate
Loans, all payments
<PAGE> 28
and prepayments of principal which
would otherwise be applied to such Bank's Affected
Loans shall be applied instead to its Variable Rate
Loans; and
(b) all Loans which would otherwise
be made or renewed by such Bank as Loans of the
Affected Type shall be made instead as Variable Rate
Loans and all Loans of such Bank which would otherwise
be converted into Loans of the Affected Type shall be
converted instead into (or shall remain as) Variable
Rate Loans; and
(c) if Loans of other Banks of the
Affected Type are subsequently converted into Loans of
another type (other than Variable Rate Loans), such
Bank's Variable Rate Loans shall be automatically
converted on the conversion date into Loans of such
other type to the extent necessary so that, after
giving effect thereto, all Loans held by such Bank and
the Banks whose Loans are so converted are held
pro-rata (as to principal amounts, types and Interest
Periods) in accordance with their respective
Commitments.
If such Bank gives notice to any Borrower (with a copy
to the Agent) that the circumstances specified in
Section 3.01 or 3.03 which gave rise to the conversion
of such Bank's Affected Loans pursuant to this Section
3.04 no longer exist (which such Bank agrees to do
promptly upon such circumstances ceasing to exist) at a
time when Loans of the Affected Type are outstanding,
such Bank's Variable Rate Loans shall be automatically
converted, on the first day(s) of the next succeeding
Interest Period(s) for such outstanding Loans of the
Affected Type to the extent necessary so that, after
giving effect thereto, all Loans held by the Banks
holding Loans of the Affected Type and by such Bank are
held pro-rata (as to principal amounts, types and
Interest Periods) in accordance with their respective
Commitments.
Section 3.05. Certain Compensation.
The Company shall pay to the Agent for the account of
each Bank, upon the request of such Bank through the
Agent, such amount or amounts as shall be sufficient
(in the reasonable opinion of such Bank) to compensate
it for any loss, cost or expense which such Bank
determines is attributable to:
(a) any payment, prepayment, conversion or
renewal of a Eurocurrency Loan made by such Bank on a
date other than the last day of an Interest Period for
such Loan (whether by reason of acceleration or
otherwise); or
(b) any failure by any Borrower to borrow,
convert into or renew a Eurocurrency Loan to be made,
converted into or renewed by such Bank on the date
specified therefor in the
<PAGE> 29
relevant notice under Section
2.05, 2.06 or 2.07, as the case may be.
Without limiting the foregoing, such compensation shall
include any losses arising from converting Loans
denominated in an Alternative Currency to the Dollar
Equivalent on the day of payment, prepayment,
conversion or renewal. A determination of any Bank as
to the amounts payable pursuant to this Section 3.05
shall be conclusive absent manifest error.
Section 3.06. Indemnification for Taxes.
(a) All payments hereunder and under any of the
Facility Documents (including, without limitation,
payments on account of principal and interest and fees)
shall be made by the Borrowers without deduction or
withholding for or on account of any present or future
tax, duty, levy, impost, assessment or other
governmental charge imposed by any jurisdiction
("Taxes"). If the Borrowers are required by law to
make any deduction or withholding of any Taxes from any
payment due hereunder or under any of the Facility
Documents, then the amount payable will be increased to
such amount which, after deduction from such increased
amount of all Taxes required to be withheld or deducted
therefrom, will not be less than the amount due and
payable hereunder had no such deduction or withholding
been required. Notwithstanding the foregoing, Taxes
shall not include, and no such additional amounts shall
be payable in respect of
(i) any tax imposed on the overall
net income of the Lending Office of any Bank in respect
of which the relevant payment is made by the
jurisdiction in which such Bank is organized, in which
its Lending Office is located or in which it is managed
and controlled; or
(ii) any such deduction or
withholding which would not have been required to be so
deducted or withheld if the Bank to which such payment
was made had at the date of payment been either:
(A) a Bank carrying on
a bona fide banking business in the United Kingdom
recognized by the Inland Revenue Service and bringing
the interest payable hereunder into account as a
trading receipt of such business; or
(B) resident in a
country with which the United Kingdom has an
appropriate Double Taxation Treaty giving exemption
from United Kingdom taxation on interest and had any
necessary application thereunder been made
(except that this proviso shall not operate
to prevent a Bank receiving such additional amounts to
the extent that such
<PAGE> 30
amounts become payable solely as a
result of any revocation or repeal of, or any change
in, or any published change in the interpretation or
application of, any relevant law or the practice of the
Inland Revenue Service or the provisions of a double
taxation treaty since the date of this Agreement.)
(b) If any additional amounts shall become
payable pursuant to Section 3.06(a), the relevant
Borrower and the Bank concerned will discuss in good
faith with a view to determining whether any means (not
being detrimental in the opinion of the Bank to any of
the Bank's interests) exist or may be implemented by
which such amounts may lawfully be mitigated or
reduced, (or the Bank be compensated in some other way)
so as to leave the Bank in the same position in which
it would have been had such Taxes not been payable.
(c) If the Borrowers make any payment
hereunder in respect of which they are required by law
to make any deduction or withholding of any Taxes, they
shall pay the full amount to be deducted or withheld to
the relevant taxation or other authority within the
time allowed for such payment under applicable law and
shall deliver to the Banks as soon as practicable after
they have made such payment to the applicable authority
a receipt issued by such authority or a statement of
the Borrowers confirming the payment to such authority
of all amounts so required to be deducted or withheld
from such payment.
(d) Without prejudice to the provisions of
paragraph (a) of this Section 3.06, if any Bank, or the
Agent on its behalf, is required by law to make any
payment on account of Taxes (other than those referred
to in clause (a)(i) above) on or in relation to any sum
received or receivable hereunder or under any of the
Facility Documents by such Bank, or the Agent on its
behalf, or any liability for such Taxes in respect of
any such payment is imposed, levied or assessed against
any Bank or the Agent on its behalf, the Borrowers will
promptly indemnify such person against such tax payment
or liability, together with any interest, penalties and
expenses (including counsel fees and expenses) payable
or incurred in connection therewith, including any such
Tax of any Bank arising by virtue of payments under
this Section 3.06(c), computed in a manner consistent
with Section 3.06(a). A certificate as to the amount
of such payment by such Bank, or the Agent on its
behalf, absent manifest error, shall be final,
conclusive and binding for all purposes.
Section 3.07. 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
<PAGE> 31
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 applicable Lending Office,
if, in the judgement 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 4. CONDITIONS PRECEDENT
Section 4.01. Documentary Conditions
Precedent. The obligations of the Banks to make the
Loans constituting the initial Borrowing are subject to
the condition precedent that the Agent shall have
received on or before the date of such Loans each of
the following, in form and substance satisfactory to
the Agent and its counsel:
(a) this Agreement duly executed by
the Company;
(b) the Notes duly executed by the
Borrowers;
(c) the Authorization Letter duly
executed by the Company, and as applicable, any
Eligible Subsidiary;
(d) the consents to this transaction
required under the Morgan Credit Agreement and
amendments to the Morgan Credit Agreement satisfactory
to the Agent, in each case duly executed;
(e) satisfactory completion of the Agent's
due diligence;
(f) a certificate of the Secretary
or Assistant Secretary of the Company, dated the
Closing Date, attesting to all corporate action taken
by the Company, including resolutions of its Board of
Directors authorizing the execution, delivery and
performance of the Facility Documents to which it is a
party and each other document to be delivered pursuant
to this Agreement;
<PAGE> 32
(g) a certificate of the Secretary
or Assistant Secretary of the Company, dated the
Closing Date, certifying the names and true signatures
of the officers of the Company authorized to sign the
Facility Document to which it is a party and the other
documents to be delivered by the Company under this
Agreement;
(h) a certificate of a duly authorized
officer of the Company, dated the Closing Date,
stating that the representations and warranties
in Article 5 are true and correct on such date as
though made on and as of such date and that no event
has occurred and is continuing which constitutes a
Default or Event of Default;
(i) a favorable opinion of counsel
for the Company, dated the Closing Date, in
substantially the form of Exhibit E and as to such
other matters as the Agent or any Bank may reasonably
request;
(j) such other consents, approvals or
documents as the Agent or any Bank may reasonably
request.
Section 4.02. Additional Conditions
Precedent. The obligations of the Banks to make any
Loans pursuant to a Borrowing (including the initial
Borrowing) shall be subject to the further conditions
precedent that on the date of such Loans:
(a) the following statements shall be true:
(i) the representations and warranties
contained in Article 5, and in the case of a Borrowing
by an Eligible Subsidiary, Section 4.05, are true
and correct on and as of the date of such Loans as
though made on and as of such date; and
(ii) no Default or Event of Default
has occurred and is continuing, or would result from such
Loans; and
(b) the Agent shall have received such consents,
approvals, opinions or documents as the Agent or any Bank
may reasonably request.
Section 4.03. Deemed Representations.
Each Borrowing Request hereunder and acceptance by the
Company or an Eligible Subsidiary of the proceeds of
such Borrowing or Borrowings shall constitute a
representation and warranty that the statements
contained in Section 4.02(a) are true and correct both
on the date of such notice and, unless the Borrower
<PAGE> 33
otherwise notifies the Agent prior to such Borrowing,
as of the date of such Borrowing.
Section 4.04. 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
2.03;
(b) receipt by the Agent of an
Authorization Letter duly executed by the Eligible
Subsidiary;
(c) receipt by the Agent of an
opinion of counsel for such Eligible Subsidiary
acceptable to 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) 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; and
(e) the representations and
warranties contained in Section 4.05 shall be true and
correct on and as of the date of such Borrowing as
though made on and as of such date and no Default or
Event of Default shall have occurred and be continuing,
or would result from such Loans.
The opinion referred to in clause (c) above shall be
dated no more than five Banking Days before the date of
the first Borrowing by such Eligible Subsidiary
hereunder.
Section 4.05. Representations 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:
(a) 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.
<PAGE> 34
(b) The execution and
delivery by it of its Election to Participate and its
Notes, and 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 or 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.
(c) This Agreement
constitutes a legal, valid and binding obligation of
such Eligible Subsidiary and its Notes, when executed
and delivered in accordance with this Agreement, will
constitute the legal, valid and binding obligation of
such Eligible Subsidiary, and each is enforceable
against such Eligible Subsidiary in accordance with its
terms except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency or other
similar laws affecting creditors' rights generally.
(d) 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 of its Notes.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants
that:
Section 5.01. Incorporation, Good Standing
and Due Qualification. Each of the Company and its
Subsidiaries is duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and
authority to own its assets and to transact the
business in which it is now engaged, and is duly
qualified as a foreign corporation and in good standing
under the laws of each other jurisdiction in which such
qualification is required except where failure to be so
qualified would not have a material adverse effect on
its business, properties, condition (financial or
otherwise) or operation.
Section 5.02. Corporate Power and Authority;
No Conflicts. The execution, delivery and
performance by
<PAGE> 35
the Company of the Facility Documents to
which it is a party have been duly authorized by all
necessary corporate action and do not and will not:
(a) require any consent or approval of its
stockholders; (b) contravene its charter or by-laws;
(c) violate any provision of, or require any filing
(except for the filing of this Agreement with the
Securities and Exchange Commission and the New York
Stock Exchange), registration, consent or approval
under, any law, rule, regulation (including, without
limitation, Regulation U), order, writ, judgment,
injunction, decree, determination or award presently in
effect having applicability to the Company or any of
its Subsidiaries or affiliates; (d) result in a breach
of or constitute a default or require any consent
(except for those consents which have been obtained or
will be obtained prior to the Closing Date) under any
indenture or loan or credit agreement or any other
agreement, lease or instrument to which the Company is
a party or by which it or its properties may be bound;
(e) or result in, or require, the creation or
imposition of any Lien, upon or with respect to any of
the properties now owned or hereafter acquired by the
Company or any of its Subsidiaries; or (f) cause the
Company (or any Subsidiary or affiliate, as the case
may be) to be in default under any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture,
agreement, lease or instrument.
Section 5.03. Legally Enforceable
Agreements. Each Facility Document to which the
Company is a party is, or when delivered under this
Agreement will be, a legal, valid and binding
obligation of the Company enforceable against the
Company in accordance with its terms, except to the
extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar
laws affecting creditors' rights generally.
Section 5.04. Litigation. There are
no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened, against or
affecting the Company or any of its Subsidiaries before
any court, governmental agency or arbitrator, which, in
any one case or in the aggregate, would have a
reasonable likelihood of having a material adverse
affect on the financial condition, operations,
properties or business of the Company or any such
Subsidiary or the ability of the Company to perform its
obligation under the Facility Documents to which it is
a party.
Section 5.05. Financial Statements.
The consolidated balance sheet of the Company and its
Consolidated Subsidiaries as at December 31, 1992, and
the related consolidated statements of income and
statements of cash flows and changes in stockholders'
equity of the Company and its Consolidated Subsidiaries
for the fiscal year then ended, and the
<PAGE> 36
accompanying footnotes, together with the opinion thereon, of
Deloitte & Touche, independent certified public
accountants, and the interim consolidated balance sheet
of the Company and its Consolidated Subsidiaries as at
September 30, 1993, and the related consolidated
statements of income and statements of cash flows and
changes in stockholders' equity for the nine month
period then ended, copies of which have been furnished
to each of the Banks, fairly present the financial
condition of the Company and its Consolidated
Subsidiaries as at such dates and the results of the
operations of the Company and its Consolidated
Subsidiaries for the periods covered by such
statements, all in accordance with generally accepted
accounting principles (subject to year end adjustments
in the case of the interim financial statements).
Since December 31, 1992, there has been no material
adverse change in the business, financial position or
results of operations of the Company and its
Subsidiaries considered as a whole.
Section 5.06. Taxes. Each of the
Company and its Subsidiaries has filed all United
States Federal income tax returns and all other
material tax returns required to be filed and has paid
all taxes, assessments and governmental charges and
levies thereon to be due, including interest and
penalties, except for those which are being contested
in good faith and by appropriate proceedings diligently
conducted. The federal income tax liability of the
Company and its Subsidiaries has been audited by the
Internal Revenue Service and has been finally
determined and satisfied for all taxable years up to
and including the taxable year ended December 31, 1989.
The charges, accruals and reserves on the books of the
Company and its Subsidiaries with respect to taxes or
other governmental charges are adequate in the opinion
of the Company.
Section 5.07. ERISA. Each member of
the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Code with
respect to each Plan and is in compliance in all
material respects with the presently applicable
provisions of ERISA and the 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 Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or
Multiemployer Plan or in respect 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 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.
<PAGE> 37
Section 5.08. Subsidiaries and Ownership of
Stock. Schedule I is a complete and accurate list of
Subsidiaries of the Company, showing the jurisdiction
of incorporation or organization of each Subsidiary and
showing the percentage of the Company's ownership of
the outstanding stock or other interest of each such
Subsidiary. Except as set forth on Schedule I, all of
the outstanding capital stock or other interest of each
such Subsidiary has been validly issued, is fully paid
and nonassessable and is owned by the Company free and
clear of all Liens.
Section 5.09. Credit Arrangements. As of
the Closing Date Schedule II is a complete and correct
list of all Debt of the Company and its Subsidiaries
outstanding (exclusive of Debt outstanding under the
Morgan Credit Agreement) and all Liens existing
securing Debt outstanding.
Section 5.10. No Default on Outstanding
Judgments or Orders. Each of the Company and its
Subsidiaries has satisfied all judgments and neither
the Company nor any of its Subsidiaries is in default
with respect to any material judgment, writ,
injunction, decree, rule or regulation of any court,
arbitrator or federal, state, municipal or other
governmental authority, commission, board, bureau,
agency or instrumentality, domestic or foreign.
Section 5.11. Governmental Regulation.
Neither the Company nor any of its Subsidiaries is
"holding company" or a "public utility" within the
meaning of the Public Utility Holding Company Act of
1935, or an "investment company" or a company
"controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as
amended, or an "investment advisor" within the meaning
of the Investment Advisors Act of 1940, as amended.
Section 5.12. 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
<PAGE> 38
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 5.13. Full Disclosure. All
information heretofore furnished by the Company or any
of its Subsidiaries 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, taken as a
whole, or the ability of the Company or its
Subsidiaries to perform their obligations under this
Agreement and the Notes.
ARTICLE 6. AFFIRMATIVE COVENANTS
So long as any of the Notes shall remain
unpaid or any Bank shall have any Commitment under this
Agreement, the Company shall comply with the following
covenants:
Section 6.01. Reporting Requirements. The
Company shall furnish directly 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, a consolidated and consolidating
balance sheet of the Company and its Consolidated
Subsidiaries as of the end of such fiscal year and a
consolidated and consolidating statements of income and
consolidated statements of cash flows and changes in
stockholders' equity of the Company and its
Consolidated Subsidiaries for such fiscal year, all in
reasonable detail and stating in comparative form the
respective consolidated and consolidating figures for
the corresponding date and period in the prior fiscal
year and (i) in the case of the consolidated
statements, all reported on in a manner acceptable to
the Securities and Exchange Commission by Deloitte &
Touche or independent public accountants of nationally
recognized standing, and (ii) in the case of
consolidating statements, all certified as to fairness
of presentation, generally accepted accounting
<PAGE> 39
principles and consistency by the chief financial
officer or 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, a
consolidated and consolidating balance sheet of the
Company and its Consolidated Subsidiaries as of the end
of such quarter and the related consolidated and
consolidating statements of income and consolidated
statements of cash flows and changes in stockholders'
equity for such quarter and for the period commencing
at the end of the previous fiscal year and ending with
the end of such quarter, all in reasonable detail and
stating in comparative form the respective consolidated
figures for the corresponding quarter and the
corresponding in the previous fiscal year, and
certified by the chief financial officer or chief
accounting officer of the Company (subject to year end
adjustments and the omission 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;
(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 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 7.01 through 7.04, inclusive, and Sections
7.06, 8.01 and 8.02 on the date of such financial
statements, (ii) setting forth in reasonable detail the
calculations of the Assets Component, the Borrowing
Base and the Available Amount (each as defined in the
Morgan Credit Agreement) as of the date of such
financial statements and whether the Company is thereby
required to make a mandatory prepayment to comply with
Section 2.13 of the Morgan Credit Agreement 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 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;
<PAGE> 40
(e) simultaneously with
the delivery of each set of financial statements
referred to in clause (a) above, a certificate of the
chief financial officer or chief accounting officer of
the Company setting forth in reasonable detail the
Company's ratio of Debt to Cash Flow;
(f) within 21 days after
the end of each monthly accounting period of the
Company, a certificate of the chief financial officer
or the chief accounting officer or the Company setting
forth calculations in reasonable detail of the
Company's best estimate of the Assets Component, the
Borrowing Base and the Available Amount (each as
defined in the Morgan Credit Agreement) as of the end
of such month and whether the Company is required to
make a mandatory prepayment to comply with Section 2.13
of the Morgan Credit Agreement;
(g) 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;
(h) promptly upon the
mailing thereof to the shareholders of the Company
generally, copies of all financial statements, reports
and proxy statements so mailed;
(i) 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;
(j) 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 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 given or
required to be given to the PBGC, a copy of such
notice; (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
<PAGE> 41
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 any member of the
ERISA Group is required or proposes to take;
(k) promptly after the
commencement thereof, notice of all actions, suits, and
proceedings before any court or governmental
department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the
Company or any of its Subsidiaries which would have a
reasonable likelihood of having a material adverse
effect on the financial condition, properties, or
operations of the Company or such Subsidiary;
(l) such other information
respecting the condition or operations, financial or
otherwise, of the Company or any of its Subsidiaries as
the Agent or any Bank may from time to time reasonably
request.
Section 6.02. 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 accepted accounting principles, appropriate
reserves for the accrual of any of the same.
Section 6.03. 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
<PAGE> 42
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 6.04. 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 6.04
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
6.07 (ii).
Section 6.05. 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 thereunder) except where the necessity
of compliance therewith is contested in good faith by
appropriate proceedings.
Section 6.06. 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
<PAGE> 43
such reasonable times, upon reasonable notice and as
often as may reasonably be desired.
Section 6.07. 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 I of each of its
Subsidiaries, except as modified by (i) sales by
Subsidiaries of directors' qualifying shares, (ii) the
sale to one or more third parties in a single
transaction of all of the capital stock of The
Timberland Company of Australia Pty., Ltd. or
Timberland Footwear & Clothing New Zealand Limited;
provided that no transfer of assets of the Company or
any of its other Subsidiaries to The Timberland Company
of Australia Pty., Ltd. or Timberland Footwear &
Clothing New Zealand Limited, as the case may be, other
than sales of inventory in the ordinary course of
business, shall have been made on or prior to the date
of such sale or shall be made in connection with such
sale, (iii) mergers permitted pursuant to the proviso
to Section 7.05 and (iv) grants or sales by The Outdoor
Footwear Company of shares of its non-voting common
stock to its employees consistent with past practice.
ARTICLE 7. NEGATIVE COVENANTS.
So long as any of the Notes shall remain unpaid or
any Bank shall have any Commitment under this
Agreement, the Company shall not, and will not permit
any Subsidiary to:
Section 7.01. Debt. Incur or at any time be
liable with respect to any Debt except:
(a) Debt outstanding under
this Agreement and the Notes;
(b) Debt outstanding on the date
of this Agreement and identified on Schedule II and
Debt outstanding from time to time under the Morgan
Credit Agreement and extensions, renewals and
re-financings thereof; provided that except in the case
of Debt under the Morgan Credit Agreement, no such
extension, renewal or refinancing shall increase the
principal amount of such Debt or shorten the maturity
thereof or accelerate the amortization thereof; and
provided, further, that in the case of Debt under the
Morgan Credit Agreement, no amendment, extension,
renewal or refinancing of the Morgan Credit Agreement
shall increase the maximum principal amount which may
be borrowed thereunder unless at the time of any such
amendment, extension, renewal or refinancing and after
giving effect thereto, (x) no Default shall have
occurred and be continuing or result therefrom, and (y)
on a pro forma basis, the Company would be in
<PAGE> 44
compliance with the covenant contained in Section 8.01
for the 12-month period ended on the last day of the
most recent fiscal quarter (based on the ratio in
effect on the date compliance herewith is determined),
assuming that 75% of the maximum principal amount of
borrowings available under such amendment, extension,
renewal or refinancing was outstanding for such period
at an interest rate equal to the average interest rate
payable in respect of borrowings under such facility
for such period.
(c) Debt of any of the Company's
Subsidiaries owing to the Company or any of its
Wholly-Owned Subsidiaries permitted by Section 7.03;
(d) Debt of the Company owing to
The Outdoor Footwear Company; provided that The Outdoor
Footwear Company is a Wholly-Owned Subsidiary at the
time such Debt is outstanding;
(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 in an
aggregate principal amount at any time outstanding not
to exceed $17,000,000, provided that for a single
thirty-day period in each twelve-month period beginning
after March 31, 1993, which thirty-day period shall be
designated by the Company by notice to the Agent at
least three Banking Days before the commencement of
such period, the sum of (x) the aggregate outstanding
principal amount of such Permitted Short-Term Debt and
(y) the Total Aggregate Exposure shall not exceed (i)
for the period beginning April 1, 1993 and ending March
31, 1994, $20,000,000, (ii) for the period beginning
April 1, 1994 and ending March 31, 1995, $18,000,000
and (iii) for the period beginning April 1, 1995 and
thereafter $16,000,000; provided that if the Morgan
Credit Agreement (as in effect on the date hereof)
shall be amended in such a way as to modify the
Permitted Short-Term Debt allowed thereunder, the Banks
and the Borrowers will negotiate in good faith with a
view to determining whether conforming amendments to
this Agreement are appropriate.
(h) Debt denominated in Sterling,
Francs or Deutschemarks and having a maturity, at the
time such Debt is
<PAGE> 45
incurred, of not more than one year
from the date such Debt is incurred; provided that the
aggregate principal amount of such Debt outstanding at
any time shall not exceed (i) for such Debt denominated
in Sterling, #4,000,000, (ii) for such Debt denominated
in Francs, FF20,000,000 and (iii) for such Debt
denominated in Deutschemarks, DM5,000,000;
(i) Permitted Long-Term
Debt in an aggregate principal amount at any time
outstanding not to exceed 50% 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
$1,000,000 at any time outstanding.
The Company shall not permit Debt incurred or existing
at any time by Subsidiaries (including under the Morgan
Credit Agreement) to exceed $17,000,000 in the
aggregate.
Section 7.02. Restricted Payments. Declare
or make any Restricted Payment unless (i) no Default or
Event of Default has occurred or is continuing under
Section 9.01(a) or Section 9.01(c) with respect to
Article 8 covenants only, and (ii) 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
7.02 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 7.02.
Section 7.03. Investments. 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;
<PAGE> 46
(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 7.01(d) or 7.01(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.
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 7.04. Negative Pledge. 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 II;
(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;
<PAGE> 47
(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 7.04; 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,
(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 7.01; and
(i) Liens not otherwise permitted
by the foregoing clauses of this Section securing Debt
in an aggregate principal amount at any time
outstanding not to exceed $2,000,000.
Section 7.05. Consolidations, Mergers and
Sales of Assets. The Company shall not (a) consolidate
or merge with or into any other Person or (b) 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 the Company or a Wholly-Owned Subsidiary
of the Company if (i) the Company or such Wholly-Owned
Subsidiary, as the case may be, is the corporation
surviving such merger and (ii) immediately after giving
effect to such merger, no Default shall have occurred
and be continuing.
Section 7.06. No Prepayment of Note
Agreement Debt; Amendments to Debt Documentation. (a)
Voluntarily prepay any 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").
(b) The Company will not consent to
(i) any amendment of the final maturity of any Debt
outstanding under any Note Agreement to a date prior to
the Termination Date, or (ii) any amendment,
modification, supplement or waiver of the covenants or
events of default contained in the Morgan Credit
Agreement in any manner that (A) causes such covenants
or events of default to include additional, greater or
more stringent restrictions on the Company and (B)
could adversely affect the Banks.".
<PAGE> 48
Section 7.07. Transactions with Affiliates.
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 7.07 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
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 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 7.08 Borrowing Base Compliance.
Incur or at any time be liable for any Debt under the
Morgan Credit Agreement or any renewal extension or
refinancing thereof in excess of the Borrowing Base (as
defined in the Morgan Credit Agreement as in effect on
the date hereof); provided that if the Morgan Credit
Agreement shall be amended in such a way as to modify
the determination of the Borrowing Base as in effect on
the date hereof or to eliminate the Borrowing Base, the
Banks and the Borrowers will negotiate in good faith
with a view to determining whether conforming
amendments to this Agreement, including amendments
replacing this covenant with other covenants, are
appropriate.
ARTICLE 8. FINANCIAL COVENANTS.
<PAGE> 49
So long as any of the Notes shall remain unpaid or
any Bank shall have any Commitment under this Agreement
the Company covenants that:
Section 8.01. Fixed Charge Coverage Ratio.
The Fixed Charge Coverage Ratio for any period of four
consecutive fiscal quarters will not be less than (a)
2.5 to 1.0 prior to the Conversion Date and (b) 3.0 to
1.0 at any time thereafter.
Section 8.02. Minimum Consolidated Tangible
Net Worth. The Company shall maintain at all times
Consolidated Tangible Net Worth of not less than the
sum of (i) $70,000,000 and (ii) 80% of Aggregate
Positive Consolidated Net Income.
ARTICLE 9. EVENTS OF DEFAULT.
Section 9.01. Events of Default. Any of the
following events shall be an "Event of Default":
(a) any Borrower shall: (i) fail to
pay the principal of any Note as and when due and
payable; (ii) fail to pay interest on any Note or any
fee or other amount due hereunder as and when due and
payable and such failure shall continue for two Banking
Days;
(b) any representation or warranty
made or deemed made by any Borrower in this Agreement
or in any other Facility Document to which it is a
party or which is contained in any certificate,
document, opinion, financial or other written statement
furnished at any time under or in connection with any
Facility Document shall prove to have been incorrect in
any material respect on or as of the date made or
deemed made;
(c) any Borrower shall fail to
perform or observe any term, covenant or agreement
contained in Section 6.07, Sections 7.01 to 7.06
inclusive, and Sections 8.01 and 8.02.
(d) any Borrower shall fail to
perform or observe any term, covenant or agreement on
its part to be performed or observed (other than the
obligations specifically referred to elsewhere in this
Section 9.01) in any Facility Document and such failure
shall continue for 30 consecutive days after written
notice thereof has been given to the Company by the
Agent at the request of the Required Banks.
(e) the Company or any Subsidiary
shall fail to make any payment in respect of any
Material Debt when due or within any applicable grace
period;
<PAGE> 50
(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 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;
<PAGE> 51
(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 l3d-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 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 Directors of the Company.
Section 9.02. Remedies. If any Event of
Default shall occur and be continuing, the Agent shall,
upon request of the Required Banks, by notice to the
Borrowers, (a) declare the Commitments to be
terminated, whereupon the same shall forthwith
terminate, and (b) declare the outstanding principal of
the Notes, all interest thereon and all other amounts
payable under this Agreement and the Notes to be
forthwith due and payable, whereupon the Notes, all
such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are
hereby expressly waived by the Borrowers; provided
that, in the case of an Event of Default referred to in
Section 9.01(g) or 9.01(h) above, the Commitments shall
be immediately terminated, and the Notes, all interest
thereon and all other amounts payable under this
Agreement shall be immediately due and payable without
notice, presentment, demand, protest or other
formalities of any kind, all of which are hereby
expressly waived by the Borrowers.
ARTICLE 10. THE AGENT; RELATIONS AMONG BANKS
AND BORROWERS.
Section 10.01. Appointment, Powers and
Immunities of Agent. Each Bank hereby irrevocably (but
subject to removal by the Required Banks pursuant to
Section 10.09) appoints and
<PAGE> 52
authorizes the Agent to act as its agent
hereunder and under any other Facility
Document with such powers as are specifically delegated
to the Agent by the terms of this Agreement and any
other Facility Document, together with such other
powers as are reasonably incidental thereto. The Agent
shall have no duties or responsibilities except those
expressly set forth in this Agreement and any other
Facility Document, and shall not by reason of this
Agreement be a trustee for any Bank. The Agent shall
not be responsible to the Banks for any recitals,
statements, representations or warranties made by any
Borrower or any officer or official of any Borrower or
any other Person contained in this Agreement or any
other Facility Document, or in any certificate or other
document or instrument referred to or provided for in,
or received by any of them under, this Agreement or any
other Facility Document, or for the value, legality,
validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Facility
Document or any other document or instrument referred
to or provided for herein or therein, for the
perfection or priority of any collateral security for
the Loans, if any or for any failure by any Borrower to
perform any of its obligations hereunder or thereunder.
The Agent may employ agents and attorneys-in-fact and
shall not be responsible, except as to money or
securities received by it or its authorized agents, for
the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
Neither the Agent nor any of its directors, officers,
employees or agents shall be liable or responsible for
any action taken or omitted to be taken by it or them
hereunder or under any other Facility Document or in
connection herewith or therewith, except for its or
their own gross negligence or willful misconduct or
action not authorized under this Agreement or by the
Required Banks which is in violation of law and results
in a liability of the Banks to any of the Borrowers.
The Company shall pay any fee agreed to by the Company
and the Agent with respect to the Agent's services
hereunder.
Section 10.02. Reliance by Agent. The Agent
shall be entitled to rely upon any certification,
notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to
be genuine and correct and to have been signed or sent
by or on behalf of the proper Person or Persons, and
upon advice and statements of legal counsel,
independent accountants and other experts selected by
the Agent. The Agent may deem and treat each Bank as
the holder of the Loans made by it for all purposes
hereof unless and until a notice of the assignment or
transfer thereof satisfactory to the Agent signed by
such Bank shall have been furnished to the Agent but
the Agent shall not be required to deal with any Person
who has acquired a participation in any Loan from a
Bank. As to any
<PAGE> 53
matters not expressly provided for by
this Agreement or any other Facility Document, the
Agent shall in all cases be fully protected in acting,
or in refraining from acting, hereunder in accordance
with instructions signed by the Required Banks, and
such instructions of the Required Banks and any action
taken or failure to act pursuant thereto shall be
binding on all of the Banks and any other holder of all
or any portion of any Loan.
Section 10.03. Defaults. The Agent shall
not be deemed to have knowledge of the occurrence of a
Default or Event of Default (other than the non-payment
of principal of or interest on the Loans to the extent
the same is required to be paid to the Agent for the
account of the Banks) unless the Agent has received
notice from a Bank or the Company specifying such
Default or Event of Default and stating that such
notice is a "Notice of Default." In the event that the
Agent receives such a notice of the occurrence of a
Default or Event of Default, the Agent shall give
prompt notice thereof to the Banks (and shall give each
Bank prompt notice of each such non-payment). The Agent
shall (subject to Section 10.08) take such action with
respect to such Default or Event of Default which is
continuing as shall be directed by the Required Banks;
provided that, unless and until the Agent shall have
received such directions, the Agent may take such
action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall
deem advisable in the best interest of the Banks; and
provided further that the Agent shall not be required
to take any such action which it determines to be
contrary to law.
Section 10.04. Rights of Agent as a Bank.
With respect to its Commitment and the Loans made by
it, the Agent in its capacity as a Bank hereunder shall
have the same rights and powers hereunder as any other
Bank and may exercise the same as though it were not
acting as the Agent, and the term "Bank" or "Banks"
shall, unless the context otherwise indicates, include
the Agent in its capacity as a Bank. The Agent and its
affiliates may (without having to account therefor to
any Bank) accept deposits from, lend money to (on a
secured or unsecured basis), and generally engage in
any kind of banking, trust or other business with, any
Borrower (and any of its affiliates) as if it were not
acting as the Agent, and the Agent may accept fees and
other consideration from any Borrower for services in
connection with this Agreement or otherwise without
having to account for the same to the Banks.
Section 10.05. Indemnification of Agent.
The Banks agree to indemnify the Agent (to the extent
not reimbursed under Section 12.03 or under the
applicable provisions of any other Facility Document,
but without limiting the obligations of the Company
under Section 12.03 or such provisions), ratably in
<PAGE> 54
accordance with the aggregate unpaid principal amount
of the Loans made by the Banks (without giving effect
to any participations, in all or any portion of such
Loans, sold by them to any other Person) (or, if no
Loans are at the time outstanding, ratably in
accordance with their respective Commitments), for any
and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out
of this Agreement, any other Facility Document or any
other documents contemplated by or referred to herein
or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses
which the Company is obligated to pay under Section
12.03 or under the applicable provisions of any other
Facility Document but excluding, unless a Default or
Event of Default has occurred, normal administrative
costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of
the terms hereof or thereof or of any such other
documents or instruments; provided that no Bank shall
be liable for any of the foregoing to the extent they
arise from the gross negligence or willful misconduct
or actions not authorized under this Agreement or by
the Required Banks which are in violation of law and
result in a liability of the Banks to any Borrowers of
the party to be indemnified.
Section 10.06. Documents. The Agent will
forward to each Bank, promptly after the Agent's
receipt thereof, a copy of each report, notice or other
document required by this Agreement or any other
Facility Document to be delivered to the Agent for such
Bank.
Section 10.07. Non-Reliance on Agent and
Other Banks. Each Bank agrees that it has,
independently and without reliance on the Agent or any
other Bank, and based on such documents and information
as it has deemed appropriate, made its own credit
analysis of the Company and its Subsidiaries and
decision to enter into this Agreement and 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 analysis and decisions in
taking or not taking action under this Agreement or any
other Facility Document. The Agent shall not be
required to keep itself informed as to the performance
or observance by the Company or its Subsidiaries of
this Agreement or any other Facility Document or any
other document referred to or provided for herein or
therein or to inspect the properties or books of the
Company or any Subsidiary. Except for notices, reports
and other documents and information expressly required
to be furnished to the Banks by the Agent hereunder,
the Agent shall
<PAGE> 55
not have any duty or responsibility to
provide any Bank with any credit or other information
concerning the affairs, financial condition or business
of the Company or any Subsidiary (or any of their
affiliates) which may come into the possession of the
Agent or any of its affiliates. The Agent shall not be
required to file this Agreement, any other Facility
Document or any document or instrument referred to
herein or therein, for record or give notice of this
Agreement, any other Facility Document or any document
or instrument referred to herein or therein, to anyone.
Section 10.08. Failure of Agent to Act.
Except for action expressly required of the Agent
hereunder, the Agent shall in all cases be fully
justified in failing or refusing to act hereunder
unless it shall have received further assurances (which
may include cash collateral to the extent permitted by
law) of the indemnification obligations of the Banks
under Section 10.05 in respect of any and all liability
and expense which may be incurred by it by reason of
taking or continuing to take any such action.
Section 10.09. Resignation or Removal of
Agent. Subject to the appointment and acceptance of a
successor Agent as provided below, the Agent may resign
at any time by giving written notice thereof to the
Banks and the Company; provided that the Company and
the other Banks shall be promptly notified thereof.
Upon any such resignation, the Required Banks shall
have the right to appoint, with the consent of the
Company, which consent shall not be unreasonably
withheld, 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,
with an office in New York, New York and having a
combined capital and surplus of at least $100,000,000.
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 Company, 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, with an office in New York, New York, and
having a combined capital and surplus of at least
$100,000,000. The Required Banks or the retiring
Agent, as the case may be, shall upon the appointment
of a successor Agent promptly so notify the Company and
the other Banks. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges
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, the provisions of this Article 10 shall
continue in
<PAGE> 56
effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was
acting as the Agent.
Section 10.10. Amendments Concerning Agency
Function. The Agent shall not be bound by any waiver,
amendment, supplement or modification of this Agreement
or any other Facility Document which affects its duties
hereunder or thereunder unless it shall have given its
prior consent thereto.
Section 10.11. Liability of Agent. The
Agent shall not have any liabilities or
responsibilities to any Borrower on account of the
failure of any Bank to perform its obligations
hereunder or to any Bank on account of the failure of
any Borrower to perform its obligations hereunder or
under any other Facility Document. This Section 10.11
shall not be construed to relieve the Agent of any
liability it may have as a Bank when acting in its
capacity as a Bank hereunder.
Section 10.12. Transfer of Agency Function.
Without the consent of the Company or any Bank, the
Agent may at any time or from time to time transfer its
functions as Agent hereunder to any of its offices
wherever located, provided that the Agent shall
promptly notify the Company and the Banks thereof.
Section 10.13. Non-Receipt of Funds by the
Agent. Unless the Agent shall have been notified by a
Bank or the Company (either one as appropriate being
the "Payor") prior to the date on which such Bank is to
make payment hereunder to the Agent of the proceeds of
a Loan or any Borrower is to make payment to the Agent,
as the case may be (either such payment being a
"Required Payment"), which notice shall be effective
upon receipt, that the Payor does not intend to make
the Required Payment to the Agent, the Agent may assume
that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be
required to), make the amount thereof available to the
intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Agent, the
recipient of such payment (and, if such recipient is a
Borrower and the Payor Bank fails to pay the amount
thereof to the Agent forthwith upon demand, such
Borrower) shall, on demand, repay to the Agent the
amount made available to it together with interest
thereon for the period from the date such amount was so
made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to the
average daily Federal Funds Rate for such period.
Section 10.14. Withholding Taxes. Each Bank
represents that it is entitled to receive any payments
to be made to it hereunder without the withholding of
any tax and will furnish to the Agent such forms,
certifications, statements and
<PAGE> 57
other documents as the Agent may request
from time to time to evidence such
Bank's exemption from the withholding of any tax
imposed by any jurisdiction or to enable the Agent to
comply with any applicable laws or regulations relating
thereto. Without limiting the effect of the foregoing,
if any Bank is not created or organized under the laws
of the United States of America or any state thereof,
in the event that the payment of interest by any
Borrower is treated for U.S. income tax purposes as
derived in whole or in part from sources from within
the U.S., such Bank will furnish to the Agent and the
Company Form 4224 or Form 1001 of the Internal Revenue
Service, or such other forms, certifications,
statements or documents, duly executed and completed by
such Bank as evidence of such Bank's exemption from the
withholding of U.S. tax with respect thereto. The
Agent shall not be obligated to make any payments
hereunder to such Bank in respect of any Loan or such
Bank's Commitment until such Bank shall have furnished
to the Agent the requested form, certification,
statement or document.
Section 10.15. Several Obligations and
Rights of Banks. The failure of any Bank to make any
Loan to be made by it on the date specified therefor
shall not relieve any other Bank of its obligation to
make its Loan on such date, but no Bank shall be
responsible for the failure of any other Bank to make a
Loan to be made by such other Bank. The amounts
payable at any time hereunder to each Bank shall be a
separate and independent debt, and each Bank shall be
entitled to protect and enforce its rights arising out
of this Agreement, and it shall not be necessary for
any other Bank to be joined as an additional party in
any proceeding for such purpose.
Section 10.16. Pro Rata Treatment of Loans,
Etc. Except to the extent otherwise provided: (a)
each Borrowing under Section 2.05 shall be made from
the Banks, each reduction or termination of the amount
of the Commitments under Section 2.08 shall be applied
to the Commitments of the Banks, and each payment of
commitment fee accruing under Section 2.12 shall be
made for the account of the Banks, pro-rata according
to the amounts of their respective unused Commitments;
(b) each conversion under Section 2.06 of Loans of a
particular type (but not conversions provided for by
Section 3.04), shall be made pro-rata among the Banks
holding Loans of such type according to the respective
principal amounts of such Loans by such Banks; (c) each
prepayment and payment of principal of or interest on
Loans of a particular type and a particular Interest
Period shall be made to the Agent for the account of
the Banks holding Loans of such type and Interest
Period pro-rata in accordance with the respective
unpaid principal amounts of such Loans of such Interest
Period held by such Banks.
<PAGE> 58
Section 10.17. Sharing of Payments Among
Banks. If a Bank shall obtain payment of any principal
of or interest on any Loan made by it through the
exercise of any right of setoff, banker's lien,
counterclaim, or by any other means, it shall promptly
purchase from the other Banks participations in (or, if
and to the extent specified by such Bank, direct
interests in) the Loans made by the other Banks in such
amounts, and make such other adjustments from time to
time as shall be equitable to the end that all the
Banks shall share the benefit of such payment (net of
any expenses which may be incurred by such Bank in
obtaining or preserving such benefit) pro-rata in
accordance with the unpaid principal and interest on
the Loans held by each of them. To such end the Banks
shall make appropriate adjustments among themselves (by
the resale of participations sold or otherwise) if such
payment is rescinded or must otherwise be restored.
Each Borrower agrees that any Bank so purchasing a
participation (or direct interest) in the Loans made by
other Banks may exercise all rights of setoff, banker's
lien, counterclaim or similar rights with respect to
such participation (or direct interest). Nothing
contained herein shall require any Bank to exercise any
such right or shall affect the right of any Bank to
exercise, and retain the benefits of exercising, any
such right with respect to any other indebtedness of
any Borrower.
ARTICLE 11. GUARANTY.
Section 11.01. 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 11.02. 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:
(a) 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;
(b) any modification or
amendment of or supplement to this Agreement or any
Note;
<PAGE> 59
(c) 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;
(d) 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;
(e) 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 any unrelated transactions;
provided that nothing herein shall prevent the
assertion of any such claim by separate suit or
compulsory counterclaim;
(f) 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
(g) 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 11.03. 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 11.04. Waiver by the Company. The
Company irrevocably waives acceptance hereof,
presentment, demand,
<PAGE> 60
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 11.05. 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.
Section 11.06. 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 12. MISCELLANEOUS.
Section 12.01. Amendments and Waivers. No
amendment or waiver of any provision of this Agreement
nor consent to any departure by any Borrower therefrom,
shall in any event be effective unless the same shall
be in writing and signed by the Agent and the Required
Banks, and then such waiver or consent shall be
effective only in the specific instance and for the
specific purpose for which given. Notwithstanding the
foregoing, no amendment, waiver or consent shall,
unless in writing and signed by the Agent and all the
Banks, do any of the following: (a) increase the
Commitments of the Banks or subject the Banks to any
additional obligations, (b) reduce the principal amount
of, or interest on, any Loan or any fees or other
amounts payable under any Facility Documents, (c)
postpone any date fixed for any payment of principal
of, or interest on, any Loans or any fees or other
amounts payable under any Facility Documents, (d)
change the percentage of the Commitments or of the
aggregate unpaid principal amount of Loans, or the
number of Banks which shall be required for the Banks
or any of them to take any action under any Facility
Documents or (e) amend this Section 12.01; provided
further that no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition
to the Banks required hereinabove to take such action,
affect the rights or duties of the Agent under any
Facility Documents. No failure on the part of the
Agent or any Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a
waiver thereof or preclude any other or further
exercise thereof or the exercise of any
<PAGE> 61
other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 12.02. Usury. Anything herein to
the contrary notwithstanding, the obligations of the
Company and its Subsidiaries under this Agreement and
the Notes shall be subject to the limitation that
payments of interest shall not be required to the
extent that receipt thereof would be contrary to
provisions of law applicable to a Bank limiting rates
of interest which may be charged or collected by such
Bank.
Section 12.03. Expenses; Indemnification.
The Company shall reimburse (a) the Agent on demand
for all costs, expenses, and charges (including,
without limitation, fees and charges of external legal
counsel for the Agent and costs allocated by its
internal legal department) incurred by the Agent in
connection with the preparation, performance, or
administration of this Agreement or the Notes and (b)
the Agent and the Banks on demand for all costs,
expenses, and charges (including, without limitation,
fees and expenses of counsel) in connection with the
enforcement of this Agreement. The Company agrees to
indemnify the Agent and each Bank and their respective
directors, officers, employees and agents from, and
hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses incurred by
any of them arising out of or by reason of any
investigation or litigation or other proceedings
(including any threatened investigation or litigation
or other proceedings) arising out of this Agreement or
any actual or proposed use by the Company or any
Subsidiary of the proceeds of the Loans, including
without limitation, the reasonable fees and
disbursements of counsel incurred in connection with
any such investigation or litigation or other
proceedings (but excluding any such losses,
liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of
the Person to be indemnified).
Section 12.04. Survival. The obligations of
the Borrowers under Sections 3.01, 3.05 and 12.03 shall
survive the repayment of the Loans and the termination
of the Commitments.
Section 12.05. Assignments; Participations.
This Agreement shall be binding upon, and shall inure
to the benefit of, the Borrowers, the Agent, the Banks
and their respective successors and assigns, except
that neither the Company nor any Eligible Subsidiaries
may assign or transfer its rights or obligations
hereunder. Each Bank may assign all or any part of any
Loan to another bank or other entity with the consent
of the Company, in which event the assignee shall have,
to the extent of such assignment (unless otherwise
provided therein), the same rights, benefits and
obligations as it would have if it were a
<PAGE> 62
Bank hereunder. Each Bank may sell participations in, all
or any part of any Loan to another bank or other
entity, in which event, the participant shall have no
rights under the Facility Documents and all amounts
payable by any Borrower under Article 3 shall be
determined as if such Bank had not sold such
participation. Such Bank shall deliver a notice to the
Company and the Agent of any such participation which
shall set forth the participant and the amount of such
participation. The agreement executed by such Bank in
favor of the participant shall not give the participant
the right to require such Bank to take or omit to take
any action hereunder except action directly relating to
(i) the extension of a payment date with respect to any
portion of the principal of or interest on any amount
outstanding hereunder allocated to such participant,
(ii) the reduction of the principal amount outstanding
hereunder or (iii) the reduction of the rate of
interest payable on such amount or any amount of fees
payable hereunder to a rate or amount, as the case may
be, below that which the participant is entitled to
receive under its agreement with such Bank. Such Bank
may furnish any information concerning the Borrowers in
the possession of such Bank from time to time to
assignees and participants (including prospective
assignees and participants); provided that such Bank
shall require any such prospective assignee or such
participant (prospective or otherwise) to agree in
writing to maintain the confidentiality of such
information.
Section 12.06. Notices. Unless the party to
be notified otherwise notifies the other party in
writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be
given to the Agent by telephone, confirmed by telex,
telecopy, facsimile or other writing, and to the Banks
and to the Borrowers by ordinary mail, telex or
facsimile addressed to such party at its address on the
signature page of this Agreement. Notices shall be
effective: (a) if given by mail, 72 hours after deposit
in the mails with first class postage prepaid,
addressed as aforesaid; and (b) if given by telex or
facsimile, when the telex or facsimile is transmitted
to the telex or facsimile number as aforesaid; provided
that notices to the Agent and the Banks shall be
effective upon receipt.
Section 12.07. Setoff. The Borrowers agree
that, in addition to (and without limitation of) any
right of setoff, banker's lien or counterclaim a Bank
may otherwise have, each Bank shall be entitled, at its
option, to offset balances (general or special, time or
demand, provisional or final) held by it for the
account of any Borrower at any of such Bank's offices,
in Dollars or in any other currency, against any amount
payable by the Borrowers to such Bank under this
Agreement or such Bank's Note which is not paid when
due (regardless of whether such balances are then due
to any Borrower), in which
<PAGE> 63
case it shall promptly notify the Company and the Agent thereof;
provided that such Bank's failure to give such notice shall not
affect the validity thereof. Payments by the Borrowers
hereunder shall be made without setoff or counterclaim.
Section 12.08. Jurisdiction; Immunities.
(a) The Borrowers hereby irrevocably submit to the
jurisdiction of any New York State or United States
Federal court sitting in New York City over any action
or proceeding arising out of or relating to this
Agreement or the Notes, and the Borrowers hereby
irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in
such New York State or Federal court. The Borrowers
irrevocably consent to the service of any and all
process in any such action or proceeding by the mailing
of copies of such process to the Company at its address
specified on the signature pages hereof. The Borrowers
agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any
other manner provided by law. The Borrowers further
waive any objection to venue in such state and any
objection to an action or proceeding in such state on
the basis of forum non conveniens. The Borrowers
further agree that any action or proceeding brought
against the Agent shall be brought only in New York
State or United States Federal court sitting in New
York County. The Borrowers, the Agent and the Banks
waive any right they may have to jury trial.
(b) Nothing in this Section 12.08 shall affect the
right of the Agent or any Bank to serve legal process
in any other manner permitted by law or affect the
right of the Agent or any Bank to bring any action or
proceeding against the Borrowers or any of their
property in the courts of any other jurisdictions.
(c) To the extent that any Borrower has or
hereafter may acquire any immunity from jurisdiction of
any court or from any legal process (whether from
service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise)
with respect to itself or its property, each Borrower
hereby irrevocably waives such immunity in respect of
its obligations under this Agreement and the Notes.
Section 12.09. 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 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 Banking Day preceding
that on which final judgment is given. The obligations
<PAGE> 64
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
Banking 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 10.07, such Bank or
the Agent, as the case may be, agrees to remit such
excess to the appropriate Borrower.
Section 12.10. 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 those
contained in this Section, to any prospective
participant or assignee.
Section 12.11. Table of Contents: Headings.
Any table of contents and the headings and captions
hereunder are for convenience only and shall not affect
the interpretation or construction of this Agreement.
Section 12.12. Severability. The provisions
of this Agreement are intended to be severable. If for
any reason any provision of this Agreement shall be
held invalid or unenforceable in whole or in part in
any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner
affecting the validity or enforceability thereof in any
other jurisdiction or the remaining provisions hereof
in any jurisdiction.
<PAGE> 65
Section 12.13. Counterparts. This Agreement
may be executed in any number of counterparts, all of
which taken together shall constitute one and the same
instrument, and any party hereto may execute this
Agreement by signing any such counterpart.
Section 12.14. Integration. The Facility
Documents and the fee letter between the Company and
the Agent dated September 23, 1993, set forth the
entire agreement among the parties hereto relating to
the transactions contemplated thereby and supersede any
prior oral or written statements or agreements with
respect to such transactions.
Section 12.15. Governing Law. This
Agreement shall be governed by, and interpreted and
construed in accordance with, the law of the State of
New York.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the day and
year first above written.
THE TIMBERLAND COMPANY
/s/ Carden N. Welsh
By _____________________________
Name: Carden N. Welsh
Title: Treasurer
Address for Notices:
The Timberland Company
11 Merrill Industrial Drive
Hampton, NH 03842-5050
Attention: Nancy A. Wels
Telefax No.: (603) 926-9239
AGENT:
THE CHASE MANHATTAN BANK, N.A.
<PAGE> 66
/s/ Gaspare Galante Jr.
By ______________________________
Name: Gaspare Galante Jr.
Title: Second Vice President
Address for Notices:
Gaspare Galante
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
Susan Timmerman
The Chase Manhattan Bank of
Connecticut, N.A.
999 Broad Street
Bridgeport, Connecticut 06604
Telephone: (203) 368-5119
Telefax: (203) 382-6573
Lucy Dorazio
The Chase Manhattan Bank, N.A.
4 Chase Metrotech
Brooklyn, New York 11245
Telephone: (718) 242-7945
Telefax: (718) 242-6900
BANKS:
THE CHASE MANHATTAN BANK, N.A.
<PAGE> 67
/s/ Gaspare Galante Jr.
By ______________________________
Name: Gaspare Galante, Jr.
Title: Second Vice President
Lending Office for Variable Rate Loans:
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
Lending Office for Eurocurrency Loans:
The Chase Manhattan Bank, N.A.
International Banking Facility
4 Chase Metrotech
Brooklyn, New York 11245
Address for Notices:
Susan Timmerman
The Chase Manhattan Bank of
Connecticut, N.A.
999 Broad Street
Bridgeport, Connecticut 06604
Telephone: (203) 368-5119
Telefax: (203) 382-6573
Lucy Dorazio
<PAGE> 68
The Chase Manhattan Bank, N.A.
4 Chase Metrotech
Brooklyn, New York 11245
Telephone: (718) 242-7945
Telefax: (718) 242-6900
FLEET NATIONAL BANK OF
MASSACHUSETTS, N.A.
/s/ Joan S. Parsons
By _____________________________
Name: Joan S. Parsons
Title: Vice President
Lending Office for Variable Rate Loans:
Fleet Bank of Massachusetts, N.A.
75 State Street
Boston, Massachusetts 02109
Attn: Roseanne Secondino
Telephone: (617) 346-1859
(617) 346-1879
Telefax: (617) 346-1833
Lending Office for Eurocurrency Loans:
Fleet Bank of Massachusetts, N.A.
75 State Street
Boston, Massachusetts 02109
<PAGE> 69
Attn: Roseanne Secondino
Telephone: (617) 346-1859
(617) 346-1879
Telefax: (617) 346-1833
Address for Notices:
Joan Parsons
Fleet Bank of Massachusetts, N.A.
75 State Street
Boston, Massachusetts 02109
Telephone: (617) 346-1872
IBJ SCHRODER BANK AND TRUST COMPANY
/s/ Brian MacConnell
By _____________________________
Name: Brian MacConnell
Title: VP
Lending Office for Variable Rate Loans:
IBJ Schroder Bank and Trust Company
One State Street
New York, New York 10004
Attn: Gary Conga
Telephone: (212) 858-2872
(212) 858-2222
Telefax: (212) 858-2768
<PAGE> 70
Lending Office for Eurocurrency Loans:
IBJ Schroder Bank and Trust Company
One State Street
New York, New York 10004
Attn: Gary Conga
Telephone: (212) 858-2872
(212) 858-2222
Telefax: (212) 858-2768
Address for Notices:
Brian MacConnel
IBJ Schroder Bank and Trust Company
One State Street
New York, New York 10004
Telephone: (212) 858-2197
<PAGE> 1
Exhibit 10.13(ii)
THE TIMBERLAND COMPANY
11 Merrill Industrial Drive
Hampton, NH 03842-5050
FIRST AMENDMENT
Dated as of September 15, 1993
RE: Note Agreements dated as of September 30, 1989
$35,000,000 9.7% Senior Notes
Due December 1, 1999
To the Holder named in Schedule I hereto which is a signatory of this Agreement
Gentlemen:
Reference is made to the separate Note Agreements, each dated as of
September 30, 1989 (the "Original Note Agreements"), between the undersigned,
THE TIMBERLAND COMPANY, a Delaware corporation (the "Company"), and the
Purchasers named in Schedule I thereto (the "Holders") respectively. Unless
otherwise herein defined or the context hereof otherwise requires, the
capitalized terms in this First Amendment shall have the respective meanings
specified in the Original Note Agreements.
The Company now wishes to amend 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:
SECTION 1. AMENDMENTS.
1.1. Section 5.6 of the Original Note Agreements shall be, and the same
hereby is, amended in its entirety so that the same shall read as follows:
"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."
1.2. Section 5.7 of the Original Note Agreements shall be, and the same
hereby is, amended in its entirety so that the same shall read as follows:
"5.7. Consolidated Tangible Net Worth. The Company will
<PAGE> 2
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 October 1,
1993, $55,000,000, 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 2. MISCELLANEOUS
2.1. Any Default or Event of Default which might have existed under the
Original Note Agreements prior to giving effect to this First Amendment but
which would not constitute such a Default or Event of Default under the
Original Note Agreements as amended by this First Amendment is hereby waived.
2.2. Any and all notices, requests, certificates and other instruments
executed and delivered after the effective date of this First Amendment may
refer to the "Note Agreements dated as of September 30, 1989" without making
specific reference to this First Amendment, but nevertheless all such
references shall be deemed to include this First Amendment unless the context
shall otherwise require.
2.3. This First Amendment shall be construed in connection with and as
part of the Original Note Agreements, and all terms, conditions and covenants
contained in the Original Note Agreements, except as herein modified, shall be
and remain in full force and effect.
2.4. This First Amendment may be executed in any number of counterparts,
each executed counterpart constituting an original but altogether one and the
same instrument.
Upon the acceptance of this First 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 September 30, 1993.
THE TIMBERLAND COMPANY
<PAGE> 3
By: /s/ CARDEN N. WELSH
Its: Treasurer
Accepted as of September 15, 1993
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By: /s/ CLINT WOODS
Its: Counsel
By /s/ JOSEPH P. MCLAUGHLIN
Its: Counsel
NORTHWESTERN NATIONAL LIFE
INSURANCE COMPANY
By: /s/ FRANK P. PINTENS
Its: Authorized Representative
NORTHERN LIFE INSURANCE COMPANY
By: /s/ FRANK P. PINTENS
Its: Assistant Treasurer
BENEFICIAL STANDARD LIFE INSURANCE
COMPANY
By: /s/ THOMAS A. MEYERS
Its: Vice President, Investment Officer
FARM BUREAU LIFE INSURANCE
COMPANY
By: /s/ DAVID D. BAKER
Its: Portfolio Department Manager
FB ANNUITY COMPANY
By: /s/ DAVID D. BAKER
Its: Portfolio Department Manager
FARM BUREAU MUTUAL LIFE INSURANCE
COMPANY OF MICHIGAN
By: /s/ DAVID D. BAKER
Its: Portfolio Department Manager
SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
By: /s/ L. BROCK THOMSON
Its: Treasurer
GUARANTEE MUTUAL LIFE COMPANY
By: /s/ DAVID BOMBERGER
Its: Senior Vice President-
Investments & Treasurer
Holding the unpaid principal amount of the
Notes set out opposite its name in Schedule I
hereto
<PAGE> 4
<TABLE>
SCHEDULE I
HOLDERS PRINCIPAL AMOUNT
<S> <C>
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
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 $ 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
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
</TABLE>
<PAGE> 1
<TABLE>
THE TIMBERLAND COMPANY Exhibit 13
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
SELECTED INCOME STATEMENT DATA
(Dollars in Thousands Except Per Share Data)
<CAPTION>
Year Ended December 31,
1993 1992 1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $418,918 $291,368 $226,082 $196,319 $156,141
Net Income 22,521 12,919 8,085 7,854 6,380
Earnings per Share $ 2.01 $ 1.18 $ .75 $ .73 $ .60
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
<TABLE>
<CAPTION>
December 31,
1993 1992 1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Working Capital $155,660 $ 94,427 $ 87,610 $ 88,196 $ 84,134
Total Assets 290,611 194,117 177,470 170,076 148,327
Long-Term Debt 90,809 41,533 44,199 46,924 46,675
Stockholders' Equity 128,363 104,600 93,412 85,664 74,915
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
THE TIMBERLAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
(Amounts in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
Year Ended December 31,
1993 % 1992 % 1991 %
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $418,918 100.0% $291,368 100.0% $226,082 100.0%
Gross profit 152,707 36.5 107,858 37.0 79,792 35.3
Total operating expenses 112,315 26.8 82,016 28.1 62,390 27.6
Operating income 40,392 9.6 25,842 8.9 17,402 7.7
Interest expense 6,252 1.5 5,528 1.9 5,822 2.6
Net income 22,521 5.4% 12,919 4.4% 8,085 3.6%
Earnings per share $ 2.01 $ 1.18 $ .75
Weighted average shares outstanding 11,206 10,922 10,791
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
1993 COMPARED TO 1992
Net sales for 1993 were $418.9 million, which represents an increase of
44% over the $291.4 million reported in 1992. This increase in net sales was
attributable primarily to an overall increase in the number of footwear,
apparel and accessory units sold.
Gross profit as a percentage of net sales for 1993 was 36.5%, as compared
to 37.0% in 1992. This decrease resulted principally from the Company's
strategic decision to attempt to lead the market by pre-emptively reducing
prices on certain products to improve the price/value proposition for the
consumer. The Company anticipates further pressure on gross margins in the
first half of 1994, as a result of this pricing strategy not yet being fully
offset by expected product cost reductions. The Company also expects its
historical trend, in which revenues and earnings have been more heavily
weighted to the second half of the year, primarily the third quarter, to
continue in 1994.
Total operating expenses for 1993 increased to $112.3 million from $82.0
million in 1992, as the Company further invested in infrastructure and
increased marketing in support of overall worldwide sales growth. As a
percentage of net sales, total operating expenses decreased to 26.8% in 1993
from 28.1% in 1992.
Interest expense in 1993 increased $.7 million over 1992, primarily due
to higher average borrowings in 1993 in support of sales growth.
1992 COMPARED TO 1991
Net sales in 1992 were $291.4 million, a 29% increase over the $226.1
million reported in fiscal 1991. This increase was primarily attributable to an
overall increase in the volume of footwear, apparel and accessory units sold.
Gross profit as a percentage of net sales was 37.0% in 1992 as compared
to 35.3% in 1991. This increase resulted from a combination of significant
reductions in the level of markdowns in 1992 compared to 1991 which was
affected by an aggressive inventory reduction program, increased production
levels, increased efficiencies in manufacturing and sourcing, and a favorable
sales mix.
Total operating expenses increased by 31% to $82.0 million in 1992 from
$62.4 million in 1991. The increased spending was attributable to a higher
level of selling and general and administrative expenses, as the Company
invested further in infrastructure and increased marketing in support of
current and future sales growth.
Interest expense in 1992 decreased by $.3 million from 1991 due primarily
to lower interest rates.
For an analysis of the change in the effective tax rates from 1991 to
1993, see notes to the consolidated financial statements.
<PAGE> 3
THE TIMBERLAND COMPANY
LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operations during 1993 totaled $26.7 million, due
primarily to increases in certain working capital items. At December 31, 1993,
the Company had working capital of $155.7 million versus $94.4 million at
December 31, 1992. Accounts receivable grew to $93.2 million at December 31,
1993 compared to $54.1 million at December 31, 1992. Days sales outstanding at
December 31, 1993 were 75 days compared to 61 days at December 31, 1992.
Inventories at year end 1993 increased by $40.8 million, to $111.4 million,
since year end 1992, primarily in response to increased customer demand.
Inventory turns improved to 2.7 times from 2.5 times a year ago.
Net cash used for investing activities was $23.9 million,
of which $21.6 million represented additions to property,
plant and equipment. These investments compare with $11.8 million in 1992 and
were primarily made for manufacturing machinery and equipment and corporate
information systems enhancements.
In December 1993, the Company entered into a Memorandum of Understanding
with its Italian distributor outlining the contemplated termination of its
distribution rights and acquisition of certain of its assets. Net sales to this
distributor represented 4% of the Company's consolidated revenues in 1993.
Timberland intends to assume the distribution of its own products in Italy
effective on the termination date.
Net cash required for operating and investing activities in 1993 was
provided by a combination of internally generated cash and increased
borrowings. The Company uses unsecured and committed lines of credit as the
primary sources of financing for its seasonal and other working capital
requirements. Under its existing short-term credit facilities, the Company can
borrow, subject to a borrowing base formula, up to an aggregate amount of $70
million, of which $10 million was outstanding at December 31, 1993.
Additionally, the Company had uncommitted lines of credit totaling $24 million
at December 31, 1993, none of which was outstanding at year end. (See notes to
the consolidated financial statements.) As a result of the increase in overall
borrowings, the Company's debt to capital ratio rose to 44% at December 31,
1993 compared to 33% at year end 1992.
The Company is currently exploring additional financing opportunities to
support anticipated near-term growth. Management believes that the Company's
existing credit 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.
INFLATION
The Company believes that inflation has not had a significant overall
impact on its operations or liquidity over the past three years.
<PAGE> 4
THE TIMBERLAND COMPANY
QUARTERLY MARKET INFORMATION
AND RELATED MATTERS
The Company's Class A Common Stock is traded on the New York Stock
Exchange under the symbol TBL. There is no market for shares of the Company's
Class B Common Stock; however, shares of Class B Common Stock may be converted
into shares of Class A Common Stock on a one-for-one basis and shall
automatically be converted upon any transfer (except for estate planning
transfers and any transfer approved by the board of directors).
The following table presents the high and low closing sales prices of the
Company's Class A Common Stock for the past two years as reported by the New
York Stock Exchange.
<TABLE>
<CAPTION>
1993 1992
HIGH LOW High Low
- -------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter 34 1/2 19 1/8 17 3/8 9
Second Quarter 38 1/4 29 5/8 16 7/8 13
Third Quarter 61 1/4 29 1/8 17 3/4 13
Fourth Quarter 85 47 3/8 19 7/8 14 1/4
- -------------------------------------------------------
</TABLE>
As of March 1, 1994, the number of record holders of the Company's Class
A Common Stock was approximately 659, and the number of record holders of the
Company's Class B Common Stock was eight. The closing sales price of the
Company's Class A Common Stock on March 1, 1994 was 38 1/8.
No cash dividends have ever been declared on either the Company's Class A
or Class B Common Stock, and none are contemplated in the foreseeable future.
In addition, the Company's ability to pay cash dividends is limited pursuant to
various loan agreements. (See notes to the consolidated financial statements.)
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
THE TIMBERLAND COMPANY:
We have audited the accompanying consolidated balance sheets of The
Timberland Company and subsidiaries as of December 31, 1993 and 1992 and the
related consolidated statements of income, changes in stockholders' equity, and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. The Company's
consolidated statements of income, changes in stockholders' equity, and cash
flows for the year ended December 31, 1991, were audited by other auditors
whose report dated February 12, 1992, expressed an unqualified opinion on those
statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such 1993 and 1992 consolidated financial statements
present fairly, in all material respects, the financial position of the
companies at December 31, 1993 and 1992, and the results of their operations
and their cash flows for the years then ended in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE
Boston, Massachusetts
February 15, 1994
<PAGE> 5
<TABLE>
THE TIMBERLAND COMPANY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1993 AND 1992
(Dollars in Thousands)
<CAPTION>
Assets 1993 1992
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash and equivalents $ 3,281 $ 1,220
Accounts receivable, net of allowance for doubtful accounts of
$1,014 in 1993 and $1,821 in 1992 93,226 54,141
Inventories 111,380 70,542
Prepaid expenses 7,571 4,501
Deferred and refundable income taxes 5,625 7,466
- -----------------------------------------------------------------------------------------------------------------
Total current assets 221,083 137,870
- -----------------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost 79,145 57,820
Less - accumulated depreciation and amortization (33,530) (25,151)
- -----------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 45,615 32,669
Excess of cost over fair value of net assets acquired, net 18,157 18,931
Other assets, net 5,756 4,647
- -----------------------------------------------------------------------------------------------------------------
$290,611 $194,117
=================================================================================================================
Liabilities and Stockholders' Equity
- -----------------------------------------------------------------------------------------------------------------
Current liabilities
Notes payable $ 10,061 $ 6,851
Current maturities of long-term obligations 682 2,643
Accounts payable 32,526 14,121
Accrued expenses
Payroll and related 8,873 5,933
Interest and other 9,609 8,096
Income taxes payable 3,672 5,799
- -----------------------------------------------------------------------------------------------------------------
Total current liabilities 65,423 43,443
- -----------------------------------------------------------------------------------------------------------------
Long-term obligations, less current maturities 90,809 41,533
- -----------------------------------------------------------------------------------------------------------------
Deferred income taxes 6,016 4,541
- -----------------------------------------------------------------------------------------------------------------
Stockholders' equity
Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued -- --
Class A Common Stock, $.01 par value; 30,000,000 shares authorized;
7,630,556 shares issued in 1993 and 7,549,015 shares in 1992 76 75
Class B Common Stock, $.01 par value; 15,000,000 shares authorized;
3,237,598 shares issued and outstanding in 1993 and 3,238,686 shares in 1992 32 32
Additional paid-in capital 55,805 53,758
Retained earnings 74,106 51,585
Cumulative translation adjustment (1,536) (850)
Less treasury stock at cost, 18,513 shares in 1993 and 16,993 shares in 1992 (120) --
- -----------------------------------------------------------------------------------------------------------------
128,363 104,600
- -----------------------------------------------------------------------------------------------------------------
$290,611 $194,117
=================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 6
THE TIMBERLAND COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Amounts in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $418,918 $291,368 $226,082
Cost of goods sold 266,211 183,510 146,290
- -----------------------------------------------------------------------------------------------------------------
Gross profit 152,707 107,858 79,792
- -----------------------------------------------------------------------------------------------------------------
Operating expenses
Selling 82,585 57,145 45,209
General and administrative 28,956 24,194 16,504
Amortization of goodwill 774 677 677
- -----------------------------------------------------------------------------------------------------------------
Total operating expenses 112,315 82,016 62,390
- -----------------------------------------------------------------------------------------------------------------
Operating income 40,392 25,842 17,402
- -----------------------------------------------------------------------------------------------------------------
Other expense (income)
Interest expense 6,252 5,528 5,822
Other, net 17 1,315 (137)
- -----------------------------------------------------------------------------------------------------------------
Total other expense 6,269 6,843 5,685
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes 34,123 18,999 11,717
Provision for income taxes 11,602 6,080 3,632
- -----------------------------------------------------------------------------------------------------------------
Net income $ 22,521 $ 12,919 $ 8,085
=================================================================================================================
Earnings per share $ 2.01 $ 1.18 $ .75
=================================================================================================================
Weighted average shares and share equivalents outstanding 11,206 10,922 10,791
=================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 7
THE TIMBERLAND COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in Thousands)
<TABLE>
<CAPTION>
Class A Class B Additional
Common Common Paid-in Retained
Stock Stock Capital Earnings
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, January 1, 1991 $74 $33 $53,062 $30,581
Issuance of shares under employee stock option
and stock purchase plans and other
transactions 1 (1) 231 -
Net income - - - 8,085
Translation adjustment - - - -
- ----------------------------------------------------------------------------------------------
Balance, December 31, 1991 75 32 53,293 38,666
Issuance of shares under employee stock option
and stock purchase plans and other
transactions - - 465 -
Net income - - - 12,919
Translation adjustment - - - -
- ----------------------------------------------------------------------------------------------
Balance, December 31, 1992 75 32 53,758 51,585
Issuance of shares under employee stock option
and stock purchase plans and other
transactions 1 - 980 -
Tax benefit from stock option plans - - 1,067 -
Net income - - - 22,521
Translation adjustment - - - -
- ----------------------------------------------------------------------------------------------
Balance, December 31, 1993 $76 $32 $55,805 $74,106
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Cumulative Consolidated
Translation Treasury Stockholders'
Adjustment Stock Equity
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1, 1991 $ 1,914 $ - $ 85,664
Issuance of shares under employee stock option
and stock purchase plans and other
transactions - - 231
Net income - - 8,085
Translation adjustment (568) - (568)
- -----------------------------------------------------------------------------------------
Balance, December 31, 1991 1,346 - 93,412
Issuance of shares under employee stock option
and stock purchase plans and other
transactions - - 465
Net income - - 12,919
Translation adjustment (2,196) - (2,196)
- -----------------------------------------------------------------------------------------
Balance, December 31, 1992 (850) - 104,600
Issuance of shares under employee stock option
and stock purchase plans and other
transactions - (120) 861
Tax benefit from stock option plans - - 1,067
Net income - - 22,521
Translation adjustment (686) - (686)
- -----------------------------------------------------------------------------------------
Balance, December 31, 1993 $(1,536) $(120) $128,363
=========================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 8
THE TIMBERLAND COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in Thousands)
<TABLE>
<CAPTION>
1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $22,521 $12,919 $ 8,085
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Deferred income taxes 1,475 119 (3,748)
Depreciation and amortization 10,279 7,959 6,304
Increase (decrease) in cash from changes in working capital items:
Accounts receivable (39,484) (6,210) (6,499)
Inventories (41,560) (13,892) 10,607
Prepaid expenses (3,170) 202 (149)
Accounts payable 18,497 1,841 5,724
Accrued expenses 5,084 3,712 2,326
Income taxes (320) (6,642) 4,975
- -----------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities (26,678) 8 27,625
- -----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment, net (21,645) (11,774) (7,540)
Other, net (2,234) 1,616 (747)
- -----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (23,879) (10,158) (8,287)
- -----------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net borrowings (payments) under short-term credit facilities 3,257 6,352 (11,188)
Proceeds from long-term obligations 50,000 - -
Payments on long-term debt and capital lease obligations (2,643) (2,711) (2,646)
Issuance of common stock 981 465 231
Tax benefit from stock option plans 1,067 - -
Purchase of treasury stock (120) - -
- -----------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 52,542 4,106 (13,603)
- -----------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 76 (245) 219
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and equivalents 2,061 (6,289) 5,954
- -----------------------------------------------------------------------------------------------------------------
Cash and equivalents at beginning of year 1,220 7,509 1,555
- -----------------------------------------------------------------------------------------------------------------
Cash and equivalents at end of year $ 3,281 $ 1,220 $ 7,509
=================================================================================================================
Supplemental disclosures of cash flow information:
Interest paid $ 6,020 $ 5,699 $ 5,877
Income taxes paid 9,346 12,356 2,899
=================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 9
THE TIMBERLAND COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All intercompany transactions have been eliminated in
consolidation.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the
current year presentation.
RECOGNITION OF REVENUE
Revenue is recognized upon shipment of product to customers.
TRANSLATION OF FOREIGN CURRENCIES
The Company translates financial statements denominated in foreign
currency by translating balance sheet accounts at the end of period exchange
rate and income statement accounts at the average exchange rate for the period.
Translation gains and losses are recorded in stockholders' equity, and
transaction gains and losses are reflected in income.
FOREIGN CURRENCY OPTIONS
The Company has entered into foreign currency forward contracts (6.1
million pounds sterling, 12.7 million Deutsche marks and 38.5 million French
francs) to hedge foreign currency commitments through the first half of 1994.
Gains and losses on these contracts will be recognized when the offsetting
gains and losses on the hedged transactions occur. The unrealized net gain
(loss) deferred on such contracts as of December 31, 1993, 1992 and 1991 was
approximately $(178), $495 and $(1,179), respectively. Unrealized gains or
losses are determined based on the difference between the settlement and year
end spot rates.
CASH AND EQUIVALENTS
Cash equivalents consist of short-term, highly liquid investments which
have original maturities to the Company of three months or less.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are depreciated using the straight-line
method over the estimated useful lives of the assets or over the terms of the
related leases, if such periods are shorter. The principal estimated useful
lives are: building and improvements, 4 to 30 years; machinery and equipment, 3
to 10 years; lasts, patterns and dies, 5 years.
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED
The excess of cost over the fair value of net assets acquired is being
amortized on a straight-line basis over periods of 40 and 15 years. Accumulated
amortization amounted to $4,639 and $3,865 at December 31, 1993 and 1992,
respectively.
INCOME TAXES
In 1993, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes," which requires an asset and
liability approach for financial accounting and reporting for income taxes. In
addition, future tax benefits, such as net operating loss carryforwards, are
recognized to the extent realization of such benefits is more likely than not.
The implementation of SFAS No. 109 did not have a material impact on the
financial statements.
EARNINGS PER SHARE
Earnings per share are calculated by dividing net income for each period
by the weighted average number of common shares and equivalents outstanding
during each period.
2. FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
The estimated fair values of the Company's financial instruments are as
follows:
<CAPTION>
December 31,
1993 1992
- -----------------------------------------------------------------------------
Carrying Carrying
or Contract Fair or Contract Fair
Amount Value Amount Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and equivalents1 $ 3,281 $ 3,281 $ 1,220 $ 1,220
Notes payable1 10,061 10,061 6,851 6,851
Long-term obligations2 91,491 95,724 44,176 49,075
Foreign currency
contracts3 30,801 30,783 17,590 16,780
=============================================================================
<FN>
1 The carrying amounts of cash and equivalents and notes payable approximate
their fair values.
2 The fair value of the Company's long-term obligations are estimated based
on current rates available to the Company as of December 31, 1993 and 1992,
for debt of the same remaining maturities.
3 The fair value of foreign currency contracts are estimated by obtaining the
appropriate forward market rates as of December 31, 1993 and 1992, respectively.
</TABLE>
3. INVENTORIES
<TABLE>
Inventories consist of the following:
<CAPTION>
December 31,
1993 1992
<S> <C> <C>
- -------------------------------------------------------
Raw materials $ 11,108 $10,802
Work-in-process 13,060 6,761
Finished goods 87,212 52,979
- -------------------------------------------------------
$111,380 $70,542
=======================================================
</TABLE>
<PAGE> 10
THE TIMBERLAND COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
<TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<CAPTION>
December 31,
1993 1992
- -------------------------------------------------------
<S> <C> <C>
Land and improvements $ 649 $ 633
Building and improvements 17,500 14,640
Machinery and equipment 49,337 33,490
Lasts, patterns and dies 11,659 9,057
- -------------------------------------------------------
$79,145 $57,820
=======================================================
</TABLE>
5. INCOME TAXES
<TABLE>
The tax effects of temporary differences and carryforwards that give rise to
significant portions of deferred tax assets and liabilities at December 31,
1993, consist of the following:
<CAPTION>
Assets Liabilities Total
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Inventories $1,554 $ - $ 1,554
Receivable allowances 1,229 - 1,229
Intercompany profit elimination 1,681 - 1,681
Other 762 - 762
- ---------------------------------------------------------------------------------
5,226 - 5,226
=================================================================================
Non-current
Accelerated depreciation
and amortization - (946) (946)
Puerto Rico tollgate taxes - (1,229) (1,229)
Undistributed foreign earnings - (3,841) (3,841)
Net operating loss carryforwards 2,499 - 2,499
Less valuation allowance (2,499) - (2,499)
- ----------------------------------------------------------------------------------
- (6,016) (6,016)
- ----------------------------------------------------------------------------------
$5,226 $(6,016) $ (790)
- ----------------------------------------------------------------------------------
</TABLE>
The valuation allowance at December 31, 1993 of $2,499 includes $499
which arose during the current year. The valuation allowance relates primarily
to foreign net operating loss carryforwards that may not be realized.
Deferred and refundable income taxes includes $399 and $1,656 at December
31, 1993 and 1992, respectively, for refundable income taxes.
<TABLE>
The components of the provision for income taxes are as follows:
<CAPTION>
Years Ended December 31,
1993 1992 1991
- --------------------------------------------------------------------------
Current Deferred Current Deferred Current Deferred
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal $6,687 $ 935 $6,356 $(2,887) $2,606 $(1,000)
State 2,131 1,233 2,514 (193) 843 184
Puerto Rico 416 171 454 281 276 577
Foreign 29 - (445) - 146 -
- --------------------------------------------------------------------------
$9,263 $2,339 $8,879 $(2,799) $3,871 $ (239)
==========================================================================
</TABLE>
<TABLE>
The deferred tax provision consists of the following:
<CAPTION>
Years Ended December 31,
1993 1992 1991
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Increase in reserves
not currently deductible $ 719 $(2,709) $(1,015)
Tax depreciation over (under)
book depreciation 177 (239) 357
Puerto Rico tollgate taxes 172 281 625
Undistributed foreign earnings 1,355 (47) (51)
Other, net (84) (85) (155)
- ----------------------------------------------------------------------
$2,339 $(2,799) $ (239)
=====================================================================
</TABLE>
<TABLE>
The provision for income taxes differs from the amount
computed using the statutory federal income tax rate of 35% in 1993 and 34% in
1992 and 1991 due to the following:
<CAPTION>
Years Ended December 31,
1993 1992 1991
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Federal income tax at statutory rate $11,943 $6,460 $3,984
Net reduction in federal tax due to
tax exempt earnings in Puerto Rico (3,150) (3,341) (2,138)
Puerto Rico and state taxes, net of
applicable federal benefit 2,775 908 1,050
Purchase accounting adjustments 271 230 230
Losses of foreign subsidiaries 335 2,395 576
Foreign sales corporation (574) (508) -
Other, net 2 (64) (70)
- ----------------------------------------------------------------------------
Total provision for income taxes $11,602 $6,080 $3,632
============================================================================
</TABLE>
The Company's consolidated income before taxes included earnings from its
subsidiary in Puerto Rico, which are substantially exempt from Puerto Rico and
federal income taxes under an exemption which expires in 2002. However, if the
earnings were remitted to Timberland, they would be subject to a Puerto Rico
tollgate tax not to exceed 10%. Deferred tollgate taxes have been provided on
all of the accumulated earnings of the subsidiary in Puerto Rico. Deferred
income taxes are also provided on the undistributed earnings of Timberland's
foreign subsidiaries.
Losses before income taxes from foreign operations were $(835),
$(5,563) and $(1,267) for the years ended December 31, 1993, 1992 and 1991,
respectively. At December 31, 1993, the Company had $7,140 of foreign operating
loss carryforwards available to offset future foreign taxable income. Of these
operating loss carryforwards, $1,772 will expire in 1996, $1,977 in 1997 and
$374 will expire in 1998.
<PAGE> 11
THE TIMBERLAND COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
On August 10, 1993, the United States House and Senate Budget Conference
Committee enacted the Omnibus Budget Reconciliation Act of 1993 (the "Act"). As
required under SFAS No. 109, the Company has recorded the effect of the Act on
its deferred and currently payable tax liabilities as of December 31, 1993. The
effect of adopting the Act on the Company's financial statements was not
material either as to the cumulative effect upon adoption or as to the full
year 1993.
6. NOTES PAYABLE
In May 1993, the Company entered into a new unsecured committed revolving
credit agreement (the "Agreement") with a group of banks through March 29,
1996, that currently provides for revolving credit loans of up to $70,000,
subject to a borrowing base formula. At December 31, 1993, the amount available
under this formula was approximately $52,000, of which $10,000 was outstanding
at year end. Under the terms of the Agreement, the Company may borrow at
interest rates which are based upon the lender's cost of funds (4.25% at
December 31, 1993).
The Agreement provides for a facility fee of 3/8% per annum on the daily
average aggregate amount of the commitment. The Agreement places limitations on
the payment of dividends and the incurrence of additional debt, and also
contains certain other financial and operational covenants.
In addition to the above Agreement, the Company has the ability to borrow
approximately $9,300 for its European subsidiaries under demand line of credit
arrangements, which provide for interest based upon the lender's cost of funds
(6.5% to 7.6% at December 31, 1993).
Additionally, the Company had uncommitted lines of credit available from
certain banks totaling $15,000 at December 31, 1993, none of which was
outstanding at year end. Borrowings under these lines are at prevailing money
market rates (4% at December 31, 1993). These arrangements may be terminated at
any time at the option of the banks or the Company.
The balance outstanding under all short-term borrowing arrangements was
$10,061 and $6,851 at December 31, 1993 and December 31, 1992, respectively.
The maximum short-term borrowings at any month-end were $52,679, $33,874
and $19,285 during 1993, 1992 and 1991, respectively. Average borrowings under
all short-term credit arrangements were $37,596 in 1993, $16,997 in 1992 and
$11,391 in 1991. The weighted average interest rates were 4.16%, 5.88% and
8.66% in 1993, 1992 and 1991, respectively.
7. LONG-TERM OBLIGATIONS
<TABLE>
Long-term obligations consist of the following:
<CAPTION>
December 31,
1993 1992
- -------------------------------------------------------------
<S> <C> <C>
Credit agreement $50,000 $ -
Senior notes 35,000 35,000
Industrial revenue bonds 5,345 5,345
Note payable - 1,500
Capitalized lease obligations (Note 8) 1,146 2,331
- -------------------------------------------------------------
91,491 44,176
Less - current maturities (682) (2,643)
- --------------------------------------------------------------
$90,809 $41,533
==============================================================
</TABLE>
In November 1993, the Company entered into a credit agreement (the
"Agreement") expiring on May 15, 1999 with a group of banks, which provides
commitments for loans of up to $50,000. Under the Agreement, the Company may
make unsecured borrowings in the form of Variable Rate or Eurocurrency Loans.
Variable Rate Loans bear interest based upon the lender's cost of funds (4.75%
at December 31, 1993). Eurocurrency Loans bear interest based on the rate as
quoted in the London interbank market of dollar deposits. On May 15, 1996,
outstanding credit loans will be converted to three year term loans, payable
in equal quarterly principal amounts beginning on August 31, 1996. The term
loans may be outstanding as either Variable Rate or Eurocurrency Loans. The
Agreement provides for a commitment fee of 3/8% per annum on the daily average
unused portion of the commitment. The Agreement places limitations on the
payment of dividends and the incurrence of additional debt, and also requires
maintenance of certain operational and financial covenants.
The unsecured senior notes bear interest at a rate of 9.7% and mature on
December 1, 1999. Commencing December 1, 1995, annual redemption payments of
$7,000 are required until maturity. The note agreement places limitations on
the payment of cash dividends and contains other financial and operational
covenants.
The industrial revenue bonds bear interest at 6.75% through November
30, 1994 at which time the rate will be readjusted for another five-year
period. The bonds mature in 2014. The bondholders have the right to require
the Company to repurchase the bonds at face value in December 1994 and at every
five-year anniversary date thereafter until maturity. Notwithstanding this
requirement, the Company intends to renew these obligations through maturity
under the remarketing provisions of the bond agreement. The bonds are
collateralized by a mortgage on the real estate and specified equipment at the
<PAGE> 12
THE TIMBERLAND COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Company's headquarters and distribution center. The bonds contain financial and
operational covenants and restrictions similar to the credit agreement
described in Note 6. Additionally, the Company has obtained an irrevocable
standby letter of credit which also secures the outstanding principal of the
bonds through 1994.
<TABLE>
The Company's long-term obligations at December 31, 1993, excluding
capitalized lease obligations, are scheduled to become due as follows:
<S> <C>
- -------------------------------------------------------
1994 $ -
1995 7,000
1996 15,333
1997 23,667
1998 23,667
Thereafter 20,678
- -------------------------------------------------------
$90,345
=======================================================
</TABLE>
8. LEASE COMMITMENTS
<TABLE>
The Company leases manufacturing facilities, retail stores, showrooms and
equipment under noncancellable operating and capital leases expiring at various
dates through 2015. The approximate minimum rental commitments under all
noncancellable leases as of December 31, 1993, are as follows:
<CAPTION>
Capital Operating
- -------------------------------------------------------------------
<S> <C> <C>
1994 $ 770 $ 7,647
1995 483 7,468
1996 -- 7,051
1997 -- 5,946
1998 -- 5,090
Thereafter -- 19,617
- -------------------------------------------------------------------
Total minimum lease payments 1,253 $52,819
=======
Less - amount representing interest (107)
- -----------------------------------------------------
Present value of net minimum lease payments 1,146
Less - current maturities (682)
- -----------------------------------------------------
$ 464
=====================================================
</TABLE>
Property and accumulated depreciation on equipment held under capital
leases were $5,156 and $3,423, respectively, at December 31, 1993 and $6,419
and $3,368, respectively, at December 31, 1992.
Rental expense for all operating leases was $7,490, $6,635 and $5,444
for the years ended December 31, 1993, 1992 and 1991, respectively.
9. INDUSTRY SEGMENT AND GEOGRAPHICAL AREA INFORMATION
The Company operates in a single industry segment which includes the designing,
manufacturing and marketing of footwear, apparel and accessories. The following
summarizes the Company's operations in different geographical areas for the
years ended December 31, 1993, 1992 and 1991, respectively.
<TABLE>
<CAPTION>
Adjustments
United Other and
1993 States Europe Foreign Eliminations Consolidated
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated
customers $340,811 $71,927 $ 6,180 $ - $418,918
Transfers between
geographical
areas 42,388 - 20,872 (63,260) -
- -------------------------------------------------------------------------------------------------------
$383,199 $71,927 $27,052 $(63,260) $418,918
=======================================================================================================
Operating
income $ 35,282 $ 709 $ 1,953 $ 2,448 $ 40,392
=======================================================================================================
Identifiable assets
at December 31,
1993 $301,949 $53,888 $15,336 $(80,562) $290,611
=======================================================================================================
1992
- -------------------------------------------------------------------------------------------------------
Sales to unaffiliated
customers $232,748 $54,891 $ 3,729 $ - $291,368
Transfers between
geographical
areas 27,441 - 11,735 (39,176) -
- -------------------------------------------------------------------------------------------------------
$260,189 $54,891 $15,464 $(39,176) $291,368
=======================================================================================================
Operating
income (loss) $ 31,465 $(4,055) $ (788) $ (780) $ 25,842
=======================================================================================================
Identifiable assets
at December 31,
1992 $199,618 $37,612 $ 9,911 $(53,024) $194,117
=======================================================================================================
1991
- -------------------------------------------------------------------------------------------------------
Sales to unaffiliated
customers $181,429 $42,221 $ 2,432 $ - $226,082
Transfers between
geographical
areas 25,522 733 8,427 (34,682) -
- -------------------------------------------------------------------------------------------------------
$206,951 $42,954 $10,859 $(34,682) $226,082
=======================================================================================================
Operating
income (loss) $ 15,638 $ 1,371 $ (375) $ 768 $ 17,402
- -------------------------------------------------------------------------------------------------------
Identifiable assets
at December 31,
1991 $178,029 $43,566 $ 6,074 $(50,199) $177,470
=======================================================================================================
</TABLE>
<PAGE> 13
THE TIMBERLAND COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Export sales from the United States to unaffiliated customers,
principally to European distributors, amounted to 10%, 17% and 21% of
consolidated net sales for the years ended December 31, 1993, 1992 and 1991,
respectively. The Company had net sales to a single distributor which
approximated 13% of consolidated net sales for the year ended December 31,
1991.
10. STOCKHOLDERS' EQUITY
The Company's Class A and Class B Common Stock are identical in all respects
except that shares of Class A Common Stock carry one vote per share while the
shares of Class B Common Stock carry ten votes per share. In addition, holders
of Class A Common Stock have the right, voting separately as a class, to elect
25% of the directors of the Company and vote together with the holders of Class
B Common Stock for the remaining directors.
11. STOCK AND EMPLOYEE BENEFIT PLANS
Under its 1987 Stock Option Plan (the "1987 Plan"), as amended in May 1993, the
Company has reserved 1,600,000 shares of Class A Common Stock for the granting
of stock options to key employees. Pursuant to the terms of the 1987 Plan,
grants may be made by the Board of Directors from time to time, but no grant
shall be made ten years after the adoption of the 1987 Plan. The option price
per share shall not be less than the fair market value of stock at the time
such option is granted in the case of options intended to qualify as
"incentive" stock options under the Internal Revenue Code of 1986, and shall
not be less than 50% of such fair market value in the case of "non-qualified"
stock options for employees who are subject to Section 16 of the Securities
Exchange Act of 1934. To date, all options have been granted at fair market
value. Options which have been granted under the 1987 Plan become exercisable
in equal installments over four years beginning one year after the grant date.
In addition to the 1987 Plan, the Company has, on occasion, granted
"non-qualified" stock options at fair market value to non-employees to purchase
Class A Common Stock.
Under its 1991 Stock Option Plan for Non-Employee Directors (the "1991
Plan"), the Company is authorized to issue a maximum of 100,000 shares of Class
A Common Stock to eligible non-employee directors of the Company. Under the
terms of the 1991 Plan, option grants are awarded on a predetermined basis, and
no grant can be made after November 15, 2001. The exercise price of options
granted under the 1991 Plan shall be the fair market value of the stock on the
date of grant, and the options become exercisable in equal installments over
four years beginning one year after the grant date.
Options for 182,480 and 144,985 shares were exercisable under all option
arrangements at December 31, 1993 and 1992, respectively. Under the existing
plans there were 819,616 and 487,882 shares available for future grants at
December 31, 1993 and 1992, respectively.
<TABLE>
The following summarizes transactions under all stock option
arrangements for the years ended December 31, 1993, 1992 and 1991:
<CAPTION>
Number Per Share
of Shares Option Price
- ------------------------------------------------------------------
<S> <C> <C>
January 1, 1991 449,937 $ 3.74 - 12.00
Granted 61,750 7.88 - 9.25
Exercised (31,500) 3.74
Cancelled (88,752) 3.74 - 10.63
- ------------------------------------------------------------------
December 31, 1991 391,435 6.38 - 12.00
Granted 185,680 13.38 - 18.88
Exercised (45,196) 6.38 - 9.25
Cancelled (89,386) 6.38 - 15.25
- ------------------------------------------------------------------
December 31, 1992 442,533 6.38 - 18.88
Granted 434,655 26.00 - 83.25
Exercised (56,113) 6.38 - 15.25
Cancelled (66,389) 6.38 - 56.00
- ------------------------------------------------------------------
December 31, 1993 754,686 $ 6.38 - 83.25
==================================================================
</TABLE>
Pursuant to the terms of its 1991 Employee Stock Purchase Plan (the
"Plan"), the Company is authorized to issue up to an aggregate of 100,000
shares of its Class A Common Stock to eligible employees electing to
participate in the Plan. Eligible employees may contribute, through payroll
withholdings, from 2% to 10% of their regular base compensation during
six-month participation periods beginning January 1 and July 1 of each year. At
the end of each participation period, the accumulated deductions are applied
toward the purchase of Class A Common Stock at a price equal to 85% of the
market price at the beginning or end of the participation period, whichever is
lower. Employee purchases amounted to 24,340 shares in 1993, 17,592 shares in
1992 and 18,736 shares in 1991 (of which 10,182 shares were purchased under the
1987 Employee Stock Purchase Plan which expired in July 1991) at prices ranging
from $4.99 to $26.35. At December 31, 1993, 49,514 shares were available for
future purchases.
<PAGE> 14
THE TIMBERLAND COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
The Company maintains a contributory 401(k) Retirement Earnings Plan (the
"401(k) Plan") for eligible salaried and hourly employees who are at least 21
years of age with one or more years of service. Under the provisions of the
401(k) Plan, employees may contribute between 2% and 10% of their base salary
up to certain limits. The 401(k) Plan provides for Company matching
contributions not to exceed 2% of the employee's compensation or, if less, 50%
of the employee's contribution. Vesting of the Company contribution begins at
25% after one year of service and increases by 25% each year until full vesting
occurs. The Company's contribution expense was $252 in 1993, $207 in 1992 and
$177 in 1991.
The Company maintains a non-contributory profit sharing plan for eligible
hourly employees not covered by the 401(k) Plan who are 21 years of age with
one or more years of service. Contributions are at the discretion of the
Company and fully vest to the employee upon completing three years of service.
The Company's contribution expense was $320 in 1993, $260 in 1992 and $231 in
1991.
12. LITIGATION The Company is involved in litigation and various legal
matters, including U.S. Customs claims, which have arisen in the ordinary
course of business. Management believes that the ultimate resolution of any
existing matter will not have a material effect on the Company's financial
position.
On February 15, 1994, a complaint was filed in which the Company
and one of its officers were named as defendants in a purported class action
lawsuit brought on behalf of purchasers of the Company's stock between November
15, 1993 and February 10, 1994. The suit alleges material misstatements and
omissions were made by the Company in the Company's public filings and
statements in 1993. The named plaintiff contends he suffered damages as a
result of his December 1993 purchase of fifty shares of the Company's Class A
Common Stock. To date, the court has not approved the formation of a class nor
has the plaintiff specified damages sought in this action. While the suit is in
its preliminary stages, based on an initial review, and after consultation with
counsel, management believes the allegations are without merit. Accordingly,
management does not expect the outcome of such litigation to have a material
adverse effect on the financial statements. The Company intends to defend this
proceeding vigorously.
<TABLE>
13. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a tabulation of the quarterly results of operations for the
years ended December 31, 1993 and 1992, respectively (Dollars in Thousands
Except Per Share Data):
<CAPTION>
Quarter Ended
1993 April 2 July 2 October 1 December 31
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $70,606 $84,849 $140,261 $123,202
Gross profit 27,467 30,586 49,846 44,808
Net income 2,332 1,912 11,241 7,036
Earnings per share $ .21 $ .17 $ 1.00 $ .62
======================================================================
</TABLE>
<TABLE>
<CAPTION>
1992 March 27 June 26 September 25 December 31
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $52,788 $57,674 $ 92,281 $ 88,625
Gross profit 18,546 20,635 34,899 33,778
Net income 851 364 6,887 4,817
Earnings per share $ .08 $ .03 $ .63 $ .44
======================================================================
</TABLE>
<PAGE> 1
Exhibit 16
Arthur
Andersen
Arthur Andersen & Co.
One International Place
Boston, MA 02110-2604
617-330-4000
March 29, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read The Timberland Company's disclosure regarding the change in
accountants during 1992, contained in the Company's Annual Report on Form 10-K
dated March 22, 1994, and are in agreement with the statement contained therein.
Very truly yours,
/s/ Arthur Andersen & Co.
<PAGE> 1
<TABLE>
<CAPTION>
Exhibit 21
<S> <C>
Name of Subsidiary Jurisdiction of Organization
The Outdoor Footwear Company Delaware
Timberland Aviation, Inc. Delaware
Timberland Direct Sales, Inc. Delaware
Timberland Europe, Inc. Delaware
The Timberland Finance Company Delaware
Timberland International, Inc. Delaware
Timberland International Sales Corporation U.S. Virgin Islands
Timberland Manufacturing Company Delaware
Timberland Retail Inc. Delaware
Timberland Scandinavia, Inc. Delaware
The Timberland World Trading Company Delaware
Component Footwear (Dominicana), S.A. Dominican Republic
The Recreational Footwear Company (Dominicana), S.A. Dominican Republic
The Recreational Footwear Company Grand Cayman Islands
The Timberland Company of Australia Pty. Ltd. Australia
Timberland Espana, S.A. Spain
Timberland Footwear & Clothing Company Inc. Canada
Les Vetements & Chaussures Timberland Inc.
Timberland Footwear & Clothing New Zealand Limited New Zealand
Timberland GmbH Austria
Timberland S.A.R.L. France
Timberland (U.K.) Ltd. United Kingdom
Timberland World Trading GmbH Germany
</TABLE>
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
33-67128, 33-50998, 33-17552, 33-41660 and 33-19183 of The Timberland Company
on Form S-8 of our reports dated February 15, 1994, appearing in and
incorporated by reference in the Annual Report on Form 10-K of The Timberland
Company for the year ended December 31, 1993.
/s/ Deloitte & Touche
Boston, Massachusetts
March 16, 1994
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in Registration Statements Nos. 33-67128, 33-50998, 33-17552,
33-41660 and 33-19183 of The Timberland Company on Form S-8 of our report dated
February 12, 1992 appearing in the Annual Report on Form 10-K of The Timberland
Company for the year ended December 31, 1993.
/s/ Arthur Andersen & Co.
Arthur Andersen & Co.
Boston Massachusetts
March 14, 1994
