<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
--------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the transition period from to
------------- -------------
Commission File Number 1-9548
------
The Timberland Company
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 02-0312554
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
200 Domain Drive, Stratham, New Hampshire 03885
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (603) 772-9500
---------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
On April 28, 1995, 8,219,649 shares of the registrant's Class A Common Stock
were outstanding and 2,735,381 shares of the registrant's Class B Common Stock
were outstanding.
<PAGE> 2
<TABLE>
THE TIMBERLAND COMPANY
FORM 10-Q
TABLE OF CONTENTS
<CAPTION>
Page(s)
<S> <C>
Independent Accountants' Review Report 1
Part I Financial Information (unaudited)
- ----------------------------------------
Condensed Consolidated Balance Sheets - 2-3
March 31, 1995 and December 31, 1994
Condensed Consolidated Statements of Operations - 4
For the three months ended March 31, 1995
and April 1, 1994
Condensed Consolidated Statements of Cash Flows - 5
For the three months ended March 31, 1995 and
April 1, 1994
Notes to Condensed Consolidated Financial Statements 6-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-10
Part II Other Information 11
- -------------------------
</TABLE>
<PAGE> 3
Form 10-Q
Page 1
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
- --------------------------------------
To the Stockholders and Board of Directors of
The Timberland Company:
We have reviewed the accompanying condensed consolidated balance sheet of The
Timberland Company and subsidiaries as of March 31, 1995, and the related
condensed consolidated statements of income and cash flows for the three-month
period ended March 31, 1995 and April 1, 1994. These condensed consolidated
financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to such condensed consolidated financial statements for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of The Timberland Company and
subsidiaries as of December 31, 1994, and the related consolidated statements
of income, changes in stockholders' equity, and cash flows for the year then
ended (not presented herein); and, in our report dated February 9, 1995, we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1994, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
was derived.
Deloitte & Touche LLP
Boston, Massachusetts
April 24, 1995
<PAGE> 4
Form 10-Q
Page 2
Part I Financial Information
- ----------------------------
<TABLE>
THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
March 31, December 31,
1995 1994
--------- ----------
<S> <C> <C>
Current assets
Cash and equivalents $ 2,037 $ 6,381
Accounts receivable, net 122,473 128,435
Inventories 229,308 218,219
Prepaid expenses 11,686 13,504
Deferred and refundable income taxes 7,106 7,112
--------- ----------
Total current assets 372,610 373,651
--------- ----------
Property, plant and equipment, at cost 113,536 110,650
Less accumulated depreciation and amortization (46,227) (42,417)
--------- ----------
Net property, plant and equipment 67,309 68,233
--------- ----------
Excess of cost over fair value of net assets
acquired, net 25,535 25,956
--------- ----------
Other assets, net 5,748 5,424
--------- ----------
$ 471,202 $ 473,264
========= ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 5
Form 10-Q
Page 3
<TABLE>
THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(Dollars in Thousands)
(Unaudited)
<CAPTION>
March 31, December 31,
1995 1994
--------- ------------
<S> <C> <C>
Current liabilities
Notes payable $ 26,901 $ 22,513
Current maturities of long-term obligations 7,994 8,048
Accounts payable 24,007 37,035
Accrued expenses
Payroll and related 8,524 6,038
Interest and other 27,166 24,459
Income taxes payable 1,755 9,029
--------- ----------
Total current liabilities 96,347 107,122
--------- ----------
Long-term obligations, less current maturities 207,008 206,767
--------- ----------
Deferred income taxes 10,535 10,285
--------- ----------
Deferred income 4,946 -
--------- ----------
Stockholders' equity
Preferred stock, $.01 par value; 2,000,000 shares authorized;
none issued - -
Class A Common Stock, $.01 par value (1 vote per share);
30,000,000 shares authorized; 8,237,519 shares issued
at March 31, 1995 and 8,221,615 shares at
December 31, 1994 82 82
Class B Common Stock, $.01 par value (10 votes per share);
15,000,000 shares authorized; 2,735,381 shares issued
at March 31, 1995 and 2,737,121 shares at
December 31, 1994 27 27
Additional paid-in capital 57,902 57,756
Retained earnings 92,735 91,816
Cumulative translation adjustment 1,740 (471)
Less treasury stock at cost, 18,369 shares at March 31,
1995 and December 31, 1994 (120) (120)
--------- ----------
152,366 149,090
--------- ----------
$471,202 $473,264
========= ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 6
Form 10-Q
Page 4
<TABLE>
THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
<CAPTION>
For the
Three Months Ended
------------------
March 31, April 1,
1995 1994
-------- --------
<S> <C> <C>
Net sales $141,397 $108,093
Cost of goods sold 96,611 75,602
-------- --------
Gross profit 44,786 32,491
-------- --------
Operating expenses
Selling 33,491 22,577
General and administrative 11,671 10,232
Amortization of goodwill 421 194
-------- --------
Total operating expenses 45,583 33,003
-------- --------
Operating loss (797) (512)
-------- --------
Other expense (income)
Interest expense 5,116 1,885
Other, net (7,396) 215
-------- --------
Total other expense (income) (2,280) 2,100
-------- --------
Income (loss) before income taxes 1,483 (2,612)
-------- --------
Provision (benefit) for income taxes 564 (993)
-------- --------
Net income (loss) $ 919 $ (1,619)
======== ========
Earnings (loss) per share $ .08 $ (.14)
======== ========
Weighted average shares outstanding 11,139 11,232
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 7
Form 10-Q
Page 5
<TABLE>
THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
For the
Three Months Ended
------------------
March 31, April 1,
1995 1994
---------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 919 $ (1,619)
Gain on distributorship transaction (7,358) -
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Deferred income taxes 250 160
Depreciation and amortization 4,536 3,339
Increase (decrease) in cash from changes in working
capital items, net of effects of distributorship transaction:
Accounts receivable 3,830 1,707
Inventories (15,921) (37,471)
Prepaid expenses 1,844 (1,028)
Bank overdraft, net - 4,236
Accounts payable (13,002) (10,805)
Accrued expenses 3,326 7,802
Income taxes (7,268) (1,327)
---------- --------
Net cash used in operating activities (28,844) (35,006)
---------- --------
Cash flows from investing activities:
Proceeds from distributorship transaction 24,000 -
Additions to property, plant and equipment, net (3,939) (4,747)
Other, net (574) (756)
---------- --------
Net cash provided in investing activities 19,487 (5,503)
---------- --------
Cash flows from financing activities:
Net borrowings under short-term credit facilities 4,371 37,284
Proceeds from long-term debt 525 -
Payments on long-term debt and capital lease obligations (322) (164)
Issuance of common stock 146 92
---------- --------
Net cash provided by financing activities 4,720 37,212
---------- --------
Effect of exchange rate changes on cash 293 16
---------- --------
Net decrease in cash and equivalents (4,344) (3,281)
Cash and equivalents at beginning of period 6,381 3,281
---------- --------
Cash and equivalents at end of period $ 2,037 $ -
========== ========
Supplemental disclosures of cash flow information:
Interest paid $ 792 $ 720
Income taxes paid 7,582 191
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 8
Form 10-Q
Page 6
THE TIMBERLAND COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain the adjustments necessary to
present fairly the Company's financial position, results of operations
and changes in cash flows for the interim periods presented. Such
adjustments consisted of normal recurring items. The unaudited
condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto included in the Company's annual report on Form 10-K for the
year ended December 31, 1994.
2. The results of operations for the three months ended March 31, 1995
are not necessarily indicative of the results to be expected for the
full year. Historically, the Company's revenues have been more
heavily weighted to the second half of the year.
<TABLE>
3. Inventories consist of the following (in thousands):
<CAPTION>
March 31, 1995 December 31, 1994
-------------- -----------------
<S> <C> <C>
Raw materials $ 17,069 $ 19,806
Work-in-process 10,765 13,137
Finished goods 201,474 185,276
--------- ---------
$ 229,308 $ 218,219
========= =========
</TABLE>
4. Indebtedness
On March 14, 1995, the Company amended its revolving credit agreement
to increase the committed credit amount to $125 million from $91.6
million at December 31, 1994, and to extend the term to February 28,
1997 from May 30, 1996.
5. Other Income
On January 26, 1995, the Company appointed Inchcape plc
("Inchcape") as the exclusive distributor of Timberland(R) products
throughout most of the Asia/Pacific region. The agreement included
Inchcape's acquisition of the Company's Australian and New Zealand
subsidiaries and future consideration provided to Inchcape for the
total sum of $24 million. The transaction resulted in a non-recurring
gain of approximately $7.4 million. The future consideration of $6.0
million on the transaction date is reported in the condensed
consolidated balance sheet as deferred income and is being amortized to
income as products are shipped to the Company's former subsidiaries.
In 1994, net sales of the Company's Australian and New Zealand
subsidiaries combined accounted for less than 2% of total consolidated
net sales.
6. 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
consolidated financial statements.
The Company and two of its officers and directors have been named as
defendants in two actions filed in the United States District Court for
the District of New Hampshire, one filed by Jerrold Schaffer on
December 12, 1994, and the other filed by Gershon Kreuser on
January 4, 1995. The suits, which are each brought by purported
purchasers of the Company's Class A Common Stock ("Common Stock"),
allege that the defendants violated the federal securities laws by
making material misstatements and omissions in certain of the Company's
public filings and statements in 1994. Specifically, the complaints
allege that such statements and omissions had the effect of
artificially inflating the market price for the Company's Common Stock
until the disclosure by the Company on December 9, 1994, of its
expectation that results for the fourth quarter were not likely to meet
analysts' anticipated levels. The suits seek class action status, with
the Schaffer complaint embracing all purchasers of the Company's Common
Stock between October 25, 1994 and December 9, 1994, and the Krueser
complaint including such purchasers between February 15, 1994 and
December 9, 1994. Damages are unspecified. On April 24, 1995, the
District Court granted the plaintiffs' motion, assented to by the
defendants, to consolidate the two suits. The plaintiffs are required
to file a single consolidated amended complaint with the District Court
by June 23, 1995.
While this action is in its preliminary stages, and although plaintiffs
have yet to file their consolidated amended complaint, 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 these proceedings vigorously.
<PAGE> 9
Form 10-Q
Page 7
THE TIMBERLAND COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. Subsequent Event
On April 24, 1995, the Company announced the closing of its
manufacturing facilities in Boone, North Carolina and Mountain City,
Tennessee effective June 28, 1995, and planned reductions in its
manufacturing operations in the Dominican Republic. These actions are
estimated to result in a one-time pre-tax charge of approximately $16
million against earnings for the second quarter of 1995. After these
plants are closed, the Company will have two manufacturing facilities:
one in Puerto Rico and one in the Dominican Republic. All other
product will be sourced by the Company from contract manufacturers.
<PAGE> 10
Form 10-Q
Page 8
<TABLE>
THE TIMBERLAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
RESULTS OF OPERATIONS
- ---------------------
The following table sets forth selected items in the Company's condensed
consolidated statements of operations as percentages of net sales for the
periods indicated.
<CAPTION>
For the
Three Months Ended
----------------------------
March 31, April 1,
1995 1994
--------- -----------
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of goods sold 68.3 69.9
----- -----
Gross profit 31.7 30.1
----- -----
Operating expenses
Selling 23.7 20.9
General and administrative 8.3 9.5
Amortization of goodwill .3 .2
----- -----
Total operating expenses 32.2 30.5
----- -----
Operating loss (.6) (.5)
----- -----
Other expense (income)
Interest expense 3.6 1.7
Other, net (5.2) .2
----- -----
Total other expense (income) (1.6) 1.9
----- -----
Income (loss) before income taxes 1.0 (2.4)
Provision (benefit) for income taxes .4 (.9)
----- -----
Net income (loss) .7% (1.5)%
===== =====
<FN>
Note: Percentages may not add due to rounding.
</TABLE>
First Quarter 1995 Compared with First Quarter 1994
- ---------------------------------------------------
Net sales for the first quarter of 1995 were $141.4 million, an increase of
30.8% compared to the $108.1 million reported in the comparable prior year
period. The increase was attributable to an overall increase in the number of
footwear, apparel and accessory units sold. Although the sales increase was
substantial, unusually warm weather and a soft retail environment in the first
quarter negatively impacted sales.
<PAGE> 11
Form 10-Q
Page 9
First Quarter 1995 Compared with First Quarter 1994 (continued)
- ---------------------------------------------------
Net sales of footwear increased $14.5 million, or 15.9%, in the first quarter
of 1995, compared to the same period in 1994. Net sales attributable to
apparel and accessories increased $18.8 million, or 110.5% off a smaller base,
in the first quarter of 1995, compared to the same period in 1994.
International sales for the first quarter of 1995 were up 47.1%, compared to
the same period in the prior year.
Gross profit as a percentage of net sales for the first quarter of 1995 was
31.7%, compared to 30.1% for the first quarter of 1994. The improvement in
gross margin reflects cost efficiencies in product procurement offset in part
by pricing pressure in the retail environment.
Operating expenses were $45.6 million in the first quarter of 1995 compared to
$33.0 million in the first quarter of 1994. Operating expenses as a percentage
of net sales in the first quarter of 1995 were 32.2%, compared with 30.5% in the
first quarter of 1994. This was due primarily to the higher operating costs
associated with our retail organization.
Interest expense for the first quarter of 1995 increased by $3.2 million to
$5.1 million over the comparable period in 1994, primarily as a result of
increased borrowings to support higher inventory levels and higher interest
rates.
For the first quarter of 1995, other expense (income) includes a non-recurring
pre-tax gain of $7.4 million resulting from the Company's appointment on
January 26, 1995 of Inchcape plc as the exclusive distributor of Timberland(R)
products throughout most of the Asia/Pacific region. The agreement included
Inchcape's acquisition of the Company's Australian and New Zealand subsidiaries
and future consideration provided to Inchcape for a total sum of $24 million.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash used by operations during the first quarter of 1995 was $28.8 million,
compared to $35.0 million in the same period in 1994. Net cash used
by operations was adversely affected by increased levels of inventories and
reductions in accounts payable. Although accounts receivable have declined $6.0
million from year end 1994, accounts receivable have increased $31.0 million
since April 1, 1994 primarily as the result of the Company's continued growth
and increased wholesale days sales outstanding to 86 days at March 31, 1995
compared to 79 days at April 1, 1994. Inventories increased $11.1 million
since year end 1994 to support future anticipated sales increases. Inventory
turns were 1.7 times for the first quarter of 1995 compared to 2.2 times for
the same period in 1994.
During the first three months of 1995, $19.5 million of cash was provided from
financing activities, due to $24 million of cash proceeds received from the
agreement with Inchcape plc. These proceeds were partially offet by capital
expenditures for the first quarter of 1995 of $3.9 million, compared to $4.7
million for the same period in 1994. The increase in the level of total
borrowings since year-end 1994 is due primarily to the higher inventory
levels. The Company uses unsecured revolving and committed lines of
credit as the primary sources of financing for its seasonal and other working
capital requirements. On March 14, 1995, the Company amended its revolving
credit agreement to increase the committed credit amount to $125 million from
$91.6 million at December 31, 1994, and to extend the term to February 28, 1997
from May 30, 1996. The Company's debt to capital ratio was 61.4% at March 31,
1995 and at December 31, 1994.
Management believes that the Company's capital needs for 1995 will be met
through the credit facilities and cash flows from operation without the need
for additional permanent financing.
<PAGE> 12
Form 10-Q
Page 10
OTHER
- -----
On April 24, 1995, the Company announced the closing of its manufacturing
facilities in Boone, North Carolina and Mountain City, Tennessee effective June
28, 1995, and planned reductions in its manufacturing operations in the
Dominican Republic. These actions are estimated to result in a one-time
pre-tax charge of approximately $16 million against earnings for the second
quarter of 1995. After these plants are closed, the Company will have two
manufacturing facilities: one in Puerto Rico and one in the Dominican
Republic. All other product will be sourced by the Company from contract
manufacturers.
<PAGE> 13
Form 10-Q
Page 11
Part II Other Information
- -------------------------
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Description
------- -----------
(10) Material Contracts
10.13 Amended and Restated Credit Agreement
dated as of March 14, 1995 among The
Timberland Company, certain banks
listed therein and Morgan Guaranty
Trust Company of New York, as Agent.
27 Financial Data Schedule
(b) Reports on Form 8-K -- There were no reports on Form 8-K filed
during the period covered by this report.
Signatures
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Timberland Company
----------------------------
(Registrant)
Date: May 12, 1995 /s/ Keith D. Monda
----------------------------
Keith D. Monda
Senior Vice President -
Finance and Administration
and Chief Financial Officer
Date: May 12, 1995 /s/ Dennis W. Hagele
----------------------------
Dennis W. Hagele
Vice President Finance
and Corporate Controller
(Chief Accounting Officer)
<PAGE> 1
CONFORMED COPY
$125,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
March 14, 1995
among
The Timberland Company
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Accounting Terms and Determinations . . . . . . . . . . 19
SECTION 1.03. Types of Borrowings . . . . . . . . . . . . . . . . . . 20
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend . . . . . . . . . . . . . . . . . . 20
SECTION 2.02. Notice of Committed Borrowings . . . . . . . . . . . . 21
SECTION 2.03. Money Market Borrowings . . . . . . . . . . . . . . . . 21
SECTION 2.04. Notice to Banks; Funding of Loans . . . . . . . . . . . 25
SECTION 2.05. Notes . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.06. Maturity of Loans . . . . . . . . . . . . . . . . . . . 27
SECTION 2.07. Method of Electing Interest Rates . . . . . . . . . . . 27
SECTION 2.08. Interest Rates. . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.09. Facility Fees . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.10. Mandatory Termination of Commitments . . . . . . . . . 33
SECTION 2.11. Optional Termination or Reduction of Commitments. . . . 33
SECTION 2.12. Optional Prepayments. . . . . . . . . . . . . . . . . . 34
SECTION 2.13. Mandatory Prepayments . . . . . . . . . . . . . . . . . 34
SECTION 2.14. General Provisions as to Payments . . . . . . . . . . . 35
SECTION 2.15. Funding Losses. . . . . . . . . . . . . . . . . . . . . 36
SECTION 2.16. Computation of Interest and Fees. . . . . . . . . . . . 36
SECTION 2.17. Judgment Currency . . . . . . . . . . . . . . . . . . . 36
SECTION 2.18. Foreign Subsidiary Costs. . . . . . . . . . . . . . . . 37
</TABLE>
<PAGE> 3
ARTICLE III
CONDITIONS
<TABLE>
<S> <C> <C>
SECTION 3.01. Effectiveness . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.02. Consequences of Effectiveness . . . . . . . . . . . . . 39
SECTION 3.03. Borrowings. . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 3.04. First Borrowing by Each Eligible Subsidiary . . . . . . 40
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Corporate Existence and Power . . . . . . . . . . . . . 41
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention . . . . . . . . . . . . . . . . . . . 41
SECTION 4.03. Binding Effect . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.04. Financial Information . . . . . . . . . . . . . . . . . 41
SECTION 4.05. Litigation. . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.06. Compliance with ERISA . . . . . . . . . . . . . . . . . 42
SECTION 4.07. Environmental Matters . . . . . . . . . . . . . . . . . 43
SECTION 4.08. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.09. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.10. Not an Investment Company . . . . . . . . . . . . . . . 44
SECTION 4.11. Full Disclosure . . . . . . . . . . . . . . . . . . . . 44
ARTICLE V
COVENANTS
SECTION 5.01. Information . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.02. Payment of Obligations. . . . . . . . . . . . . . . . . 47
SECTION 5.03. Maintenance of Property; Insurance. . . . . . . . . . . 48
SECTION 5.04. Conduct of Business and Maintenance of Existence. . . . 48
SECTION 5.05. Compliance with Laws. . . . . . . . . . . . . . . . . . 48
SECTION 5.06. Inspection of Property, Books and Records . . . . . . . 49
SECTION 5.07. Fixed Charge Coverage Ratio . . . . . . . . . . . . . . 49
SECTION 5.08. Debt. . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 5.09. Minimum Consolidated Tangible Net Worth . . . . . . . . 50
SECTION 5.10. Restricted Payments . . . . . . . . . . . . . . . . . . 51
SECTION 5.11. Investments . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.12. Maintenance of Ownership of Subsidiaries. . . . . . . . 52
SECTION 5.13. Negative Pledge . . . . . . . . . . . . . . . . . . . . 52
SECTION 5.14. Consolidations, Mergers and Sales of Assets . . . . . . 53
SECTION 5.15. Restrictions on Prepayments of and Amendments to
Certain Debt. . . . . . . . . . . . . . . . . . . . . . 54
SECTION 5.16. Transactions with Affiliates. . . . . . . . . . . . . . 54
SECTION 5.17. Use of Proceeds . . . . . . . . . . . . . . . . . . . . 55
SECTION 5.18. Leverage Ratio. . . . . . . . . . . . . . . . . . . . . 55
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . 56
SECTION 6.02. Notice of Default . . . . . . . . . . . . . . . . . . . 59
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization . . . . . . . . . . . . . 59
SECTION 7.02. Agent and Affiliates. . . . . . . . . . . . . . . . . . 59
SECTION 7.03. Action by Agent . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.04. Consultation with Experts . . . . . . . . . . . . . . . 59
SECTION 7.05. Liability of Agent. . . . . . . . . . . . . . . . . . . 59
SECTION 7.06. Indemnification . . . . . . . . . . . . . . . . . . . . 60
SECTION 7.07. Credit Decision . . . . . . . . . . . . . . . . . . . . 60
SECTION 7.08. Successor Agent . . . . . . . . . . . . . . . . . . . . 60
SECTION 7.09. Agent's Fee . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8.02. Illegality. . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 8.03. Increased Cost and Reduced Return . . . . . . . . . . . 63
SECTION 8.04. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.05. Base Rate Loans Substituted for Affected
Fixed Rate Loans . . . . . . . . . . . . . . . . . . . 66
</TABLE>
<PAGE> 4
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF ELIGIBLE SUBSIDIARIES
<TABLE>
<S> <C> <C>
SECTION 9.01. Corporate Existence and Power . . . . . . . . . . . . 67
SECTION 9.02. Corporate and Governmental Authorization;
Contravention . . . . . . . . . . . . . . . . . . . . 67
SECTION 9.03. Binding Effect. . . . . . . . . . . . . . . . . . . . 67
SECTION 9.04. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE X
GUARANTY
SECTION 10.01. The Guaranty . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.02. Guaranty Unconditional . . . . . . . . . . . . . . . . 68
SECTION 10.03. Discharge Only Upon Payment In Full; Reinstatement
in Certain Circumstances . . . . . . . . . . . . . . . 69
SECTION 10.04. Waiver by the Company. . . . . . . . . . . . . . . . . 69
SECTION 10.05. Subrogation. . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.06. Stay of Acceleration . . . . . . . . . . . . . . . . . 70
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices. . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.02. No Waivers . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.03. Expenses; Documentary Taxes; Indemnification . . . . . 71
SECTION 11.04. Sharing of Set-Offs. . . . . . . . . . . . . . . . . . 71
SECTION 11.05. Amendments and Waivers . . . . . . . . . . . . . . . . 72
SECTION 11.06. Successors and Assigns . . . . . . . . . . . . . . . . 72
SECTION 11.07. Collateral . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 11.08. Confidentiality. . . . . . . . . . . . . . . . . . . . 74
SECTION 11.09. Governing Law; Submission to Jurisdiction. . . . . . . 75
SECTION 11.10. Counterparts; Integration. . . . . . . . . . . . . . . 75
SECTION 11.11. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . 75
</TABLE>
<PAGE> 5
Schedule I - Existing Debt and Liens
Schedule II - Subsidiaries
Schedule III - Approved Foreign Distributors
Exhibit A - Note
Exhibit B - Notice of Committed Borrowing
Exhibit C - Money Market Quote Invitation
Exhibit D - Money Market Quote
Exhibit E - Opinion of Counsel for the Company
Exhibit F - Opinion of Special Counsel for the Agent
Exhibit G - Form of Election to Participate
Exhibit H - Form of Election to Terminate
Exhibit I - Opinion of Counsel for the Borrower
Exhibit J - Form of Assignment and Assumption Agreement
<PAGE> 6
AMENDED AND RESTATED CREDIT AGREEMENT
AGREEMENT dated as of March 14, 1995 among THE TIMBERLAND COMPANY, the
BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent.
WHEREAS, the Company, each of the banks party thereto and Morgan
Guaranty Trust Company of New York, as agent, are parties to a $125,000,000
Credit Agreement dated as of May 4, 1994, as amended by Amendment No. 1 thereto
dated as of December 9, 1994 (the "Existing Credit Agreement");
WHEREAS, the parties hereto desire to amend and restate the Existing
Agreement to read in its entirety as set forth herein;
NOW, THEREFORE, the parties hereto hereby agree to amend and restate the
Existing Credit Agreement to read in its entirety 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.
"Adjusted CD Rate" has the meaning set forth in Section 2.08(b).
"Adjusted Interbank Offered Rate" has the meaning set forth in Section
2.08(c).
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Company) duly completed by such Bank.
"Affiliate" means (i) any Person that directly, or indirectly through one
or more intermediaries, controls the Company (a "Controlling Person") or (ii)
any Person (other than the Company or a Subsidiary) which is controlled by or is
under common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agent" means Morgan Guaranty Trust Company of New York in its capacity
as agent for the Banks hereunder, and its successors in such capacity.
"Amendment Effective Date" means the date this Agreement becomes
effective in accordance with Section 3.01.
"Applicable Certificate" means, for any day, the certificate that, as of
the date two days prior to such day, was most recently required to be delivered
pursuant to Section 5.01(e).
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its
Money Market Loans, its Money Market Lending Office.
"April 1994 Private Placement Debt" means Debt in respect of the
Company's 7.16% Senior Unsecured Notes due April 2000 issued in April 1994, as
the same may, subject to Section 5.15, be amended from time to time.
"Assessment Rate" has the meaning set forth in Section 2.08(b).
"Assignee" has the meaning set forth in Section 11.06(c).
"Available Amount" means, on any day, the lesser of (i) the aggregate
amount of the Commitments on such day and (ii) the Borrowing Base for such day.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 11.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and
<PAGE> 7
(ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day.
"Base Rate Loan" means (i) a Committed Loan which bears interest at a
rate determined on the basis of the Base Rate pursuant to the applicable Notice
of Committed Borrowing or Notice of Interest Rate Election or the provisions of
Article VIII or (ii) an overdue amount which was a Base Rate Loan immediately
before it became overdue.
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by any member of the ERISA
Group.
"Borrower" means the Company or any Eligible Subsidiary, as the context
may require, and their respective successors, and "Borrowers" means all of the
foregoing.
"Borrowing" has the meaning set forth in Section 1.03.
"Borrowing Base" means, for any day, an amount equal to (i) 85% of the
aggregate amount of Eligible Receivables set forth in the Applicable Certificate
for such day plus (ii) if such day occurs during the period from April 1 of any
calendar year through August 31 of such calendar year, 20% of the Footwear
Inventory Component set forth in the Applicable Certificate for such day less
(iii) the sum of (A) the amount by which the aggregate principal amount of Debt
(other than Permitted Short-Term Debt) of the Company incurred on or after May
4, 1994 outstanding on such day exceeds $75,000,000 and (B) the aggregate
principal amount of Permitted Short-Term Debt outstanding on such day.
"Borrowing Base Period" means a period beginning on the second day after
the Company is required to deliver a certificate pursuant to Section 5.01(e) in
any month and ending on the day after the Company is so required to deliver such
a certificate in the succeeding calendar month.
"Calculation Period" means, with respect to any day, the period of four
consecutive fiscal quarters of the Company ending on the last day of the most
recently ended fiscal quarter of the Company as to which the Company shall have
delivered a certificate pursuant to Section 5.01(c).
"CD Base Rate" has the meaning set forth in Section 2.08(b).
"CD Loan" means (i) a Committed Loan which bears interest at a CD Rate
pursuant to the applicable Notice of Committed Borrowing or Notice of Interest
Rate Election or (ii) an overdue amount which was a CD Loan immediately before
it became overdue.
"CD Margin" has the meaning set forth in Section 2.08(b).
"CD Rate" means a rate of interest determined pursuant to Section 2.08(b)
on the basis of an Adjusted CD Rate.
"CD Reference Banks" means ABN AMRO Bank N.V., The First National Bank of
Boston and Morgan Guaranty Trust Company of New York.
"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 Section 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 1993 Form 10-K" means the Company's annual report on Form 10-K
for 1993 as filed with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934.
"Company's Latest Form 10-Q" means the Company's quarterly report on Form
10-Q for the quarter ended September 30, 1994, 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.
<PAGE> 8
"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 (C)
consolidated taxes of the Company and its Consolidated Subsidiaries for such
period and (D) up to $19,000,000 (calculated on a pre-tax basis) of certain
extraordinary items that may be booked after the Amendment Effective Date.
"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 (i) any write-ups or write-downs resulting from foreign currency translations
after December 31, 1994 or (ii) up to $19,000,000 (calculated on a pre-tax
basis) of certain extraordinary items that may be booked after the Amendment
Effective Date) 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, 1993 in the book
value of any asset owned by the Company or a Consolidated Subsidiary, (ii) all
Investments in unconsolidated Subsidiaries and all equity investments in Persons
which are not Subsidiaries and (iii) all unamortized debt discount and expense,
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, anticipated future benefit of tax loss carry-forwards, copyrights,
organization or developmental expenses and other intangible assets.
"Continuing Money Market Loans" has the meaning set forth in Section
3.01(e).
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all non-contingent
obligations (and, for purposes of Section 5.13 and the definitions of Material
Debt and Material Financial Obligations, all contingent obligations) of such
Person to reimburse or prepay any bank or other Person in respect of amounts
paid under a letter of credit, banker's acceptance or similar instrument,
whether drawn or undrawn, (vi) all Debt of others secured by a Lien on any asset
of such Person, whether or not such Debt is assumed by such Person, and (vii)
all Debt of others Guaranteed by such Person.
"December 1994 Private Placement Debt" means Debt in respect of the
Company's 8.94% Senior Unsecured Notes due December 2001 issued in December
1994, as the same may, subject to Section 5.15, be amended from time to time.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the
<PAGE> 9
foregoing transactions.
"Domestic Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City or Boston are authorized by law
to close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Company and the Agent; provided that any Bank may so designate
separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references herein to the
Domestic Lending Office of such Bank shall be deemed to refer to either or both
of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in Section
2.08(b).
"Election to Participate" means an Election to Participate substantially
in the form of Exhibit G hereto.
"Election to Terminate" means an Election to Terminate substantially in
the form of Exhibit H hereto.
"Eligible Receivables" means, at any date, the aggregate of the unpaid
portions at such date of assets ("Receivables") which were or would have been
included as accounts receivable on the consolidated balance sheet referred to in
Section 4.04(a), net of any credits, rebates, offsets or other adjustments to
such Receivables owed to any of the account debtors from which such Receivables
are due and also net of any commissions payable to third parties which are
adjustments to such Receivables, and excluding the following (determined without
duplication):
(a) any Receivable as to which there is any unresolved dispute with the
account debtor (including any offset or counterclaim by the account debtor),
but only to the extent of such dispute,
(b) (i) any Receivable which, at the date of the original issuance of the
invoice therefor, was payable more than 90 days (or, in the case of a
Receivable that represents the purchase price of boots sold by the Company or
any of its Subsidiaries, 270 days) from such date or (ii) any Receivable which
remains unpaid more than 60 days after the due date for payment specified at
the time of the original issuance of the invoice therefor, and
(c) unless in any of the following cases the relevant account debtor has
previously been approved by the Required Banks (through the Agent) as an
eligible account debtor for purposes of this Agreement, all Receivables due
from any account debtor (i) which is a distributor organized outside the
United States of America or whose principal place of business is located
outside the United States of America, unless (A) such Receivable is insured
under policies of insurance issued by insurance companies with an A.M. Best
policyholders ratings of not less than B+, but only to the extent of such
insurance and less any deductible or similar amount, (B) to the extent, but
only to the extent, such Receivable is fully backed by a letter of credit, in
form and substance satisfactory to the Required Banks and issued by (1) a
Bank, (2) a bank or other Person the long-term senior unsecured debt of which
is rated A or higher by Standard & Poor's Corporation or A or higher by
Moody's Investor Service, Inc. and is not rated lower than A by Standard &
Poor's Corporation or A by Moody's Investor Service, Inc., or (3) a bank or
other Person that is reasonably satisfactory to the Required Banks or (C) such
distributor is listed on Schedule III hereto, (ii) which is a Subsidiary or
Affiliate, (iii) which is the subject of bankruptcy, insolvency or similar
proceedings, (iv) which the Required Banks (through the Agent) have notified
the Company does not have a satisfactory credit standing (as reasonably
determined in good faith by the Required Banks), or (v) that, at the time such
Receivable arose, was not in compliance with the credit guidelines, standards
and procedures of the Company as in effect on the date of the Existing Credit
Agreement.
"Eligible Subsidiary" means any Wholly-Owned Consolidated Subsidiary of
the Company as to which an Election to Participate shall have been delivered to
the
<PAGE> 10
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, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to the
environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment, including, without limitation, ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Company, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Company and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or (ii) an overdue amount which was a
Euro-Dollar Loan immediately before it became overdue.
"Euro-Dollar Margin" has the meaning set forth in Section 2.08(c).
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.08(c) on the basis of an Adjusted Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal London offices of ABN
AMRO Bank N.V., The First National Bank of Boston and Morgan Guaranty Trust
Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.08(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Credit Agreement" has the meaning set forth in the recitals
hereto.
"Factorable Receivables" means Receivables of the Company and its
Subsidiaries (i) that are produced in the ordinary course of business, (ii) that
are not contingent upon any further performance, or any product guarantee, by
the Company or any of its Subsidiaries, (iii) arising from sales of inventory
outside the United States and (iv) the account debtors with respect to which
have their principal places of business outside the United States of America.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day; provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day, and (ii) if no such rate is so published on
such next succeeding Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to Morgan Guaranty Trust Company
<PAGE> 11
of New York on such day on such transactions as determined by the Agent.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (i)
Consolidated EBITR for such period to (ii) the sum of (A) Consolidated Interest
Expense for such period, (B) Consolidated Rental Expense for such period and (C)
dividends on preferred stock of the Company and its Consolidated Subsidiaries
for such period (other than any such dividends paid to the Company or its
Consolidated Subsidiaries).
"Fixed Rate Loans" means CD Loans, Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01(a)) or any combination of the foregoing.
"Footwear Inventory Component" means, at any date, the aggregate amount
of footwear inventories at such date that (i) are current or next season
inventories (determined on a basis consistent with the Company's existing
inventory accounting system) and (ii) were or would have been identified as
finished goods in the notes to the consolidated financial statements referred to
in Section 4.04(a).
"Group of Loans" means at any time a group of Committed Loans to the same
Borrower consisting of (i) all such Committed Loans which are Base Rate Loans at
such time or (ii) all such Committed Loans which are Fixed Rate Loans having the
same Interest Period at such time; provided that, if a Committed Loan of any
particular Bank is converted to or made as a Base Rate Loan pursuant to Section
8.02 or 8.05, such Loan shall be included in the same Group or Groups of Loans
from time to time as it would have been in if it had not been so converted or
made.
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part); provided that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydro-carbons, or any substance having any constituent elements displaying any
of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 11.03.
"Interbank Offered Rate" has the meaning set forth in Section 2.08(c).
"Interest Period" means: (1) with respect to each Euro-Dollar Loan, a
period commencing on the date of borrowing specified in the applicable Notice of
Committed Borrowing or on the date specified in the applicable Notice of
Interest Rate Election and ending one, two, three or six months thereafter, as
the Borrower may elect in the applicable notice; provided that:
(a) any Interest Period which would other- wise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business Day
of a calendar month; and
(c) any Interest Period which would other- wise end after the
Termination Date shall end on the Termination Date;
(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
<PAGE> 12
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 other- wise end after the
Termination Date shall end on the Termination Date;
(3) with respect to each Money Market LIBOR Loan, the period commencing on the
date of borrowing specified in the applicable Notice of Money Market Borrowing
and ending such whole number of months thereafter (or periods of not less than
seven days, if available) as the Borrower may elect in accordance with Section
2.03; provided that:
(a) any Interest Period which would other- wise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Euro- Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business Day
of a calendar month; and
(c) any Interest Period which would other- wise end after the
Termination Date shall end on the Termination Date; and
(4) with respect to each Money Market Absolute Rate Loan, the period commencing
on the date of borrowing specified in the applicable Notice of Money Market
Borrowing and ending such number of days thereafter (but not less than seven
days) as the Borrower may elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would other- wise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would other- wise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise.
"LIBOR Auction" means a solicitation of Money Market Quotes setting forth
Money Market Margins based on the Interbank Offered Rate pursuant to Section
2.03.
"Level I Status" exists on any date if (i) the Fixed Charge Coverage
Ratio for the Calculation Period with respect to such date is greater than 3.5
to 1.0 and (ii) the Leverage Ratio as of the last day of each fiscal quarter
included in the Calculation Period with respect to such date is less than 0.75
to 1.0.
"Level II Status" exists on any date if (i) Level I Status does not
exist, (ii) the Fixed Charge Coverage Ratio for the Calculation Period with
respect to such date is greater than 3.2 to 1.0 and (iii) the Leverage Ratio as
of the last day of each fiscal quarter included in the Calculation Period with
respect to such date is less than 0.85 to 1.0.
"Level III Status" exists on any date if neither Level I Status nor Level
II Status exists.
"Leverage Ratio" means, for any date, the ratio of (i) Consolidated Debt
on such date to (ii) Consolidated Net Worth on such date.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, the
Company or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating
<PAGE> 13
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 Loans) of the Company and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal amount exceeding $1,000,000.
"Material Financial Obligations" means a principal or face amount of Debt
and/or payment obligations in respect of Derivatives Obligations of the Company
and/or one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, exceeding in the aggregate $2,500,000 (or, in the case
of foreign exchange transactions, $5,000,000).
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $500,000.
"Money Market Absolute Rate" has the meaning set forth in Section
2.03(c).
"Money Market Absolute Rate Loan" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the Company
and the Agent; provided that any Bank may from time to time by notice to the
Company and the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate
Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of such Bank shall be deemed to refer to either or both of
such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank pursuant to a
LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant
to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section 2.03(c).
"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.
"New Bank" means a financial institution that is a Bank hereunder on the
Amendment Effective Date but is not a Bank (as defined in the Existing Credit
Agreement) immediately prior to the Amendment Effective Date.
"1994 Private Placement Debt" means April 1994 Private Placement Debt and
December 1994 Private Placement Debt.
"Non-Continuing Bank" means a financial institution that is a Bank (as
defined in the Existing Credit Agreement) immediately prior to the Amendment
Effective Date that is not a Bank hereunder on the Amendment Effective Date.
"Note Agreement" means each of the Note Agreements dated as of September
30, 1989 between the Company and the Purchaser named in Schedule I thereto, in
each case as amended, subject to Section 5.15, from time to time.
"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.
<PAGE> 14
"Participant" has the meaning set forth in Section 11.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Factoring Transaction" means any sale or other transfer by the
Company or any of its Subsidiaries of Factorable Receivables, which sale or
transfer does not involve the creation of any recourse obligation in respect
thereof on the part of the Company or any of its Subsidiaries (other than with
respect to matters of title to, and the character (other than the
collectability) of, the Factorable Receivables so sold or transferred); provided
that the aggregate principal amount of Factorable Receivables that may be sold
or transferred pursuant to such sales or transfers during any fiscal year of the
Company may not exceed $15,000,000.
"Permitted Short-Term Debt" means Debt (other than Loans or Debt
permitted under Section 5.08(g)) of the Company or any of its Subsidiaries
having a maturity, at the time such Debt is incurred, of not more than one year
from the date such Debt is incurred.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Quarterly Date" means the last Euro-Dollar Business Day of each March,
June, September and December.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "Reference Bank" means any one
of such Reference Banks.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having more than 50% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing more than 50% of the aggregate unpaid
principal amount of the Loans.
"Restricted Payment" means (i) any dividend or other distribution on any
shares of the Company's capital stock (except dividends payable solely in shares
of its capital stock) or (ii) any payment (other than payments for the
repurchase of shares of the Company's common stock from employees or former
employees of the Company or any of its Subsidiaries pursuant to the 1987
Employee Stock Purchase Plan, the 1991 Employee Stock Purchase Plan or the 1987
Employee Stock Option Plan, in each case as amended (other than to change in any
material respect any provisions relating to repurchases of any such shares) from
time to time (or any successor plans with substantially similar provisions), in
an aggregate amount not to exceed the proceeds received by the Company after the
date hereof of sales of shares of the Company's common stock to employees of the
Company and its Subsidiaries) on account of the purchase, redemption, retirement
or acquisition of (a) any shares of the Company's capital stock or (b) any
option, warrant or other right to acquire shares of the Company's capital stock.
"Subsidiary" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person; unless
otherwise specified, "Subsidiary" means a Subsidiary of the Company.
"Swartz Family" means Sidney W. Swartz, his estate, his spouse, his
lineal descendants, trusts established for his, her or their benefit, the Swartz
Family Charitable Trust and The Sidney W. Swartz 1982 Family Trust.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United
<PAGE> 15
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 February 28, 1997 or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), but only to the extent that
such excess represents a potential liability of a member of the ERISA Group to
the PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the States
and the District of Columbia, but excluding its territories and possessions.
"Wholly-Owned Subsidiary" means any Consolidated Subsidiary all of the
shares of capital stock or other ownership interests of which (except directors'
qualifying shares and, in the case of The Outdoor Footwear Company, shares of
non-voting common stock of The Outdoor Footwear Company issued to employees
thereof under arrangements consistent with past practice) are at the time
directly or indirectly owned by the Company.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Company's
independent public accountants) with the most recent audited consolidated
financial statements of the Company and its Consolidated Subsidiaries delivered
to the Banks; provided that, if the Company notifies the Agent that the Company
wishes to amend any covenant in Article V to eliminate the effect of any change
in generally accepted accounting principles on the operation of such covenant
(or if the Agent notifies the Company that the Required Banks wish to amend
Article V for such purpose), then the Company's compliance with such covenant
shall be determined on the basis of generally accepted accounting principles in
effect immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Company and the Required
Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to a single Borrower
pursuant to Article II on the same date, all of which Loans are of the same type
(subject to Article VIII) and, except in the case of Base Rate Loans, have the
same Interest Period or initial Interest Period. Borrowings are classified for
purposes of this Agreement either by reference to the pricing of Loans
comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing
comprised of Euro-Dollar Loans) or by reference to the provisions of Article II
under which participation therein is determined (i.e., a "Committed Borrowing"
is a Borrowing under Section 2.01 in which all Banks participate in proportion
to their Commitments, while a "Money Market Borrowing" is a Borrowing under
Section 2.03 in which the Bank participants are determined on the basis of their
bids in accordance therewith).
<PAGE> 16
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make loans to the Company
or any Eligible Subsidiary pursuant to this Section from time to time before the
Termination Date in amounts such that the aggregate principal amount of
Committed Loans by such Bank outstanding shall not exceed the amount of its
Commitment. Each Borrowing under this Section shall be in an aggregate principal
amount of (i) $500,000 or any larger multiple of $100,000, in the case of a Base
Rate Borrowing, and (ii) $1,000,000 or any larger multiple of $100,000, in the
case of a Fixed Rate Borrowing (except that any such Borrowing may be in the
aggregate amount available in accordance with Section 3.02(c)) and shall be made
from the several Banks ratably in proportion to their respective Commitments.
Within the foregoing limits, a Borrower may borrow under this Section, prepay
Loans to the extent permitted by Section 2.12, and reborrow at any time before
the Termination Date under this Section. The Commitments shall terminate on the
Termination Date.
SECTION 2.02. Notice of Committed Borrowings. The applicable Borrower
shall give the Agent notice, substantially in the form of Exhibit B hereto (a
"Notice of Committed Borrowing"), not later than 11:30 A.M. (New York City time)
on (x) the date of each Base Rate Borrowing, (y) the second Domestic Business
Day before each CD Borrowing and (z) the third Euro-Dollar Business Day before
each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business Day
in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case
of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to bear interest
initially at the Base Rate, at a CD Rate or at a Euro-Dollar Rate, and
(iv) in the case of a Fixed Rate Borrowing, the duration of the initial
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed Borrowings
pursuant to Section 2.01, any Borrower may, as set forth in this Section,
request the Banks prior to the Termination Date to make offers to make Money
Market Loans to the Borrower. The Banks may, but shall have no obligation to,
make such offers and the Borrower may, but shall have no obligation to, accept
any such offers in the manner set forth in this Section.
(b) Invitation for Money Market Quotes. When a Borrower wishes to
request offers to make Money Market Loans under this Section, it shall transmit
to the Banks by telex or facsimile transmission an Invitation for Money Market
Quotes substantially in the form of Exhibit C hereto so as to be received no
later than 11:00 A.M. (New York City time) on (x) the fourth Euro-Dollar
Business Day prior to the date of Borrowing proposed therein, in the case of a
LIBOR Auction or (y) the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Company and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Invitation for Money Market Quotes for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a Euro-Dollar
Business Day in the case of a LIBOR Auction or a Domestic Business Day in the
case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be $1,000,000 or
a larger multiple of $100,000, provided that the sum of (A) the aggregate
principal amount of all Money Market Loans outstanding and (B) the aggregate
principal amount of all Permitted Short-Term Debt outstanding shall at no time
exceed $50,000,000,
(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.
<PAGE> 17
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 Agent may agree) of any other
Invitation for Money Market Quotes.
(c) Submission and Contents of Money Market Quotes. (i) Each Bank may
submit a Money Market Quote containing an offer or offers to make Money Market
Loans in response to any Invitation for Money Market Quotes. Each Money Market
Quote must comply with the requirements of this subsection (c) and must be
submitted to the Borrower by telex or facsimile transmission at its offices
specified in or pursuant to Section 11.01 not later than (x) 2:00 P.M. (New York
City time) on the third Euro- Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) 9:15 A.M. (New York City time)
on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or,
in either case, such other time or date as the Company and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Invitation for Money Market Quotes for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective). Subject to Articles III
and VI, any Money Market Quote so made shall be irrevocable except with the
written consent of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing, which shall be the proposed date of
Borrowing set forth in the corresponding Invitation for Money Market Quotes,
(B) the principal amount of the Money Market Loan for which each such
offer is being made, which principal amount (w) may be greater than or less
than the Commitment of the quoting Bank, (x) must be $500,000 or a larger
multiple of $100,000, (y) may not exceed the principal amount of Money Market
Loans for which offers were requested and (z) may be subject to an aggregate
limitation as to the principal amount of Money Market Loans for which offers
being made by such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or below the
applicable Interbank Offered Rate (the "Money Market Margin") offered for each
such Money Market Loan, expressed as a percentage (specified to the nearest
1/10,000 of 1%) to be added to or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of interest per
annum (specified to the nearest 1/10,000 of 1%) (the "Money Market Absolute
Rate") offered for each such Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D hereto or does not
specify all of the information required by subsection (c)(ii),
(B) contains qualifying, conditional or similar language,
(C) proposes terms other than or in addition to those set forth in the
applicable Invitation for Money Market Quotes, or
(D) arrives after the time set forth in subsection (c)(i).
(d) Acceptance and Notice by Borrower. Not later than 11:00 A.M. (New
York City time) on (x) the third Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction, or (y) the proposed date of
Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Company and the Agent shall have mutually agreed and
shall have notified the Banks not later than the date of the Invitation for
Money Market Quotes for the first LIBOR Auction or Absolute Rate Auction for
which such change is to be effective), the Borrower shall notify each Bank from
which it has received a Money Market Quote of its acceptance or non-acceptance
of the offers contained in such Money Market Quote; provided that if the
Borrower
<PAGE> 18
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 Agent, shall specify the aggregate
principal amount of offers for each Interest Period that are accepted from each
Bank. The Borrower may accept any Money Market Quote in whole or in part;
provided that:
(i) the aggregate principal amount of each Money Market Borrowing may
not exceed the applicable amount set forth in the related Invitation for Money
Market Quotes,
(ii) the principal amount of each Money Market Borrowing must be
$1,000,000 or a larger multiple of $100,000,
(iii) acceptance of offers may only be made on the basis of ascending
Money Market Margins or Money Market Absolute Rates, as the case may be,
(iv) immediately after the making of the Money Market Loans to be made
pursuant to all accepted Money Market Quotes, the sum of (A) the aggregate
principal amount of all Money Market Loans outstanding and (B) the aggregate
principal amount of all Permitted Short-Term Debt outstanding shall not exceed
$50,000,000, and
(v) the Borrower may not accept any offer that is described in
subsection (c)(iii) or that otherwise fails to comply with the requirements of
this Agreement.
(e) Allocation by Borrower. If offers are made by two or more Banks
with the same Money Market Margins or Money Market Absolute Rates, as the case
may be, for a greater aggregate principal amount than the amount in respect of
which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted shall
be allocated by the Borrower among such Banks as nearly as possible (in
multiples of $100,000, as the Borrower may deem appropriate) in proportion to
the aggregate principal amounts of such offers.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly notify
each Bank of the contents thereof and of such Bank's share, if any, of such
Borrowing and such Notice of Borrowing shall not thereafter be revocable by the
Borrower.
(b) Not later than 1:30 P.M. (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address specified in or pursuant to Section 11.01.
Unless the Agent determines that any applicable condition specified in Article
III has not been satisfied, the Agent will make the funds so received from the
Banks available to the Borrower at the Agent's aforesaid address.
(c) Unless the Agent shall have received notice from a Bank prior to the
date of any Borrowing that such Bank will not make available to the Agent such
Bank's share of such Borrowing, the Agent may assume that such Bank has made
such share available to the Agent on the date of such Borrowing in accordance
with subsection (b) of this Section 2.04 and the Agent may, in reliance upon
such assumption, make available to the applicable Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so
made such share available to the Agent, such Bank and the applicable Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the applicable Borrower until the date such amount is repaid
to the Agent, at (i) in the case of the applicable Borrower, a rate per annum
equal to the higher of the Federal Funds Rate and the interest rate applicable
thereto pursuant to Section 2.08 and (ii) in the case of such Bank, the Federal
Funds Rate. If such Bank shall repay to the Agent such corresponding amount,
such amount so repaid shall constitute such Bank's Loan included in such
Borrowing for purposes of this Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank to each Borrower shall
be evidenced by a single Note of such Borrower payable to the order of such Bank
for the account of its Applicable Lending Office in an amount equal to the
aggregate unpaid principal amount of such Bank's Loans to such Borrower.
(b) Each Bank may, by notice to a Borrower and the Agent, request that its
Loans of a particular type to
<PAGE> 19
such Borrower be evidenced by a separate Note of such Borrower in an amount
equal to the aggregate unpaid principal amount of such Loans. Each such Note
shall be in substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely Loans of the relevant
type. Each reference in this Agreement to a "Note" or the "Notes" of such Bank
shall be deemed to refer to and include any or all of such Notes, as the context
may require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(b) or
3.04(a), the Agent shall forward such Note to such Bank. Each Bank shall record
the date, amount and type of each Loan made by it to each Borrower and the date
and amount of each payment of principal made with respect thereto, and may, if
such Bank so elects in connection with any transfer or enforcement of its Note
of any Borrower, endorse on the schedule forming a part thereof appropriate
notations to evidence the foregoing information with respect to each such Loan
to such Borrower then outstanding; provided that the failure of any Bank to make
any such recordation or endorsement shall not affect the obligations of any
Borrower hereunder or under the Notes. Each Bank is hereby irrevocably
authorized by each Borrower so to endorse its Notes and to attach to and make a
part of any Note a continuation of any such schedule as and when required.
SECTION 2.06. Maturity of Loans. (a) Each Committed Loan shall mature,
and the principal amount thereof shall be due and payable, on the Termination
Date.
(b) Each Money Market Loan included in any Money Market Borrowing shall
mature, and the principal amount thereof shall be due and payable, on the last
day of the Interest Period applicable to such Borrowing.
SECTION 2.07. Method of Electing Interest Rates. (a) The Loans included
in each Committed Borrowing shall bear interest initially at the type of rate
specified by the applicable Borrower in the applicable Notice of Borrowing.
Thereafter, the applicable Borrower may from time to time elect to change or
continue the type of interest rate borne by each Group of Loans (subject in each
case to the provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the applicable Borrower may elect
to convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the applicable Borrower may elect to
convert such Loans to Base Rate Loans or Euro-Dollar Loans or elect to
continue such Loans as CD Loans for an additional Interest Period, in each
case effective on the last day of the then current Interest Period applicable
to such Loans; and
(iii) if such Loans are Euro-Dollar Loans, the applicable Borrower may
elect to convert such Loans to Base Rate Loans or CD Loans or elect to
continue such Loans as Euro-Dollar Loans for an additional Interest Period, in
each case effective on the last day of the then current Interest Period
applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent at least three Euro-Dollar Business Days before the
conversion or continuation selected in such Notice is to be effective (unless
all of the relevant Loans are to be converted to or continued as Domestic Loans,
in which case such Notice shall be delivered to the Agent at least two Domestic
Business Days before such conversion or continuation is to be effective). A
Notice of Interest Rate Election may, if it so specifies, apply to only a
portion of the aggregate principal amount of the relevant Group of Loans;
provided that (i) such portion is allocated ratably among the Loans comprising
such Group, (ii) the portion to which such Notice applies, and the remaining
portion to which it does not apply, are (x) in the case of any portion that is
to be converted to or continued as Fixed Rate Loans, at least $1,000,000 and (y)
in the case of any portion that is to be converted to or continued as Base Rate
Loans, at least $500,000 and (iii) no more than one of such portions is other
than a multiple of $100,000.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such Notice
applies;
(ii) the date on which the conversion or continuation selected in such
Notice is to be effective, which shall comply with the applicable clause of
subsection (a) above;
(iii) if the Loans comprising such Group are to be converted, the new type
of Loans and if, after such conversion, such Loans are to be
<PAGE> 20
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 Agent shall promptly
notify each Bank of the contents thereof and such Notice shall not thereafter be
revocable by the Company or the applicable Borrower. If the applicable Borrower
fails to deliver a timely Notice of Interest Rate Election to the Agent for any
Group of Fixed Rate Loans, such Loans shall be converted into Base Rate Loans on
the last day of the then current Interest Period applicable thereto.
SECTION 2.08. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable quarterly in arrears on each
Quarterly Date and, with respect to the principal amount of any Base Rate Loan
converted to a Fixed Rate Loan, on each date a Base Rate Loan is so converted.
Any overdue principal of or interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 2% plus the Base Rate for such day.
(b) Each CD Loan shall bear interest on the outstanding principal amount
thereof, for each day during each Interest Period applicable thereto, at a rate
per annum equal to the sum of the CD Margin for such day plus the Adjusted CD
Rate applicable to such Interest Period; provided that if any CD Loan shall, as
a result of clause (2)(b) of the definition of Interest Period, have an Interest
Period of less than 30 days, such CD Loan shall bear interest during such
Interest Period at the rate applicable to Base Rate Loans during such period.
Such interest shall be payable for each Interest Period on the last day thereof.
Any overdue principal of or interest on any CD Loan shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the sum of 2%
plus the higher of (i) the sum of the CD Margin for such day plus the Adjusted
CD Rate applicable to such Loan at the date such payment was due and (ii) the
rate applicable to Base Rate Loans for such day.
"CD Margin" means, for any day, (i) if Level I Status exists on such day,
5/8 of 1%, (ii) if Level II Status exists on such day, 3/4 of 1% and (iii) if
Level III Status exists on such day, 7/8 of 1%.
The "Adjusted CD Rate" applicable to any Interest Period means a rate per
annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the rate of
interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation, any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be
<PAGE> 21
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
and, if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
"Euro-Dollar Margin" means, for any day, (i) if Level I Status exists on
such day, 1/2 of 1%, (ii) if Level II Status exists on such day, 5/8 of 1% and
(iii) if Level III Status exists on such day, 3/4 of 1%.
The "Adjusted Interbank Offered Rate" applicable to any Interest Period
means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "Interbank Offered Rate" applicable to any Interest Period means the
average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which deposits in dollars are offered to each of
the Euro-Dollar Reference Banks in the London or, in the case of any Reference
Bank that does not accept interbank deposits in London, New York interbank
market at approximately 11:00 A.M. (London or New York time, as the case may be)
two Euro-Dollar Business Days before the first day of such Interest Period in an
amount approximately equal to the principal amount of the Euro-Dollar Loan of
such Euro-Dollar Reference Bank to which such Interest Period is to apply and
for a period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents). The Adjusted Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
(d) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the higher of (i) the Euro-Dollar Margin
for such day plus the quotient obtained (rounded upward, if necessary, to the
next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates per annum at
which one day (or, if such amount due remains unpaid more than three Euro-Dollar
Business Days, then for such other period of time not longer than six months as
the Agent may select) deposits in dollars in an amount approximately equal to
such overdue payment due to each of the Euro-Dollar Reference Banks are offered
to such Euro-Dollar Reference Bank in the London or, in the case of any
Reference Bank that does not accept interbank deposits in London, New York
interbank market for the applicable period determined as provided above by (y)
1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances
described in clause (a) or (b) of Section 8.01 shall exist, the rate applicable
to Base Rate Loans for such day) and (ii) the sum of the Euro-Dollar Margin for
such day plus the Adjusted Interbank Offered Rate applicable to such Loan at the
date such payment was due.
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the Interbank
Offered Rate for such Interest Period (determined in accordance with Section
2.08(c) as if the
<PAGE> 22
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 Agent shall determine each interest rate applicable to the Loans
hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks by facsimile transmission, telex or cable of each rate of
interest so determined, and its determination thereof shall be conclusive in
the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference
Bank does not furnish a timely quotation, the Agent shall determine the
relevant interest rate on the basis of the quotation or quotations furnished
by the remaining Reference Bank or Banks or, if none of such quotations is
available on a timely basis, the provisions of Section 8.01 shall apply.
SECTION 2.09. Facility Fees. The Company shall pay to the Agent for the
account of the Banks ratably in proportion to their Commitments (or, for any day
on or after the date upon which the Commitments shall have terminated in their
entirety, in proportion to the daily average of the aggregate outstanding
principal amount of their Loans) a facility fee at the rate of 3/8 of 1% per
annum. Such facility fee shall accrue (i) from and including the Amendment
Effective Date to but excluding the Termination Date (or earlier date of
termination of the Commitments in their entirety), on the daily average
aggregate amount of the Commitments (whether used or unused) and (ii) from and
including such Termination Date or earlier date of termination to but excluding
the date the Loans shall be repaid in their entirety, on the daily average of
the aggregate outstanding principal amount of the Loans. Accrued fees under
this Section shall be payable quarterly on each Quarterly Date and upon the date
of termination of the Commitments in their entirety and, if later, the date the
Loans shall be repaid in their entirety.
SECTION 2.10. Mandatory Termination of Commitments. The Commitments
shall terminate in their entirety on the Termination Date.
SECTION 2.11. Optional Termination or Reduction of Commitments. The
Company may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at such
time, or (ii) ratably reduce the Commitments from time to time by an aggregate
amount of at least $5,000,000 so long as, immediately after any such reduction
the aggregate principal amount of Loans outstanding shall not exceed the
Available Amount.
SECTION 2.12. Optional Prepayments. (a) Subject in the case of any
Fixed Rate Borrowing to Section 2.15, any Borrower may, upon notice to the Agent
(i) not later than 11:30 A.M. (New York City time) on the date of prepayment, in
the case of a Group of Base Rate Loans of such Borrower (or any Money Market
Borrowing of such Borrower bearing interest at the Base Rate pursuant to Section
8.01(a)), (ii) at least two Domestic Business Days prior to the date of
prepayment, in the case of a Group of CD Loans of such Borrower and (iii) at
least three Euro- Dollar Business Days prior to the date of prepayment, in the
case of a Group of Euro-Dollar Loans of such Borrower, prepay a Group of Loans
of such Borrower in whole at any time, or from time to time in part in amounts
aggregating (x) $500,000 or any larger multiple of $100,000, in the case of a
Group of Base Rate Loans or such a Money Market Borrowing or (y) $1,000,000 or a
larger multiple of $100,000, in the case of a Group of CD Loans or Euro- Dollar
Loans, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several Banks included in such
Group or Borrowing.
(b) Except as provided in subsection (a) above, Section 2.13 or Article
VI or VIII, no Borrower may prepay all or any portion of the principal amount of
any Money Market Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section, the
Agent shall promptly notify each Bank of the contents thereof and of such Bank's
ratable share, if any, of such prepayment and such notice shall not thereafter
be revocable by the applicable
<PAGE> 23
Borrower.
SECTION 2.13. Mandatory Prepayments. (a) If the aggregate principal
amount of Loans outstanding on any day shall exceed the Available Amount for
such day, the Borrowers shall prepay Committed Loans (and, if, but only if,
after all Committed Loans shall have been prepaid, the aggregate principal
amount of Loans outstanding shall continue to exceed such Available Amount,
Money Market Loans), together with accrued interest thereon, to the extent
necessary to cause the aggregate principal amount of Loans outstanding
immediately after such prepayment to be less than or equal to such Available
Amount.
(b) Each prepayment of Loans required by this Section 2.13 shall be made
with respect to such Group or Groups of Loans and (subject to the limitations
set forth in subsection (a) above) such Money Market Borrowing or Borrowings as
the Borrowers may specify by notice to the Agent at or before the time of such
prepayment and shall be applied to prepay Loans comprising each such Group of
Loans or Loans comprising each such Money Market Borrowing pro rata; provided
that (i) subject to the limitations set forth in subsection (a) above, the
Borrowers shall specify Groups of Loans and Money Market Borrowings for
prepayment so as to minimize the amounts payable by the Borrowers pursuant to
Section 2.15 with respect to such prepayment and (ii) if no such timely
specification is given by the Borrowers, such prepayment shall be allocated
first to Base Rate Loans, if any, second to such Group or Groups of Fixed Rate
Loans as the Agent may determine, until all such Groups of Fixed Rate Loans
shall have been repaid in full, and third to such Money Market Borrowing or
Borrowings as the Agent may determine.
SECTION 2.14. General Provisions as to Payments. (a) The Borrowers
shall make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 12:00 Noon (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the Agent
at its address referred to in Section 11.01. The Agent will promptly distribute
to each Bank its ratable share of each such payment received by the Agent for
the account of the Banks. Whenever any payment of principal of, or interest on,
the Domestic Loans or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from a Borrower prior to
the date on which any payment is due from such Borrower to the Banks hereunder
that such Borrower will not make such payment in full, the Agent may assume that
such Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank. If and
to the extent that such Borrower shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.15. Funding Losses. If a Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a Base Rate Loan (pursuant to Article II, VI or VIII or otherwise)
on any day other than the last day of an Interest Period applicable thereto, or
the last day of an applicable period fixed pursuant to Section 2.08(d), or if a
Borrower fails to borrow or prepay any Fixed Rate Loans after notice has been
given to any Bank in accordance with Section 2.04(a) or 2.12(b), the Company
shall reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any such loss incurred in
obtaining, liquidating or employing deposits from third parties, but excluding
loss of margin for the period after any such payment or conversion or failure to
borrow or prepay, provided that such Bank shall have delivered to the Company a
certificate as to the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
SECTION 2.16. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be
<PAGE> 24
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).
SECTION 2.17. Judgment Currency. If for the purpose of obtaining
judgment in any court it is necessary to convert a sum due from any Borrower
hereunder or under any of the Notes in United States dollars ("dollars") into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Agent could purchase dollars with
such other currency at the Agent's New York office on the Domestic Business Day
preceding that on which final judgment is given. The obligations of each
Borrower in respect of any sum due to any Bank or the Agent hereunder or under
any Note shall, notwithstanding any judgment in a currency other than dollars,
be discharged only to the extent that on the Domestic Business Day following
receipt by such Bank or the Agent (as the case may be) of any sum adjudged to be
so due in such other currency such Bank or the Agent (as the case may be) may in
accordance with normal banking procedures purchase dollars with such other
currency; if the amount of dollars so purchased is less than the sum originally
due to such Bank or the Agent, as the case may be, in dollars, each Borrower
agrees, to the fullest extent that it may effectively do so, as a separate
obligation and notwithstanding any such judgment, to indemnify such Bank or the
Agent, as the case may be, against such deficiency, and if the amount of dollars
so purchased exceeds (a) the sum originally due to any Bank or the Agent, as the
case may be, and (b) any amounts shared with other Banks as a result of
allocations of such excess as a disproportionate payment to such Bank under
Section 11.04, such Bank or the Agent, as the case may be, agrees to remit such
excess to the appropriate Borrower.
SECTION 2.18. Foreign Subsidiary Costs. (a) If the cost to any Bank of
making or maintaining any Loan to an Eligible Subsidiary is increased, or the
amount of any sum received or receivable by any Bank (or its Applicable Lending
Office) is reduced by an amount deemed by such Bank to be material, by reason of
the fact that such Eligible Subsidiary is incorporated in, or conducts business
in, a jurisdiction outside the United States of America, the Company shall
indemnify such Bank for such increased cost or reduction within 15 days after
demand by such Bank (with a copy to the Agent). A certificate of such Bank
claiming compensation under this subsection (a) and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error.
(b) Each Bank will promptly notify the Company and the Agent of any
event of which it has knowledge that will entitle such Bank to additional
interest or payments pursuant to subsection (a) and will designate a different
Applicable Lending Office, if, in the judgment of such Bank, such designation
will avoid the need for, or reduce the amount of, such compensation and will not
be otherwise disadvantageous to such Bank.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become effective upon
the satisfaction of each of the following conditions:
(a) receipt by the Agent of counterparts hereof signed by each of the
parties hereto (or, in the case of any party as to which an executed counterpart
shall not have been received, receipt by the Agent in form satisfactory to it of
telegraphic, telex, facsimile or other written confirmation from such party of
execution of a counterpart hereof by such party);
(b) receipt by the Agent of a duly executed Note of the Company for the
account of each Bank dated on or before the Amendment Effective Date complying
with the provisions of Section 2.05;
(c) receipt by the Agent, with copies for each of the Banks, of an
opinion of Ropes & Gray, counsel for the Company, dated the Amendment Effective
Date and substantially in the form of Exhibit E hereto and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
<PAGE> 25
(d) receipt by the Agent, with copies for each of the Banks, of an
opinion of Davis Polk & Wardwell, special counsel for the Agent, dated the
Amendment Effective Date and 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;
(e) all principal of and interest on any Loans (as defined in the
Existing Credit Agreement) outstanding under the Existing Credit Agreement
(other than Money Market Loans of any Bank which has agreed as of the Amendment
Effective Date to maintain such Money Market Loans outstanding ("Continuing
Money Market Loans")), and all other amounts accrued or otherwise payable under
the Existing Credit Agreement through the Amendment Effective Date, shall have
been paid in full; and
(f) receipt by the Agent, with copies for each of the Banks, of all
other documents the Agent may reasonably request relating to the existence of
the Company, the corporate authority for and the validity of this Agreement and
the Notes, and any other matters relevant hereto, all in form and substance
satisfactory to the Agent.
The Agent shall promptly notify the Company and the Banks of the
Amendment Effective Date, and such notice shall be conclusive and binding on all
parties hereto.
SECTION 3.02. Consequences of Effectiveness. On and after the Amendment
Effective Date, the rights and obligations of the parties hereto shall be
governed by the provisions of this Agreement (and each party that is a "Bank"
under the Existing Credit Agreement hereby agrees to the amendment and
restatement of the Existing Credit Agreement in the form hereof as of the
Amendment Effective Date) and the rights and obligations of the parties under
the Existing Credit Agreement with respect to the period prior to the Amendment
Effective Date shall continue to be governed by the provisions thereof as in
effect prior to the Amendment Effective Date, except that (i) all principal of
and interest on any Loans (as defined in the Existing Credit Agreement)
outstanding under the Existing Credit Agreement (other than Continuing Money
Market Loans) shall be due and payable on the Amendment Effective Date, (ii) all
interest and facility fees accrued under the Existing Credit Agreement to but
not including the Amendment Effective Date shall be due and payable on the
Amendment Effective Date, (iii) all Continuing Money Market Loans shall be
deemed to have been made and be outstanding, hereunder, (iv) the Commitments (as
defined in the Existing Credit Agreement) of each Non-Continuing Bank under the
Existing Credit Agreement shall terminate on the Amendment Effective Date, (v)
the Commitments (as defined in the Existing Credit Agreement) of each other Bank
under the Existing Credit Agreement shall be increased or decreased, as the case
may be, to the amounts set forth for such Bank on the signature pages hereof and
(vi) each New Bank shall, effective as of the Amendment Effective Date, have a
Commitment in the amount set forth for such New Bank on the signature pages
hereof.
SECTION 3.03. 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 Amendment Effective Date shall have occurred on or
prior to April 15, 1995;
(b) receipt by the Agent of a Notice of Borrowing as required by Section
2.02 or 2.03, as the case may be;
(c) the fact that, immediately before and after such Borrowing, the
aggregate outstanding principal amount of the Loans shall not exceed the
Available Amount;
(d) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing; and
(e) the fact that the representations and warranties of the Borrowers
contained in this Agreement shall be true on and as of the date of such
Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrowers on the date of such Borrowing as to the facts
specified in clauses (c), (d) and (e) of this Section.
SECTION 3.04. 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 2.05;
(b) receipt by the Agent of an opinion of counsel for such Eligible
Subsidiary acceptable to the Agent, substantially in the form of Exhibit I
hereto and covering such additional
<PAGE> 26
matters relating to the transactions contemplated hereby as the Required Banks
may reasonably request; and
(c) receipt by the Agent of all documents which it may reasonably
request relating to the existence of such Eligible Subsidiary, the corporate
authority for and the validity of the Election to Participate of such Eligible
Subsidiary, this Agreement and the Notes of such Eligible Subsidiary, and any
other matters relevant thereto, all in form and substance satisfactory to the
Agent.
The opinion referred to in clause (b) above shall be dated no more than five
Euro-Dollar Business Days before the date of the first Borrowing by such
Eligible Subsidiary hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Company of this Agreement and its
Notes are within the Company's corporate powers, have been duly authorized by
all necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official (other than disclosure, if any,
thereof, and filing, if any, of a copy hereof with the Securities and Exchange
Commission, required by the Securities Act of 1933 or the Securities Exchange
Act of 1934, in each case as amended) and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Company or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the Company
or result in the creation or imposition of any Lien on any asset of the Company
or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Company and its Notes, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
the Company.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of December 31, 1993 and the related consolidated statements of
operations, changes in stockholders' equity and cash flow for the fiscal year
then ended, reported on by Deloitte & Touche and set forth in the Company's 1993
Form 10-K, a copy of which has been delivered to each of the Banks, fairly
presented, in conformity with generally accepted accounting principles, the
consolidated financial position of the Company and its Consolidated Subsidiaries
as of such date and their consolidated results of operations and cash flows for
such fiscal year.
(b) The unaudited consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of September 30, 1994 and the related unaudited
consolidated statements of operations, changes in stockholders' equity and cash
flow for the nine months then ended, set forth in the Company's Latest Form
10-Q, a copy of which has been delivered to each of the Banks, fairly present,
in conformity with generally accepted accounting principles applied on a basis
consistent with the financial statements referred to in subsection (a) of this
Section, 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 nine month period (subject to normal year-end adjustments).
(c) Except as disclosed on the Company's Latest Form 10-Q and in the
Company's press releases dated December 9, 1994 and February 9, 1995, copies of
which have been provided to the Banks, since December 31, 1993 there has been no
material adverse change in the business, financial position or results of
operations of the Company and its Consolidated Subsidiaries, considered as a
whole.
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Company threatened against or
affecting, the Company or any of its Subsidiaries before any court or arbitrator
or any governmental body, agency or official in which
<PAGE> 27
there is a reasonable possibility of an adverse decision which could materially
adversely affect the business, consolidated financial position or consolidated
results of operations of the Company and its Consolidated Subsidiaries,
considered as a whole, or which in any manner draws into question the validity
of this Agreement or the Notes.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the currently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary course of its
business, the Company conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Company and its
Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, the Company has reasonably concluded that such associated
liabilities and costs, including the costs of compliance with Environmental
Laws, are unlikely to have a material adverse effect on the business, financial
condition, results of operations or prospects of the Company and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.08. Taxes. United States Federal income tax returns of the
Company and its Subsidiaries have been closed through the fiscal year ended
December 31, 1989. The Company and its Subsidiaries have filed all United
States Federal income tax returns and all other material tax returns which are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Company or any Subsidiary,
except for any such taxes being diligently contested in good faith by
appropriate proceedings. The charges, accruals and reserves on the books of the
Company and its Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Company, adequate.
SECTION 4.09. Subsidiaries. Each of the Company's Subsidiaries is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all corporate or other powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.
SECTION 4.10. Not an Investment Company. The Company is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.11. Full Disclosure. All information heretofore furnished by
the Company to the Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by the Company to the Agent or any Bank will be, true and
accurate in all material respects on the date as of which such information is
stated or certified. The Company has disclosed to the Banks in writing any and
all facts, other than general economic conditions, which materially and
adversely affect or may affect (to the extent the Company can now reasonably
foresee) the business, operations or financial condition of the Company and its
Consolidated Subsidiaries, considered as a whole, or the ability of the Company
to perform its obligations under this Agreement and the Notes.
ARTICLE V
COVENANTS
<PAGE> 28
The Company agrees that, so long as any Bank has any Commitment hereunder
or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Company will deliver to each of the
Banks:
(a) as soon as available and in any event within 90 days after the end
of each fiscal year of the Company, consolidated and consolidating balance
sheets of the Company and its Consolidated Subsidiaries as of the end of such
fiscal year and the related consolidated and consolidating statements of
operations and consolidated statements of changes in stockholders' equity and
cash flows for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, (x) in the case of the
consolidated statements, all reported on in a manner acceptable to the
Securities and Exchange Commission by Deloitte & Touche or other independent
public accountants of nationally recognized standing, and (y) in the case of
the consolidating statements, all certified as to fairness of presentation,
generally accepted accounting principles and consistency by the chief
financial officer or the chief accounting officer of the Company;
(b) as soon as available and in any event within 45 days after the end
of each of the first three quarters of each fiscal year of the Company,
consolidated and consolidating balance sheets of the Company and its
Consolidated Subsidiaries as of the end of such quarter and the related
consolidated and consolidating statements of operations and consolidated
statements of changes in stockholders' equity and cash flows for such quarter
and for the portion of the Company's fiscal year ended at the end of such
quarter, setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the Company's previous
fiscal year, all certified (subject to normal year-end adjustments and the
non-inclusion of notes permitted by the applicable regulations of the
Securities and Exchange Commission to be excluded from quarterly reports filed
on Form 10-Q) as to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the chief
accounting officer of the Company;
(c) simultaneously with the delivery of each set of financial statements
referred to in clauses (a) and (b) above, a certificate of the chief financial
officer, treasurer or the chief accounting officer of the Company (i) setting
forth in reasonable detail the calculations required to establish whether the
Company was in compliance with the requirements of Sections 5.07 through 5.11,
inclusive, and Sections 5.13 and 5.18 on the date of such financial
statements, (ii) setting forth in reasonable detail the calculations of the
Borrowing Base and the Available Amount as of the date of such financial
statements and whether the Company is thereby required to take or cause to be
taken any action to comply with Section 2.13 and (iii) stating whether any
Default exists on the date of such certificate and, if any Default then
exists, setting forth the details thereof and the action which the Company is
taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial statements
referred to in clause (a) above, a certificate of the firm of independent
public accountants which reported on such statements (i) whether anything has
come to their attention to cause them to believe that any Default existed on
the date of such statements and (ii) confirming the calculations set forth in
the officer's certificate delivered simultaneously therewith pursuant to
clause (c) above;
(e) within 21 days after the end of each monthly accounting period of
the Company, a certificate of the chief financial officer, treasurer or the
chief accounting officer of the Company setting forth calculations in
reasonable detail of the Company's best estimate of the Borrowing Base and the
Available Amount as of the end of such month and whether the Company is
required to take or cause to be taken any action to comply with Section 2.13;
(f) within five days after any officer of the Company obtains knowledge
of any Default, if such Default is then continuing, a certificate of the chief
financial officer or the chief
<PAGE> 29
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 or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than for premiums under Section
4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a
copy of such notice; (iv) applies for a waiver of the minimum funding standard
under Section 412 of the Internal Revenue Code, a copy of such application;
(v) gives notice of intent to terminate any Plan under Section 4041(c) of
ERISA, a copy of such notice and other information filed with the PBGC; (vi)
gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a
copy of such notice; or (vii) fails to make any payment or contribution to any
Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes
any amendment to any Plan or Benefit Arrangement which has resulted or could
result in the imposition of a Lien or the posting of a bond or other security,
a certificate of the chief financial officer or the chief accounting officer
of the Company setting forth details as to such occurrence and action, if any,
which the Company or applicable member of the ERISA Group is required or
proposes to take; and
(j) from time to time such additional information regarding the
financial position or business of the Company and its Subsidiaries as the
Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. The Company will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity or in accordance with customary trade practices, all their respective
material obligations and liabilities, including, without limitation, tax
liabilities, except where the same may be contested in good faith by appropriate
proceedings, and will maintain, and will cause each Subsidiary to maintain, in
accordance with generally accepted accounting principles, appropriate reserves
for the accrual of any of the same.
SECTION 5.03. Maintenance of Property; Insurance. (a) The Company will
maintain, and will cause each Subsidiary to maintain, all property useful and
necessary in its business in good working order and condition, ordinary wear and
tear excepted.
(b) The Company will, and will cause each of its Subsidiaries to, maintain
(either in the name of the Company or in such Subsidiary's own name) with
financially sound and responsible insurance companies, insurance on all their
respective properties in at least such amounts and against at least such risks
(and with such risk retention) as are (i) insured against under the policies of
insurance of the Company and its Subsidiaries set forth on the schedule
previously provided by the Company to the Banks or (ii) usually insured against
in the same general area by companies of established repute engaged in the same
or a similar business; and will furnish to the Banks, upon request from the
Agent, information presented in reasonable detail as to the insurance so
carried.
SECTION 5.04. Conduct of Business and Maintenance of Existence. The
Company will continue, and will cause each Subsidiary to continue, to engage in
business of the same general type as now conducted by the Company and its
Subsidiaries, and will preserve, renew and
<PAGE> 30
keep in full force and effect, and will cause each Subsidiary to preserve, renew
and keep in full force and effect their respective corporate existence and their
respective rights, privileges and franchises necessary or desirable in the
normal conduct of business; provided that nothing in this Section 5.04 shall
prohibit (i) the merger or consolidation of a Subsidiary with or into another
Person if the corporation surviving such consolidation or merger is a
Wholly-Owned Subsidiary or the merger of a Subsidiary into the Company if, in
each case, after giving effect thereto, no Default shall have occurred and be
continuing, (ii) the termination of the corporate existence of any Subsidiary if
such termination is not materially disadvantageous to the Banks and the Company
in good faith determines that such termination is in the best interest of the
Company or (iii) a sale of capital stock of a Subsidiary permitted under Section
5.12(ii).
SECTION 5.05. Compliance with Laws. The Company will comply, and cause
each Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
SECTION 5.06. Inspection of Property, Books and Records. The Company
will keep, and will cause each Subsidiary to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities; and will permit,
and will cause each Subsidiary to permit, representatives of any Bank at such
Bank's expense to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, all at such reasonable
times, upon reasonable notice and as often as may reasonably be desired.
SECTION 5.07. Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio for any period of four consecutive fiscal quarters will not be less than
(a) 2.0 to 1.0 for any such period ending on or prior to December 31, 1995 and
(ii) 2.25 to 1.0 for any such period ending thereafter.
SECTION 5.08. Debt. The Company will not, and will not permit any of
its Subsidiaries to, incur or at any time be liable with respect to any Debt
except:
(a) Debt outstanding under this Agreement and the Notes, provided, that
the sum of (i) the aggregate principal amount of Loans outstanding under this
Agreement and (ii) the aggregate principal amount of Permitted Short-Term Debt
shall not exceed (A) for a minimum of thirty days in the period between
December 1, 1995 and March 1, 1996, $40,000,000 and (B) for a minimum of
thirty days in the period between December 1, 1996 and February 28, 1997,
$50,000,000;
(b) Debt of any of the Company's Subsidiaries owing to the Company or
any of its Wholly-Owned Subsidiaries permitted by Section 5.11;
(c) Debt of the Company owing to Wholly-Owned Subsidiaries of the
Company;
(d) 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;
(e) 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;
(f) Permitted Short-Term Debt of the Company in an aggregate principal
amount at any time outstanding not to exceed $20,000,000;
(g) Debt denominated in currencies other than United States dollars and
having a maturity, at the time such Debt is incurred, of not more than one
year from the date such Debt is incurred in an aggregate principal amount at
the time of incurrence of any such Debt (the dollar equivalent of all Debt
outstanding at the time of any such incurrence being recalculated as of the
time of such incurrence on the basis of exchange rates then in effect) not to
exceed the equivalent of $18,000,000;
(h) Debt outstanding on the date hereof and identified on Schedule I
hereto and, extensions,
<PAGE> 31
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;
(i) the Hewlett-Packard construction allowance in an aggregate principal
amount not to exceed $3,500,000;
(j) Debt incurred or assumed for the purpose of financing all or part of
the cost of acquiring assets in an aggregate principal amount not to exceed
$5,000,000 at any time outstanding;
(k) Debt consisting of the principal component of rental payments with
respect to not more than $5,000,000 of capitalized leases, provided that the
term of each such lease is not, at the time such lease is entered into, less
than five years; and
(l) Debt not otherwise permitted under the foregoing clauses of this
Section in an aggregate principal amount not to exceed $5,000,000 at any time
outstanding.
SECTION 5.09. Minimum Consolidated Tangible Net Worth. Consolidated
Tangible Net Worth will at no time be less than the sum of (i) $103,463,000 and
(ii) 80% of the sum of (A) Aggregate Positive Consolidated Net Income and (B)
the net cash proceeds of all issuances by the Company of shares of its capital
stock after the date hereof. For purposes of this Section, "Aggregate Positive
Consolidated Net Income" means the aggregate amount of consolidated net income
for each fiscal quarter commencing on or after December 31, 1994 and ending on
or prior to the date as of which compliance with this Section 5.09 is determined
(with no deduction for consolidated net losses for any such fiscal quarter).
SECTION 5.10. Restricted Payments. Neither the Company nor any Subsidiary
will declare or make any Restricted Payment unless, after giving effect thereto,
the aggregate of all Restricted Payments declared or made subsequent to December
31, 1990 does not exceed 25% of consolidated net income (less consolidated net
loss, if any) of the Company and its Consolidated Subsidiaries for the period
from January 1, 1991 through the end of the Company's then most recent fiscal
quarter (treated for this purpose as a single accounting period). Nothing in
this Section 5.10 shall prohibit the payment of any dividend or distribution
within 60 days after the declaration thereof if such declaration was not
prohibited by this Section 5.10.
SECTION 5.11. Investments. Neither the Company nor any Subsidiary will
make or acquire any Investment in any Person other than:
(a) Investments in Persons which immediately before and after giving
effect to such Investment are Subsidiaries of the Company, if, immediately
thereafter, the aggregate amount of all such Investments made after the date
hereof does not exceed $25,000,000 at any one time outstanding;
(b) Temporary Cash Investments;
(c) loans or advances to current employees of the Company or such
Consolidated Subsidiary having a maturity of less than one year in an
aggregate principal amount at any time outstanding not to exceed $1,000,000;
(d) Investments the sole consideration for which is newly issued common
stock of the Company or newly issued preferred stock of the Company that is
not subject to mandatory redemption or redemption at the option of the holder
before the fourth anniversary of the date of issuance thereof;
(e) Investments consisting of Debt permitted under Section 5.08(c) or
5.08(e); 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 5.12. Maintenance of Ownership of Subsidiaries. The Company will
at all times maintain direct or indirect legal and beneficial ownership of the
percentage of outstanding shares of each class of capital
<PAGE> 32
stock set forth on Schedule II of each of its Subsidiaries, except as modified
by (i) sales by Subsidiaries of directors' qualifying shares, (ii) mergers and
liquidations permitted pursuant to the proviso to Section 5.14 and (iii) grants
or sales by The Outdoor Footwear Company of shares of its non-voting common
stock to its employees consistent with past practice.
SECTION 5.13. Negative Pledge. Neither the Company nor any Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount not
exceeding $15,000,000 and identified on Schedule I;
(b) any Lien existing on any asset of any corporation at the time such
corporation becomes a Subsidiary and not created in contemplation of such
event;
(c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring or constructing
such asset, provided that such Lien attaches to such asset concurrently with
or within 90 days after the acquisition or construction thereof;
(d) any Lien on any asset of any corporation existing at the time such
corporation is merged or consolidated with or into the Company or a Subsidiary
and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition thereof by
the Company or a Subsidiary and not created in contemplation of such
acquisition;
(f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section 5.13, provided that such Debt is not increased and is
not secured by any additional assets;
(g) Liens arising in the ordinary course of its business which (i) do
not secure Debt or Derivative Obligations, (ii) do not secure any obligation
in an amount exceeding $10,000,000 and (iii) do not in the aggregate
materially detract from the value of its assets or materially impair the use
thereof in the operation of its business;
(h) Liens on assets of Subsidiaries securing Debt owing to the Company
or to Wholly- Owned Subsidiaries permitted by Section 5.08;
(i) Liens on cash and cash equivalents securing Derivative Obligations,
provided that the aggregate amount of cash and cash equivalents subject to
such Liens may at no time exceed $5,000,000;
(j) Liens on Factorable Receivables arising in connection with and as
part of the sale or transfer of such Factorable Receivables pursuant to
Permitted Factoring Transactions; and
(k) Liens not otherwise permitted by the foregoing clauses of this
Section securing Debt in an aggregate principal or face amount at any time
outstanding not to exceed $5,000,000.
SECTION 5.14. Consolidations, Mergers and Sales of Assets. The Company
will not (i) consolidate or merge with or into any other Person or (ii) sell,
lease or otherwise transfer, directly or indirectly in one transaction or a
series of related transactions, all or any substantial part of the assets of the
Company and its Subsidiaries, taken as a whole, to any other Person; provided
that a Subsidiary of the Company may merge with or liquidate into the Company or
a Wholly-Owned Subsidiary of the Company if (A) the Company or such Wholly-Owned
Subsidiary, as the case may be, is the corporation surviving such merger or
liquidation and (B) immediately after giving effect to such merger, no Default
shall have occurred and be continuing.
SECTION 5.15. Restrictions on Prepayments of and Amendments to Certain
Debt. (a) Except with the proceeds of the issuance by the Company of (i) shares
of its common stock or (ii) refinancings thereof permitted under Section
5.08(h), the Company will not, and will not permit any of its Subsidiaries to,
voluntarily repay or prepay (A) any Debt outstanding under any Note Agreement or
(B) any 1994 Private Placement Debt.
(b) The Company will not consent to any
<PAGE> 33
amendment of the amount or date of any required repayment or prepayment of any
Debt outstanding under any Note Agreement or any 1994 Private Placement Debt
except for an amendment of any such date to a date on or after the earlier of
(A) the date of such required repayment or prepayment as in effect prior to such
amendment and (B) the first anniversary of the Termination Date.
SECTION 5.16. Transactions with Affiliates. The Company will not, and
will not permit any Subsidiary to, directly or indirectly, pay any funds to or
for the account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate; provided, however, that the foregoing provisions of this Section 5.16
shall not prohibit (a) the Company from declaring or paying any lawful dividend
so long as, after giving effect thereto, no Default shall have occurred and be
continuing, (b) the Company or any Subsidiary from making sales to or purchases
from any Affiliate and, in connection therewith, extending credit or making
payments, or from making payments for services rendered by any Affiliate, if
such sales or purchases are made or such services are rendered in the ordinary
course of business and on terms and conditions at least as favorable to the
Company or such Subsidiary as the terms and conditions which would apply in a
similar transaction with a Person not an Affiliate, (c) the Company or any
Subsidiary from making payments of principal, interest and premium on any Debt
of the Company or such Subsidiary held by an Affiliate if the terms of such Debt
are substantially as favorable to the Company or such Subsidiary as the terms
which could have been obtained at the time of the creation of such Debt from a
lender which was not an Affiliate and (d) the Company or any Subsidiary from
participating in, or effecting any transaction in connection with, any joint
enterprise or other joint arrangement with any Affiliate if the Company or such
Subsidiary participates in the ordinary course of its business and on a basis no
less advantageous than the basis on which such Affiliate participates.
SECTION 5.17. Use of Proceeds. The proceeds of the Loans made under
this Agreement will be used by the Borrowers for general corporate purposes,
including working capital. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U.
SECTION 5.18. Leverage Ratio. The Leverage Ratio will at no time during
any period set forth below exceed the ratio set forth below opposite such
period:
<TABLE>
<CAPTION>
Period Leverage Ratio
<S> <C>
January 1, 1995 to 2.00 to 1.00
March 31, 1995
April 1, 1995 to 2.25 to 1.00
June 30, 1995
July 1, 1995 to 2.30 to 1.00
September 28, 1995
September 29, 1995 to 2.10 to 1.00
December 30, 1995
December 31, 1995 to 1.50 to 1.00
March 29, 1996
March 30, 1996 to 1.75 to 1.00
December 30, 1996
December 31, 1996 to 1.45 to 1.00
February 28, 1997
</TABLE>
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) any principal of any Loan shall not be paid when due, or any
interest, any fees or any other amount payable hereunder shall not be paid
within two Domestic Business Days of the due date thereof;
(b) the Company shall fail to observe or perform any covenant contained
in Sections 5.07 to 5.15, inclusive, 5.17 and 5.18;
(c) any Borrower shall fail to observe or perform any covenant or
agreement contained in
<PAGE> 34
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 Agent
at the request of any Bank;
(d) any representation, warranty, certification or statement made by any
Borrower in this Agreement or in any certificate, financial statement or other
document delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed made);
(e) the Company or any Subsidiary shall fail to make any payment in
respect of any Material Financial Obligation when due or within any applicable
grace period;
(f) any event or condition shall occur which results in the acceleration
of the maturity of any Material Debt or enables (or, with the giving of notice
or lapse of time or both, would enable) the holder of such Debt or any Person
acting on such holder's behalf to accelerate the maturity thereof;
(g) the Company or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such relief or
to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any corporate action to
authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced against
the Company or any Subsidiary seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days; or
an order for relief shall be entered against the Company or any Subsidiary
under the federal bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $500,000 which it shall have become liable
to pay under Title IV of ERISA; or notice of intent to terminate a Material
Plan shall be filed under Title IV of ERISA by any member of the ERISA Group,
any plan administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to obtain
a decree adjudicating that any Material Plan must be terminated; or there
shall occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA Group
to incur a current payment obligation in excess of $500,000;
(j) a judgment or order for the payment of money in excess of $1,000,000
shall be rendered against the Company or any Subsidiary and such judgment or
order shall continue unsatisfied and unstayed for a period of (i) in the case
of a judgment or order rendered by a court, arbitrator or governmental
authority located in the United States, 10 days or (ii) in the case of a
judgment or order rendered by a court, arbitrator or governmental authority
located outside the United States, 30 days; or
(k) any person or group of persons (within the meaning of Section 13 or
14 of the Securities Exchange Act of 1934, as amended) (other than the Swartz
Family) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said
<PAGE> 35
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 Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Company
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate principal
amount of the Loans, by notice to the Company declare the Notes (together with
accrued interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by each Borrower; provided that in
the case of any of the Events of Default specified in clause (g) or (h) above
with respect to any Borrower, without any notice to any Borrower or any other
act by the Agent or the Banks, the Commitments shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by each Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
Company under Section 6.01(c) promptly upon being requested to do so by any Bank
and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the Notes as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust Company of
New York shall have the same rights and powers under this Agreement as any other
Bank and may exercise or refrain from exercising the same as though it were not
the Agent, and Morgan Guaranty Trust Company of New York and its affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with any Borrower or any Subsidiary or affiliate of any Borrower as if
it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent hereunder
are only those expressly set forth herein. Without limiting the generality of
the foregoing, the Agent shall not be required to take any action with respect
to any Default, except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for any Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of its
affiliates or any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent
nor any of its affiliates or any of their respective directors, officers, agents
or employees shall be responsible for or have any duty to ascertain, inquire
into or verify (i) any statement, warranty or representation made in connection
with this Agreement or any Borrowing hereunder; (ii) the performance or
observance of any of the covenants or agreements of any Borrower; (iii) the
satisfaction of any condition specified in Article III, except receipt of items
required to be delivered to the Agent; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Notes or any other instrument or writing
furnished in connection herewith. The Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement or other
writing (which may be a bank wire, facsimile transmission, telex or similar
writing) believed by it to be genuine or to be signed by the proper party or
parties.
<PAGE> 36
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent, its affiliates and their respective
directors, officers, agents and employees (to the extent not reimbursed by the
Borrowers) against any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from such
indemnitees' gross negligence or willful misconduct) that such indemnitees may
suffer or incur in connection with this Agreement or any action taken or omitted
by such indemnitees hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Banks and the Company. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent with the consent of the Borrower, which consent shall not be unreasonably
withheld. If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Banks and without the consent of the Borrower, appoint a successor
Agent, which shall be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $100,000,000. Upon the acceptance of its
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
SECTION 7.09. Agent's Fee. The Company shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon between
the Company and the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any Fixed Rate
Borrowing:
(a) the Agent is advised by the Reference Banks that deposits in dollars
(in the applicable amounts) are not being offered to the Reference Banks in
the relevant market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks having 50% or more of
the aggregate amount of the Commitments advise the Agent that the Adjusted CD
Rate or the Adjusted Interbank Offered Rate, as the case may be, as determined
by the Agent, will not adequately and fairly reflect the cost to such Banks of
funding their CD Loans or Euro-Dollar Loans, as the case may be, for such
Interest Period,
the Agent shall forthwith give notice thereof to the Company and the Banks,
whereupon until the Agent notifies the Company that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be, shall be suspended, and
(ii) each outstanding CD Loan or Euro-Dollar Loan, as the case may be, shall be
converted into a Base Rate Loan on the last day of the then current Interest
Period applicable thereto. If the applicable Borrower shall have received such
a notice from the Agent, unless the applicable Borrower notifies the Agent at
least two Domestic Business Days before the date of any Fixed Rate Borrowing for
which a Notice of Borrowing has previously been given that it elects not to
borrow on such date, (i) if such Fixed Rate Borrowing is a Committed Borrowing,
such Borrowing shall instead be made as a Base Rate Borrowing, and (ii) if such
Fixed Rate Borrowing is a Money Market LIBOR Borrowing, the Money Market LIBOR
Loans comprising such Borrowing shall bear interest for each day from and
including the first day to but excluding the last day of the Interest Period
applicable thereto at the Base Rate for such day.
SECTION 8.02. Illegality. If, on or after the
<PAGE> 37
date of this Agreement, the adoption of any applicable law, rule or regulation,
or any change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for any Bank (or such Applicable Lending Office) to make, maintain or
fund its Euro-Dollar Loans or Money Market LIBOR Loans to any Borrower pursuant
to this Agreement and such Bank shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and the Company, whereupon
until such Bank notifies the Company and the Agent that the circumstances giving
rise to such suspension no longer exist, the obligation of such Bank to make
Euro-Dollar Loans or to convert outstanding Loans into Euro-Dollar Loans, as the
case may be, shall be suspended. Before giving any notice with respect to
Euro-Dollar Loans or Money Market LIBOR Loans to the Agent pursuant to this
Section, such Bank shall designate a different Euro-Dollar Lending Office or
Money Market Lending Office if such designation will avoid the need for giving
such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such notice is given with respect to
Euro-Dollar Loans or Money Market LIBOR Loans, each Euro-Dollar Loan or, in the
circumstances described in clause (b) below, Money Market LIBOR Loan of such
Bank then outstanding shall be converted to a Base Rate Loan either (a) in the
case of Euro-Dollar Loans only, on the last day of the then current Interest
Period applicable to such Euro-Dollar Loan, if such Bank may lawfully continue
to maintain and fund such Loan to such day, or (b) immediately, if such Bank
shall determine that it may not lawfully continue to maintain and fund such
Euro-Dollar Loan or Money Market LIBOR Loan to such day.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after
(x) the date hereof, in the case of any Committed Loan or any obligation to make
Committed Loans or (y) the date of the related Money Market Quote, in the case
of a Money Market Loan, the adoption of any applicable law, rule or regulation,
or any change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
(i) with respect to any CD Loan any such requirement included in an applicable
Domestic Reserve Percentage and (ii) with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve Percentage),
special deposit, insurance assessment (excluding, with respect to any CD Loan,
any such requirement reflected in an applicable Assessment Rate) or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Bank (or its Applicable Lending Office) or shall impose on any
Bank (or its Applicable Lending Office) or on the United States market for
certificates of deposit or the London interbank market any other condition
affecting its Fixed Rate Loans, its Notes or its obligation to make Fixed Rate
Loans and the result of any of the foregoing is to increase the cost to such
Bank (or its Applicable Lending Office) of making or maintaining any Fixed Rate
Loan, or to reduce the amount of any sum received or receivable by such Bank (or
its Applicable Lending Office) under this Agreement or under its Notes with
respect thereto, by an amount deemed by such Bank to be material, then within 15
days after demand by such Bank (with a copy to the Agent), the Company shall pay
to such Bank such additional amount or amounts as will compensate such Bank for
such increased cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Agent), the Company shall pay to such Bank such
additional amount or amounts as will compensate such Bank (or its Parent) for
such reduction.
<PAGE> 38
(c) Each Bank will promptly notify the Company and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section 8.03 and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
SECTION 8.04. Taxes. (a) Any and all payments by any Borrower to or
for the account of any Bank or the Agent hereunder or under any Note shall be
made free and clear of and without deduction for any and all present or future
taxes, duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Bank or the Agent (as the case may be)
is organized or any political subdivision thereof and, in the case of each Bank,
taxes imposed on its income, and franchise or similar taxes imposed on it, by
the jurisdiction of such Bank's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If any Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to any Bank or the
Agent, (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 8.04) such Bank or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions, (iii) such
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) such Borrower
shall furnish to the Agent, at its address referred to in Section 11.01, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Company agrees to pay any present or future stamp
or documentary taxes and any other excise taxes, or charges or similar levies,
or any future property taxes, which arise from any payment made hereunder or
under any Note or from the execution or delivery of, or otherwise with respect
to, this Agreement, any Election to Participate or Election to Terminate or any
Note (hereinafter referred to as "Other Taxes").
(c) The Company agrees to indemnify each Bank and the Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 8.04) paid by such Bank or the Agent (as the case may be) and any
liability (including penalties, interest and expenses, other than penalties,
interest or expenses arising solely from such Bank's gross negligence or willful
misconduct) arising therefrom or with respect thereto. This indemnification
shall be made within 15 days from the date such Bank or the Agent (as the case
may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Company (but
only so long as such Bank remains lawfully able to do so), shall provide the
Company and the Agent with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to benefits under an income tax treaty to
which the United States is a party which reduces the rate of withholding tax on
payments of interest or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States. If the form provided by a Bank at the time such Bank first
becomes a party to this Agreement indicates a United States interest withholding
tax rate in excess of zero, withholding tax at such rate shall be considered
excluded from "Taxes" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to provide
the Company with the appropriate form pursuant to Section 8.04(d) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.04(a) with respect to
Taxes imposed by the United States; provided that should a Bank, which is
otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required
<PAGE> 39
hereunder, each Borrower shall take such steps as such Bank shall reasonably
request to assist such Bank to recover such Taxes.
(f) If any Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.04, then such Bank will change
the jurisdiction of its Applicable Lending Office so as to eliminate or reduce
any such additional payment which may thereafter accrue if such change, in the
judgment of such Bank, is not otherwise disadvantageous to such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans.
If (i) the obligation of any Bank to make Euro-Dollar Loans to any Borrower
pursuant to this Agreement has been suspended pursuant to Section 8.02 or (ii)
any Bank has demanded compensation under Section 8.03 or 8.04 with respect to
its CD Loans or Euro-Dollar Loans to any Borrower and the Company shall, by at
least five Euro-Dollar Business Days' prior notice to such Bank through the
Agent, have elected that the provisions of this Section 8.05 shall apply to such
Bank, then, unless and until such Bank notifies the Company that the
circumstances giving rise to such suspension or demand for compensation no
longer exist:
(a) all Loans to such Borrower which would otherwise be made by such
Bank as (or continued as or converted into) CD Loans or Euro-Dollar Loans, as
the case may be, shall instead be Base Rate Loans (on which interest and
principal shall be payable contemporaneously with the related Fixed Rate Loans
of the other Banks), and (b) if Base Rate Loans are substituted for Fixed
Rate Loans, after each of its CD Loans or Euro-Dollar Loans, as the case may
be, to such Borrower has been repaid (or converted to a Base Rate Loan), all
payments of principal which would otherwise be applied to repay such Fixed
Rate Loans shall be applied to repay its Base Rate Loans instead.
If such Bank notifies the Company that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan which
was substituted for a Fixed Rate Loan shall be converted into a CD Loan or
Euro-Dollar Loan, as the case may be, on the first day of the next succeeding
Interest Period applicable to the related CD Loans or Euro-Dollar Loans of the
other Banks.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF ELIGIBLE SUBSIDIARIES
Each Eligible Subsidiary shall be deemed by the execution and delivery of
its Election to Participate to have represented and warranted as of the date
thereof that:
SECTION 9.01. Corporate Existence and Power. It is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is a Wholly-Owned Consolidated Subsidiary of
the Company.
SECTION 9.02. Corporate and Governmental Authorization; Contravention.
The execution and delivery by it of its Election to Participate and its the
performance by it of this Agreement and its Notes, are within its corporate
powers, have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of its certificate of incorporation or by-laws
or of any agreement, judgment, injunction, order, decree or other instrument
binding upon the Company or such Eligible Subsidiary or result in the creation
or imposition of any Lien on any asset of the Company or any of its
Subsidiaries.
SECTION 9.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of such Eligible Subsidiary and its Notes, when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of such Eligible Subsidiary.
SECTION 9.04. Taxes. Except as disclosed in such Election to
Participate, there is no income, stamp or other tax of any country, or any
taxing authority thereof or therein, imposed by or in the nature of withholding
or otherwise, which is imposed on any payment to be made by such Eligible
Subsidiary pursuant hereto or on its Notes, or is imposed on or by virtue of the
execution, delivery or enforcement of its Election to Participate or its Notes.
ARTICLE X
<PAGE> 40
GUARANTY
SECTION 10.01. The Guaranty. The Company hereby unconditionally
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on each Note issued
by any Eligible Subsidiary pursuant to this Agreement and the full and punctual
payment of all other amounts payable by any Eligible Subsidiary under this
Agreement. Upon failure by any Eligible Subsidiary to pay punctually any such
amount, the Company shall forthwith on demand pay the amount not so paid at the
place and in the manner specified in this Agreement.
SECTION 10.02. Guaranty Unconditional. The obligations of the Company
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or release in
respect of any obligation of any Eligible Subsidiary under this Agreement or
any Note, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this Agreement or
any Note;
(iii) any release, non-perfection or invalidity of any direct or indirect
security for any obligation of any Eligible Subsidiary under this Agreement or
any Note;
(iv) any change in the corporate existence, structure or ownership of any
Eligible Subsidiary, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Eligible Subsidiary or its assets or any
resulting release or discharge of any obligation of any Eligible Subsidiary
contained in this Agreement or any Note;
(v) the existence of any claim, set-off or other rights which the
Company may have at any time against any Eligible Subsidiary, the Agent, any
Bank or any other Person, whether in connection herewith or with any unrelated
transactions, provided that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against any
Eligible Subsidiary for any reason of this Agreement or any Note, or any
provision of applicable law or regulation purporting to prohibit the payment
by any Eligible Subsidiary of the principal of or interest on any Note or any
other amount payable by it under this Agreement; or
(vii) any other act or omission to act or delay of any kind by any
Eligible Subsidiary, the Agent, any Bank or any other Person or any other
circumstance whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of the Company's obligations
hereunder.
SECTION 10.03. Discharge Only Upon Payment In Full; Reinstatement in
Certain Circumstances. The Company's obligations hereunder shall remain in full
force and effect until the Commitments shall have terminated and the principal
of and interest on the Notes and all other amounts payable by the Company and
each Eligible Subsidiary under this Agreement shall have been paid in full. If
at any time any payment of the principal of or interest on any Note or any other
amount payable by any Eligible Subsidiary under this Agreement is rescinded or
must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of any Eligible Subsidiary or otherwise, the Company's
obligations hereunder with respect to such payment shall be reinstated at such
time as though such payment had been due but not made at such time.
SECTION 10.04. Waiver by the Company. The Company irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against any Eligible Subsidiary or any other Person.
SECTION 10.05. Subrogation. Upon making any payment hereunder with
respect to any Borrower other than the Company, the Company shall be subrogated
to the rights of the payee against such Borrower with respect to such payment;
provided that the Company shall not enforce any payment by way of subrogation
until all amounts of principal of and interest on the Notes and all other
amounts payable by the Borrowers under this Agreement have been paid in full.
<PAGE> 41
SECTION 10.06. Stay of Acceleration. In the event that acceleration of
the time for payment of any amount payable by any Eligible Subsidiary under this
Agreement or its Notes is stayed upon insolvency, bankruptcy or reorganization
of such Eligible Subsidiary, all such amounts otherwise subject to acceleration
under the terms of this Agreement shall nonetheless be payable by the Company
hereunder forthwith on demand by the Agent made at the request of the Required
Banks.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such party: (x)
in the case of any Borrower or the Agent, at its address or telex or facsimile
transmission number set forth on the signature pages hereof (or, in the case of
an Eligible Subsidiary, its Election to Participate), (y) in the case of any
Bank, at its address or telex or facsimile transmission number set forth in its
Administrative Questionnaire or (z) in the case of any party, at such other
address or telex or facsimile transmission number as such party may hereafter
specify for the purpose by notice to the Agent and the Company. Each such
notice, request or other communication shall be effective (i) if given by telex,
when such telex is transmitted to the number specified in or pursuant to this
Section and the appropriate answerback is received, (ii) if given by certified
mail, return receipt requested, three Domestic Business Days after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in or pursuant to this Section; provided that notices to
the Agent under Article II or Article VIII shall not be effective until
received.
SECTION 11.02. No Waivers. No failure or delay by the Agent or any Bank
in exercising any right, power or privilege hereunder or under any Note shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 11.03. Expenses; Documentary Taxes; Indemnification. (a) The
Company shall pay (i) all direct out-of-pocket expenses (not to include in any
event any indirect or overhead charges) of the Agent, including reasonable fees
and disbursements of special counsel for the Agent, in connection with the
preparation and administration of this Agreement and the Notes, any waiver or
consent hereunder or any amendment hereof or any Default or alleged Default
hereunder and (ii) if an Event of Default occurs, all direct out-of-pocket
expenses (not to include in any event any indirect or overhead charges) incurred
by the Agent and each Bank, including fees and disbursements of counsel, in
connection with such Event of Default and collection, bankruptcy, insolvency and
other enforcement proceedings resulting therefrom.
(b) The Company agrees to indemnify the Agent and each Bank, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in connection
with any investigative, administrative or judicial proceeding (whether or not
such Indemnitee shall be designated a party thereto) brought or threatened
relating to or arising out of this Agreement or any actual or proposed use of
proceeds of Loans hereunder; provided that no Indemnitee shall have the right to
be indemnified hereunder for such Indemnitee's own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
SECTION 11.04. Sharing of Set-Offs. Each Bank agrees that if it shall,
by exercising any right of set-off or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal and interest due with
respect to any Note held by it which is greater than the proportion received by
any other Bank in respect of the aggregate amount of principal and interest due
with respect to any Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Notes
held by the other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the
Notes held by the Banks shall be shared by the Banks pro rata; provided that
nothing in this Section shall impair the right of any Bank to exercise any right
of set-off or counterclaim it may have
<PAGE> 42
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, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or counterclaim and other
rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of such Borrower in the amount of such
participation.
SECTION 11.05. Amendments and Waivers. Any provision of this Agreement
or the Notes may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by the Company and the Required Banks (and, if the
rights or duties of the Agent are affected thereby, by the Agent); provided that
no such amendment or waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank (except for a ratable decrease in the
Commitments of all Banks) or subject any Bank to any additional obligation, (ii)
reduce the principal of or rate of interest on any Loan or any fees hereunder,
(iii) postpone the date fixed for any payment of principal of or interest on any
Loan or any fees hereunder or for any reduction or termination of any
Commitment, (iv) release the Company from all or substantially all of its
obligations under Article X, or (v) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Loans, or the number of Banks,
which shall be required for the Banks or any of them to take any action under
this Section 11.05 or any other provision of this Agreement; and provided,
further, that no such amendment, waiver or modification shall, unless signed by
an Eligible Subsidiary, (w) subject such Eligible Subsidiary to any additional
obligation, (x) increase the principal of or rate of interest on any outstanding
Loan of such Eligible Subsidiary, (y) accelerate the stated maturity of any
outstanding Loan of such Eligible Subsidiary or (z) change this proviso.
SECTION 11.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that no Borrower may assign
or otherwise transfer any of its rights under this Agreement without the prior
written consent of all Banks.
(b) Any Bank may at any time, upon (except in the case of grants of
participating interests in Money Market Loans only) notice to the Company and
the Agent, grant to one or more banks or other institutions (each a
"Participant") participating interests in its Commitment or any or all of its
Loans. In the event of any such grant by a Bank of a participating interest to
a Participant, whether or not upon notice to the Borrowers and the Agent, such
Bank shall remain responsible for the performance of its obligations hereunder,
and the Borrowers and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under this
Agreement. Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain the sole right
and responsibility to enforce the obligations of the Borrowers hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in clause (i), (ii) or (iii) of
Section 11.05 without the consent of the Participant. The Borrowers agree that
each Participant shall, to the extent provided in its participation agreement,
be entitled to the benefits of Section 2.18 and Article VIII with respect to its
participating interest. An assignment or other transfer which is not permitted
by subsection (c) or (d) below shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in accordance
with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit J hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Company and the Agent; provided that (i) any such assignment must
be in an amount of at least $5,000,000, (ii) if an Assignee is an affiliate of
such transferor Bank, no such consent shall be required and (iii) such
assignment may, but need not, include rights of the transferor Bank in respect
of outstanding Money Market Loans. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released
<PAGE> 43
from its obligations hereunder to a corresponding extent, and no further consent
or action by any party shall be required. Upon the consummation of any
assignment pursuant to this subsection (c), the transferor Bank, the Agent and
the Borrowers shall make appropriate arrangements so that, if required, new
Notes are issued to the Assignee. In connection with any such assignment, the
transferor Bank shall pay to the Agent an administrative fee for processing such
assignment in the amount of $2,500. If the Assignee is not incorporated under
the laws of the United States of America or a state thereof, it shall, prior to
the first date on which interest or fees are payable hereunder for its account,
deliver to the Company and the Agent certification as to exemption from
deduction or withholding of any United States federal income taxes in accordance
with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Company's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 11.07. Collateral. Each of the Banks represents to the Agent
and each of the other Banks that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 11.08. Confidentiality. The Agent and each Bank shall keep
confidential any information provided by any Borrower and clearly identified as
confidential; provided that nothing herein shall prevent the Agent or any Bank
from disclosing such information (i) to its officers, directors, employees,
agents, attorneys and accountants in connection with the entry into and
administration of this Agreement and the extensions of credit hereunder, (ii)
upon the order of a court or administrative agency, (iii) upon the request or
demand of any regulatory agency or authority having jurisdiction over such
party, (iv) which has become publicly available without breach of any agreement
among the parties hereto, (v) as necessary for the exercise of any remedy
hereunder or under any Note or (vi) subject to provisions similar to those
contained in this Section, to any prospective Participant or Assignee.
SECTION 11.09. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. Each Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 11.10. Counterparts; Integration. 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, taken together with the letter dated March 6, 1995 describing
certain extraordinary items that may be booked after the Amendment Effective
Date, 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.
SECTION 11.11. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE AGENT
AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
<PAGE> 44
<PAGE>
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.
COMPANY
THE TIMBERLAND COMPANY
By /s/ Keith D. Monda
Title: Senior Vice President
and Chief Financial
Officer
200 Domain Drive
Stratham, NH 03885
Attention: Nancy A. Wels
Facsimile transmission
number: 603-773-1645
Commitments
BANKS
$25,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By /s/ Michael Y. Leder
Title: Vice President
$25,000,000 ABN AMRO BANK N.V.
By /s/ James E. Davis
Title: Vice President
By /s/ Monique F. Bazoberry
Title: Assistant Vice
President
$20,000,000 THE FIRST NATIONAL BANK OF BOSTON
By /s/ Thomas F. Farley, Jr.
Title: Director
$15,000,000 CHEMICAL BANK
By /s/ Barry K. Bergman
Title: Vice President
$15,000,000 THE NORTHERN TRUST COMPANY
By /s/ Curtis C. Tatham, III
Title: Commercial Banking
Officer
$15,000,000 THE BANK OF NOVA SCOTIA
By /s/ Carolyn A. Lopez
Title: Relationship Manager
$10,000,000 BANK HAPOALIM B.M.
By /s/ Nancy J. Lushan
Title: Director of Finance
By /s/ Paul J. Bresler
Title: Vice President and
Credit Manager
<PAGE> 45
_________________
Total Commitments
$ 125,000,000
=================
NON-CONTINUING BANK
BARCLAYS BANK PLC
By /s/ Timothy C. Harrington
Title: Associate Director
<PAGE> 46
AGENT
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent
By /s/ Michael Y. Leder
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: Michael Leder
Telex number: 177615
Facsimile transmission
number: (212) 648-5018
<PAGE> 47
EXHIBIT A
FORM OF NOTE
New York, New York
________ __, 199_
For value received, [NAME OF BORROWER], a [jurisdiction of incorporation]
corporation (the "Borrower"), promises to pay to the order of [NAME OF BANK]
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the Termination Date provided for in the
Credit Agreement. The Borrower promises to pay interest on the unpaid principal
amount of each such Loan on the dates and at the rate or rates provided for in
the Credit Agreement. All such payments of principal and interest shall be made
in lawful money of the United States in Federal or other immediately available
funds at the office of Morgan Guaranty Trust Company of New York, 60 Wall
Street, New York, New York.
All Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This note is one of the Notes referred to in the Amended and Restated
Credit Agreement dated as of March 14, 1995 among The Timberland Company, the
banks listed on the signature pages thereof and Morgan Guaranty Trust Company of
New York, as Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the
same meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
[The Timberland Company has, pursuant to the provisions of the Credit
Agreement, unconditionally guaranteed the payment in full of the principal of
and interest on this note.]
[NAME OF BORROWER]
By____________________
Title:
<PAGE> 48
LOANS AND PAYMENTS OF PRINCIPAL
Type Amount Amount of
of of Principal Notation
Date Loan Loan Repaid Made By
<PAGE> 49
EXHIBIT B
FORM OF NOTICE OF COMMITTED BORROWING
Morgan Guaranty Trust Company
of New York, as Agent
under the Credit Agreement referred
to below
60 Wall Street
New York, New York 10260-0060
Attention: Credit Administration
Re: $125,000,000 Amended and Restated Credit Agreement dated as of March 14,
1995 among The Timberland Company, the Banks listed on the signature
pages thereof and Morgan Guaranty Trust Company of New York, as Agent
(the "Credit Agreement")
Ladies and Gentlemen:
We, [name of Borrower] (the "Borrower"), refer to the Credit Agreement
and hereby give notice pursuant to Section 2.02 of the Credit Agreement that we
wish to make a Committed Borrowing as set forth below:
Date of Borrowing: __________
Aggregate Principal Amount of Borrowing: __________
Type of Borrowing (choose one):
[Base Rate]/[CD]/[Euro-Dollar]
Initial Interest Period: __________
<PAGE> 50
Dated: __________ __, 199_
Very truly yours,
[BORROWER]
By:________________________
Title:
<PAGE> 51
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
To: [Name of Bank]
From: [Name of Borrower] (the "Borrower")
Re: $125,000,000 Amended and Restated Credit Agreement dated as of March 14,
1995 among The Timberland Company, the Banks listed on the signature
pages thereof and Morgan Guaranty Trust Company of New York, as Agent
(the "Credit Agreement")
Pursuant to Section 2.03 of the Credit Agreement we are pleased to invite
you to submit Money Market Quotes to us for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the Interbank Offered Rate.]****
Please respond to this invitation by no later than [2:00 P.M.]**** [9:15
A.M.]***** (New York City time) on [date].
[NAME OF BORROWER]
By______________________
Authorized Officer
<PAGE> 52
EXHIBIT D
FORM OF MONEY MARKET QUOTE
To: [Name of Borrower] (the "Borrower")
Re: Money Market Quote to the Borrower
In response to your invitation dated _____________, 19__, we hereby make
the following Money Market Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank: _____________________________
3. Date of Borrowing: ____________________
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest Money Market
Amount Period [Margin] [Absolute Rate]
$
$
[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 Amended and Restated
Credit Agreement dated as of March 14, 1995 among The Timberland Company, the
Banks listed on the signature pages thereof and Morgan Guaranty Trust Company of
New York, as Agent, irrevocably obligates us to make the Money Market Loan(s)
for which any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
<PAGE> 53
EXHIBIT E
OPINION OF
COUNSEL FOR THE COMPANY
[Closing Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
This opinion is being furnished to you pursuant to Section 3.01(c) of the
Amended and Restated Credit Agreement dated as of March 14, 1995 (the "Credit
Agreement") among The Timberland Company, a Delaware corporation (the
"Company"), the banks listed on the signature pages thereof and Morgan Guaranty
Trust Company of New York, as Agent, in connection with the closing held this
day under the Credit Agreement. Terms defined in the Credit Agreement and not
otherwise defined herein are used herein with the meanings so defined.
We have acted as counsel to the Company in connection with the Credit
Agreement and the transactions contemplated thereby and as such are familiar
with the proceedings taken by the Company in connection therewith. Please be
advised, however, that, although we represent the Company on a regular basis,
the scope of our representation does not include, and, except as specified
herein, we have not undertaken, any special factual investigation into the
business, properties, agreements or affairs of the Company and its Subsidiaries
for purposes of rendering the opinions expressed in paragraphs 9, 10 and 11
below.
We have participated in the preparation of the Credit Agreement and have
examined copies, executed by the Company, of the Credit Agreement and each of
the Notes delivered to the Banks on the date hereof.
We have also examined such certificates, documents and records, and have
made such examination of law, as we have deemed necessary to enable us to render
the opinions expressed below. In addition, we have examined and relied upon
representations and warranties contained in the Credit Agreement and in
certificates delivered to you in connection therewith as to matters of fact
(other than facts constituting conclusions of law) and upon the covenants
contained in the Credit Agreement as to the application of the proceeds of the
loans made pursuant thereto.
The opinion expressed in clause (c) of paragraph 11 below assumes,
without investigation, that the transactions contemplated by the Credit
Agreement will not result in a violation of financial ratios which are contained
in covenants.
We call your attention to the fact that the Credit Agreement and the
Notes provide that they are to be governed by and construed in accordance with
the internal laws of the State of New York and we understand that you are
relying on the advice of your own counsel with respect to all matters of New
York law. We are of the opinion that a Massachusetts court or a federal court
sitting in Massachusetts would, under conflict of laws principles observed by
the courts of Massachusetts, give effect to such provision. For purposes of
rendering the opinions expressed in paragraphs 6 and 8 below, we have assumed
that the Credit Agreement and each Note provides that it is to be governed by
and construed in accordance with the internal laws of The Commonwealth of
Massachusetts.
The opinions expressed below are limited to matters governed by the laws
of The Commonwealth of Massachusetts, the General Corporation Law of the State
of Delaware and the federal laws of the United States. With respect to the
opinions expressed in paragraphs 2 and 4 below concerning (i) the qualification
and good standing of the Company as a foreign corporation under the laws of New
Hampshire and Tennessee and (ii) the qualification and good standing of The
Outdoor Footwear Company, a Delaware corporation ("TOFC"), as a foreign
corporation under the laws of Puerto Rico, such opinions are based solely upon
certificates from officials of such jurisdictions, copies of which have been
furnished to you.
Based on the foregoing, we are of the opinion that:
<PAGE> 54
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 and
the Notes and for carrying on the business now conducted by it.
2. The Company is duly qualified to do business as a foreign corporation
under the laws of New Hampshire and Tennessee.
3. TOFC is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware with corporate powers adequate
for carrying on the business now conducted by it.
4. TOFC is duly qualified to do business as a foreign corporation under
the laws of Puerto Rico.
5. The Credit Agreement has been duly authorized, executed and delivered
by the Company.
6. Subject to the qualifications stated in the penultimate paragraph
hereof, the Credit Agreement constitutes the legal, valid and binding obligation
of the Company and is enforceable against the Company in accordance with its
terms.
7. The Notes being delivered to the Banks today have been duly
authorized, executed and delivered by the Company.
8. Subject to the qualifications stated in the penultimate paragraph
hereof, the Notes being delivered to the Banks today constitute the legal, valid
and binding obligations of the Company and are enforceable against the Company
in accordance with the terms thereof.
9. The execution and delivery of the Credit Agreement do not, and the
performance by the Company of the terms thereof applicable to it will not,
result in any violation of, or be in conflict with, constitute a default under
or result in the creation of a lien under, any term or provision of: (a) its
charter or bylaws, (b) any presently existing federal or Massachusetts law,
statute or governmental regulation or the General Corporation Law of the State
of Delaware, or (c) any agreement, indenture or other instrument listed in
paragraph (4) of Exhibit A hereto.
10. Under existing provisions of law, no approval of, or authorization
or other action by, or filing with, any federal or Massachusetts governmental
authority, and no approval, authorization or other action or filing under the
General Corporation Law of the State of Delaware, is required to be obtained or
made by the Company in connection with the execution, delivery or performance of
the Credit Agreement or the Notes, except for such filings as do not affect the
validity or enforceability of the Credit Agreement and the Notes.
11. To the best of our knowledge after having made due inquiry of
officers of the Company, but without having investigated any governmental
records or court dockets, there is no governmental action or proceeding and no
litigation pending against the Company or any of its Subsidiaries which places
in question the validity or enforceability of the Credit Agreement or the Notes.
We call your attention to the fact that John E. Beard is the Secretary of
the Company. Our opinions expressed herein do not include matters which may
have come to the attention of John E. Beard in that capacity and which have not
been referred to us for substantive legal advice.
Our opinions that the Credit Agreement and the Notes being delivered to
the Banks today are legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms are subject to
(i) bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and (ii) general
principles of equity, regardless of whether applied in proceedings in equity or
at law. Such opinions are also subject to the following qualifications:
(a) the enforceability of the provisions of the Credit Agreement
providing for indemnification may be affected by public policy considerations
or court decisions which may limit the right of the indemnified party to
obtain indemnification;
(b) we express no opinion as to the enforceability of any provision of
the Credit Agreement which purports to grant the right of setoff to a
purchaser of a participation in the obligations of the Company under the
Credit Agreement and the Notes from a bank party to the Credit Agreement; and
(c) we express no opinion as to the enforceability of any provision of
the Credit Agreement to the extent it requires the Company to indemnify any of
you or any other party against
<PAGE> 55
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.
Very truly yours,
<PAGE> 56
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
[Closing Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
We have participated in the preparation of the Amended and Restated
Credit Agreement (the "Credit Agreement") dated as of March 14, 1995 among The
Timberland Company, a Delaware corporation (the "Company"), the banks listed on
the signature pages thereof (the "Banks") and Morgan Guaranty Trust Company of
New York, as Agent (the "Agent"), and have acted as special counsel for the
Agent for the purpose of rendering this opinion pursuant to Section 3.01(d) of
the Credit Agreement. Terms defined in the Credit Agreement are used herein as
therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Company of the Credit
Agreement and its Notes are within the Company's corporate powers and have been
duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement of the
Company and its Notes constitute valid and binding obligations of the Company,
in each case enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditor's rights generally and equitable principles of general applicability.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United States of America and the General Corporation Law of the State of
Delaware. In giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State of New York) in
which any Bank is located which limits the rate of interest that such Bank may
charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent.
Very truly yours,
<PAGE> 57
EXHIBIT G
FORM OF ELECTION TO PARTICIPATE
, 19
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
for the Banks named in the Amended
and Restated Credit Agreement dated
as of March 14, 1995 among The Timberland Company,
such Banks and such Agent (the "Credit Agreement")
Ladies and Gentlemen:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation, hereby elects to be an Eligible Subsidiary for
purposes of the Credit Agreement, effective from the date hereof until an
Election to Terminate shall have been delivered on behalf of the undersigned in
accordance with the Credit Agreement. The undersigned confirms that the
representations and warranties set forth in Article IX of the Credit Agreement
are true and correct as to the undersigned as of the date hereof, and the
undersigned hereby agrees to perform all the obligations of an Eligible
Subsidiary under, and to be bound in all respects by the terms of, the Credit
Agreement, including without limitation Section 11.09 thereof, as if the
undersigned were a signatory party thereto.
[Tax disclosure pursuant to Section 9.04]
The address to which all notices to the undersigned under the Credit
Agreement should be directed is: . This instrument shall be
construed in accordance with and governed by the laws of the State of New York.
Very truly yours,
[NAME OF ELIGIBLE SUBSIDIARY]
By_________________________________
Title:
The undersigned hereby confirms that [name of Eligible Subsidiary] is an
Eligible Subsidiary for purposes of the Credit Agreement described above.
THE TIMBERLAND COMPANY
By_________________________________
Title:
Receipt of the above Election to Participate is hereby acknowledged on
and as of the date set forth above.
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent
By_________________________________
Title:
<PAGE> 58
EXHIBIT H
FORM OF ELECTION TO TERMINATE
, 19
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
for the Banks named in the Amended
and Restated Credit Agreement dated
as of March 14, 1995 among The Timberland Company,
such Banks and such Agent (the "Credit Agreement")
Ladies and Gentlemen:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation, hereby elects to terminate its status as an Eligible
Subsidiary for purposes of the Credit Agreement, effective as of the date
hereof. The undersigned hereby represents and warrants that all principal and
interest on all Notes of the undersigned and all other amounts payable by the
undersigned pursuant to the Credit Agreement have been paid in full on or prior
to the date hereof. Notwithstanding the foregoing, this Election to Terminate
shall not affect any obligation of the undersigned under the Credit Agreement or
under any Note heretofore incurred.
<PAGE> 59
This instrument shall be construed in accordance with and governed by the
laws of the State of New York.
Very truly yours,
[NAME OF ELIGIBLE SUBSIDIARY]
By____________________________
Title:
The undersigned hereby confirms that the status of [name of Eligible
Subsidiary] as an Eligible Subsidiary for purposes of the Credit Agreement
described above is termi- nated as of the date hereof.
THE TIMBERLAND COMPANY
By____________________________
Title:
Receipt of the above Election to Terminate is hereby acknowledged on and
as of the date set forth above.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By__________________________
Title:
<PAGE> 60
EXHIBIT I
OPINION OF
COUNSEL FOR THE BORROWER
(BORROWINGS BY ELIGIBLE SUBSIDIARIES)
[Dated as provided in
Section 3.04 of the
Credit Agreement]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
9 West 57th Street
New York, New York 10019
Ladies and Gentlemen:
I am counsel to [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation (the "Borrower"), and give this opinion pursuant to
Section 3.04(b) of the Amended and Restated Credit Agreement (the "Credit
Agreement") dated as of March 14, 1995 among The Timberland Company (the
"Company"), the banks listed on the signature pages thereof and Morgan Guaranty
Trust Company of New York, as Agent. Terms defined in the Credit Agreement are
used herein as therein defined.
I have examined originals or copies, certified or otherwise identified to
my satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly existing and
in good standing under the laws of [jurisdiction of incorporation], and is a
Wholly-Owned Consolidated Subsidiary of the Company.
2. The execution and delivery by the Borrower of its Election to
Participate and its Notes and the performance by the Borrower of the Credit
Agreement and its Notes are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Borrower or
of any agreement, judgment, injunction, order, decree or other instrument
binding upon the Company or the Borrower or result in the creation or imposition
of any Lien on any asset of the Company or any of its Subsidiaries.
3. The Credit Agreement constitutes a valid and binding agreement of the
Borrower and its Notes constitute valid and binding obligations of the Borrower.
4. Except as disclosed in the Borrower's Election to Participate, there
is no income, stamp or other tax of [jurisdiction of incorporation and, if
different, principal place of business], or any taxing authority thereof or
therein, imposed by or in the nature of withholding or otherwise, which is
imposed on any payment to be made by the Borrower pursuant to the Credit
Agreement or its Notes, or is imposed on or by virtue of the execution, delivery
or enforcement of its Election to Participate or of its Notes.
Very truly yours,
<PAGE> 61
EXHIBIT J
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the "Assignor"),
[ASSIGNEE] (the "Assignee"), THE TIMBERLAND COMPANY (the "Company") and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Amended and Restated Credit Agreement dated as of March 14, 1995
among the Company, the Assignor and the other Banks party thereto, as Banks, and
the Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans in an aggregate amount at any time outstanding not to
exceed $__________;
WHEREAS, Committed Loans made by the Assignor under the Credit Agreement
in the aggregate principal amount of $__________ are outstanding at the date
hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Committed Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of the
Committed Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, the Company and the
Agent and the payment of the amounts specified in Section 3 required to be paid
on the date hereof (i) the Assignee shall, as of the date hereof, succeed to the
rights and be obligated to perform the obligations of a Bank under the Credit
Agreement with a Commitment in an amount equal to the Assigned Amount, and (ii)
the Commitment of the Assignor shall, as of the date hereof, be reduced by a
like amount and the Assignor released from its obligations under the Credit
Agreement to the extent such obligations have been assumed by the Assignee. The
assignment provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds an amount heretofore agreed between them. It is
understood that facility fees with respect to the Assigned Amount accrued to the
date hereof are for the account of the Assignor and such fees accruing from and
including the date hereof are for the account of the Assignee. Each of the
Assignor and the Assignee hereby agrees that if it receives any amount under the
Credit Agreement which is for the account of the other party hereto, it shall
receive the same for the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such other party.
SECTION 4. Consent of the Company and the Agent. This Agreement is
conditioned upon the consent of the Company and the Agent pursuant to Section
11.06(c) of the Credit Agreement. The execution of this Agreement by the
Company and the Agent is evidence of this consent. Pursuant to Section 11.06(c)
the Company agrees to execute and deliver a Note, and to cause each Eligible
Subsidiary, if any, to execute and deliver a Note, payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of any
Borrower, or the validity and enforceability of the obligations of any Borrower
in respect of the Credit Agreement or any Note. The Assignee acknowledges that
it
<PAGE> 62
has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrowers.
SECTION 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date first above
written.
[ASSIGNOR]
By____________________________
Title:
[ASSIGNEE]
By____________________________
Title:
THE TIMBERLAND COMPANY
By____________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By____________________________
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1995 AND THE
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 2,037
<SECURITIES> 0
<RECEIVABLES> 122,473
<ALLOWANCES> 3,695
<INVENTORY> 229,308
<CURRENT-ASSETS> 372,610
<PP&E> 113,536
<DEPRECIATION> 46,227
<TOTAL-ASSETS> 471,202
<CURRENT-LIABILITIES> 96,347
<BONDS> 207,008
0
0
<COMMON> 109
<OTHER-SE> 152,257
<TOTAL-LIABILITY-AND-EQUITY> 471,202
<SALES> 141,397
<TOTAL-REVENUES> 141,397
<CGS> 96,611
<TOTAL-COSTS> 96,611
<OTHER-EXPENSES> 421
<LOSS-PROVISION> 834
<INTEREST-EXPENSE> 5,116
<INCOME-PRETAX> 1,483
<INCOME-TAX> 564
<INCOME-CONTINUING> 919
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 919
<EPS-PRIMARY> .08
<EPS-DILUTED> .00
</TABLE>
