<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 June 30, 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 August 4, 1995 8,266,795 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
THE TIMBERLAND COMPANY
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
Independent Accountants' Review Report 1
Part I Financial Information (unaudited)
Condensed Consolidated Balance Sheets - 2-3
June 30, 1995 and December 31, 1994
Condensed Consolidated Statements of Operations - 4
For the three and six months ended June 30, 1995
and July 1, 1994
Condensed Consolidated Statements of Cash Flows - 5
For the six months ended June 30, 1995 and
July 1, 1994
Notes to Condensed Consolidated Financial Statements 6-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
Part II Other Information 13-15
</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 June 30, 1995, and the related
condensed consolidated statements of operations and cash flows for the
three-month and six-month periods ended June 30, 1995 and July 1, 1994. These
financial statements are the responsibility of the
Company's management.
We conducted our review 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 review, 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
July 19, 1995
<PAGE> 4
Form 10-Q
Page 2
Part I Financial Information
THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
--------- ------------
<S> <C> <C>
Current assets
Cash and equivalents $ 2,846 $ 6,381
Accounts receivable, net 111,975 128,435
Inventories 264,948 218,219
Prepaid expenses 11,153 13,504
Deferred and refundable income taxes 19,040 7,112
--------- ---------
Total current assets 409,962 373,651
--------- ---------
Property, plant and equipment, at cost 90,513 110,650
Less accumulated depreciation and amortization (37,200) (42,417)
--------- ---------
Net property, plant and equipment 53,313 68,233
--------- ---------
Assets held for sale 5,441 -
Excess of cost over fair value of net assets
acquired, net 25,114 25,956
Other assets, net 7,846 5,424
--------- ---------
$ 501,676 $ 473,264
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 5
Form 10-Q
Page 3
THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
<S> <C> <C>
Current liabilities
Notes payable $ 65,000 $ 22,513
Current maturities of long-term obligations 7,806 8,048
Accounts payable 35,572 37,035
Accrued expenses
Payroll and related 7,502 6,038
Interest and other 29,784 24,459
Income taxes payable 1,034 9,029
-------- --------
Total current liabilities 146,698 107,122
-------- --------
Long-term obligations, less current maturities 206,826 206,767
-------- --------
Deferred income taxes 10,535 10,285
-------- --------
Deferred income 4,609 -
-------- --------
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; 8,265,893 shares issued
at June 30, 1995 and 8,221,615 shares at
December 31, 1994 83 82
Class B Common Stock, $.01 par value (10 votes per share);
15,000,000 shares authorized; 2,735,381 shares issued
at June 30, 1995 and 2,737,121 shares at December 31,
1994 27 27
Additional paid-in capital 58,423 57,756
Retained earnings 72,354 91,816
Cumulative translation adjustment 2,241 (471)
Less treasury stock at cost, 18,369 shares at June 30,
1995 and December 31, 1994 (120) (120)
-------- --------
133,008 149,090
-------- --------
$501,676 $473,264
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 6
Form 10-Q
Page 4
THE TIMBERLAND COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
------------------ ----------------
June 30, July 1, June 30, July 1,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $125,143 $127,254 $266,726 $235,572
Cost of goods sold 89,064 86,795 185,675 162,397
-------- -------- -------- --------
Gross profit 36,079 40,459 81,051 73,175
-------- -------- -------- --------
Operating expenses
Selling 34,312 27,038 67,803 49,890
General and administrative 12,053 9,667 23,724 19,624
Amortization of goodwill 421 250 842 444
Restructuring charge 16,000 - 16,000 -
-------- -------- -------- --------
Total operating expenses 62,786 36,955 108,369 69,958
-------- -------- -------- --------
Operating income (loss) (26,707) 3,504 (27,318) 3,217
-------- -------- -------- --------
Other expense (income)
Interest expense 5,725 3,440 10,841 5,325
Other, net 441 (171) (6,769) 269
-------- -------- -------- --------
Total other expense 6,166 3,269 4,072 5,594
-------- -------- -------- --------
Income (loss) before income taxes (32,873) 235 (31,390) (2,377)
-------- -------- -------- --------
Provision (benefit) for income taxes (12,492) 90 (11,928) (903)
-------- -------- -------- --------
Net income (loss) $(20,381) $ 145 $(19,462) $ (1,474)
======== ======== ======== ========
Earnings (loss) per share $ (1.83) $ .01 $ (1.75) $ (.13)
======== ======== ======== ========
Weighted average shares outstanding and
share equivalents 11,120 11,201 11,130 11,216
======== ======== ======== ========
</TABLE>
See accompany notes to condensed consolidated financial statements.
.
<PAGE> 7
Form 10-Q
Page 5
THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the
Six Months Ended
----------------
June 30, July 1,
1995 1994
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (19,462) $ (1,474)
Adjustments to reconcile net loss
to net cash used in operating activities:
Deferred income taxes 250 684
Depreciation and amortization 8,629 7,017
Gain on distributorship transaction (7,358) -
Restructuring charge 16,000 -
Gain on sale of equipment (127) -
Increase (decrease) in cash from changes in working
capital items, net of effects of distributorship
transaction:
Accounts receivable 12,700 (25,977)
Inventories (52,034) (76,471)
Prepaid expenses 2,494 (3,077)
Accounts payable (1,554) 4,459
Accrued expenses (3,071) 9,835
Income taxes (19,923) (1,944)
--------- ---------
Net cash used in operating activities (63,456) (86,948)
--------- ---------
Cash flows from investing activities:
Proceeds from distributorship transaction 24,000 -
Proceeds from sale of equipment 1,756 -
Additions to property, plant and equipment, net (7,903) (9,170)
Acquisition of Italian distributor - (14,086)
Other, net (1,267) 1,061
--------- ---------
Net cash provided by (used) in investing activities 16,586 (22,195)
--------- ---------
Cash flows from financing activities:
Net borrowings under short-term credit facilities 42,470 43,676
Proceeds from long-term obligations 525 65,000
Payments on long-term and capital lease obligations (692) (332)
Issuance of common stock 668 477
--------- ---------
Net cash provided by financing activities 42,971 108,821
--------- ---------
Effect of exchange rate changes on cash 364 105
--------- ---------
Net decrease in cash and equivalents (3,535) (217)
Cash and equivalents at beginning of period 6,381 3,281
--------- ---------
Cash and equivalents at end of period $ 2,846 $ 3,064
========= =========
Supplemental disclosures of cash flow information:
Interest paid $ 10,766 $ 4,158
Income taxes paid 7,744 391
</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.
Certain prior period amounts have been reclassified for consistent
presentation with the current period presentation.
2. The results of operations for the six months ended June 30, 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.
3. Recognition of Revenue
Revenue consists of sales to customers, license fees and royalties.
Sales are recognized upon shipment of product to customers while
license fees and royalties are recognized when earned. Such license
fees and royalties are included in "Revenues" and aggregated $4.6
million and $4.8 million for the three and six month periods ended June
30, 1995, respectively. These license fees and royalties were $.3
million and $.5 million for the three and six month periods ended July
1, 1994.
4. Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------- -----------------
<S> <C> <C>
Raw materials $ 18,801 $ 19,806
Work-in-process 5,709 13,137
Finished goods 240,438 185,276
-------- --------
$264,948 $218,219
======== ========
</TABLE>
5. Indebtedness
On July 21, 1995, the Company amended the revolving credit agreement
to provide for up to $50 million in letters of credit under the
overall $125 million committed facility.
6. 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 pre-tax gain of
approximately $7.4 million. The noncurrent portion of 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, revenues of the Company's Australian and
New Zealand subsidiaries combined accounted for less than 2% of total
consolidated revenues.
<PAGE> 9
Form 10-Q
Page 7
THE TIMBERLAND COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. 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. On April 24, 1995, the District Court granted the plaintiffs'
motion, assented to by the defendants, to consolidate the two suits.
The plaintiffs filed a single consolidated amended complaint with the
District Court on June 23, 1995. The amended complaint alleges 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 amended complaint alleges
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. Damages are unspecified. The amended complaint
seeks class action status for all purchasers of the Company's
Common Stock between May 12, 1994 and December 9, 1994.
While this action is in its preliminary stages, based on an initial
review, and after consultation with counsel, management believes the
allegations are without merit. Accordingly, management does not expect
the outcome of such litigation to have a material adverse effect on the
consolidated financial statements. The Company intends to defend this
proceeding vigorously.
8. Restructuring Charge
During the second quarter of 1995, the Company closed its manufacturing
facilities in Boone, North Carolina and Mountain City, Tennessee,
reduced its manufacturing operations in the Dominican Republic and
downsized its corporate office workforce due to a reorganized
management structure. These actions resulted in a one-time pre-tax
charge of $16.0 million. The Company has two remaining manufacturing
facilities: one in Puerto Rico and one in the Dominican Republic. All
other product is sourced by the Company from contract manufacturers.
<PAGE> 10
Form 10-Q
Page 8
THE TIMBERLAND COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Of the total charge for restructuring, $10.4 million relates to
anticipated losses associated with the disposal of assets and is a
non-cash item; $2.6 million relates to payments for contractual lease
obligations and anticipated expenditures to close idle facilities; and
$3.0 million relates to anticipated payments for severance and employee
insurance liabilities.
Restructuring actions are substantially completed with the
exception of the sale of certain manufacturing equipment which may not
occur until 1996. The Company has funded the restructuring plan from
internal sources and available borrowing capacity. The Company
estimates the results of the restructuring plan will begin lowering
operating costs in the second half of 1995. Savings from the planned
action will be used to repay indebtedness and for both business-
building initiatives and profit improvement.
<PAGE> 11
Form 10-Q
Page 9
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 revenues for the
periods indicated.
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
-------------------- --------------------
June 30, July 1, June 30, July 1,
1995 1994 1995 1994
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 71.2 68.2 69.6 68.9
----- ----- ----- -----
Gross profit 28.8 31.8 30.4 31.1
----- ----- ----- -----
Operating expenses
Selling 27.4 21.2 25.4 21.2
General and administrative 9.6 7.6 8.9 8.3
Amortization of goodwill .3 .2 .3 .2
Restructuring charge 12.8 - 6.0 -
----- ----- ----- -----
Total operating expenses 50.2 29.0 40.6 29.7
----- ----- ----- -----
Operating income (loss) (21.3) 2.8 (10.2) 1.4
----- ----- ----- -----
Other expense (income)
Interest expense 4.6 2.7 4.1 2.3
Other, net .4 (.1) (2.5) .1
----- ----- ----- -----
Total other expense 4.9 2.6 1.5 2.4
----- ----- ----- -----
Income (loss) before income taxes (26.3) .2 (11.8) (1.0)
Provision (benefit) for income taxes (10.0) .1 (4.5) (.4)
----- ----- ----- -----
Net income (loss) (16.3)% .1% (7.3)% (.6)%
===== ===== ===== =====
</TABLE>
Note: Percentages may not add due to rounding.
<PAGE> 12
Form 10-Q
Page 10
Second Quarter 1995 Compared with Second Quarter 1994
-----------------------------------------------------
Revenues for the second quarter of 1995 were $125.1 million, a decrease of 1.7%
compared to the $127.3 million reported in the comparable prior year period.
The revenue decline primarily occurred in the Company's wholesale footwear
business. The generally soft retail environment also contributed to the
revenue decline as an oversupply of product affected at-once orders and can be
expected to have an unfavorable impact on second half 1995 revenue. In
addition, Timberland's more aggressive approach toward credit management and
toward establishing firmer controls over distribution and diversion of
Timberland(R) products had a negative impact on revenues. Revenues for the
second quarter of 1995 include $4.6 million of licensing fees and royalties, of
which $4.2 million are non-recurring, compared to $.3 million reported in the
comparable prior year period.
Footwear revenues decreased $11.1 million, or 10.3%, in the second quarter of
1995, compared to the same period in 1994. Apparel and accessories revenues
increased $9.0 million, or 45.9%, in the second quarter of 1995, compared to
the same period in 1994. Retail revenue represented 18.6% of total revenues in
the current quarter, compared to 7.6% in the second quarter of 1994. Domestic
first quality comparable retail store revenues were up 8% compared with second
quarter 1994. Domestic revenues declined $2.8 million, or 2.9%, compared to the
second quarter of 1994. International revenues for the second quarter of 1995
were up 2.2%, compared to the same period in the prior year, and comprised
24.4% of total second quarter revenue in 1995 versus 23.5% in the second
quarter of 1994.
Gross profit as a percentage of revenues for the second quarter of 1995 was
28.8%, compared to 31.8% for the second quarter of 1994. Gross margin was
depressed by a change in product sales mix; although first quality inventory
represented a substantial majority of total revenues, off-price sales
comprised a greater percentage of total revenues than in the same quarter last
year. In addition, period costs associated with concluding operations at
certain of the Company's manufacturing facilities further depressed gross
margins.
During the second quarter of 1995, the Company closed its manufacturing
facilities in Boone, North Carolina and Mountain City, Tennessee, reduced its
manufacturing operations in the Dominican Republic and downsized its corporate
office workforce due to a reorganized management structure. Approximately 1,800
positions were eliminated. These actions resulted in a one-time pre-tax charge
of $16.0 million. The Company has two remaining manufacturing facilities: one
in Puerto Rico and one in the Dominican Republic. All other product is sourced
by the Company from contract manufacturers.
Of the total charge for restructuring, $10.4 million relates to anticipated
losses associated with the disposal of assets and is a non-cash item; $2.6
million relates to payments for contractual lease obligations and anticipated
expenditures to close idle facilities; and $3.0 million relates to anticipated
payments for severance and employee insurance liabilities.
Restructuring actions are substantially completed with the exception of the
sale of certain manufacturing equipment which may not occur until 1996. The
Company has funded the costs of the restructuring plan from internal sources
and available borrowing capacity. The Company estimates the restructuring plan
will begin lowering operating costs in the second half of 1995 and to generate
increasing savings in subsequent years, growing to an annual savings of
approximately $7.0 million in 1996. Savings from the planned action will be
used to repay indebtedness and for both business-building initiatives and
profit improvement.
<PAGE> 13
Form 10-Q
Page 11
Excluding the one-time pre-tax restructuring charge, operating expenses were
$46.8 million in the second quarter of 1995, compared to $37.0 million in the
second quarter of 1994. Operating expenses, exclusive of the restructuring
charge, as a percentage of revenue in the second quarter of 1995 were 37.4%,
compared to 29.0% in the second quarter of 1994. This increase was due in
part to higher operating costs associated with the Company's growing retail
organization and to a larger core infrastructure designed to support higher
revenue levels.
Interest expense for the second quarter of 1995 increased by $2.3 million to
$5.7 million over the comparable period in 1994, primarily as a result of
increased borrowings to support higher inventory levels and higher interest
rates.
Six Months ended June 30, 1995 Compared with Six Months ended July 1, 1994.
---------------------------------------------------------------------------
Revenues for the first six months of 1995 were $266.7 million, an increase of
13.2% over the $235.6 million for the comparable period in 1994. Revenues for
the first six months of 1995 include $4.8 million of licensing fees and
royalties, $4.2 million of which are non-recurring, received in connection with
licensing agreements compared with $.5 million for the comparable period in
1994. The increase in product revenues was attributable to an overall increase
in the number of footwear, apparel and accessory units sold. Revenues for the
first six months of 1995 were adversely impacted by the mild winter and
generally soft retail environment.
Gross profit as a percentage of revenues for the first six months of 1995 was
30.4%, compared to 31.1% for the comparable period in 1994.
Excluding the one-time pretax restructuring charge, operating expenses for the
first half of 1995 increased $22.4 million to $92.4 million from $70.0 million
for the comparable period in 1994. The increase is principally a result of the
Company's growing retail organization and the larger core infrastructure
designed to support higher revenue periods. As a percentage of revenues,
operating expenses, exclusive of the restructuring charge, increased to 34.6%
in 1995 from 29.7% in 1994.
Interest expense for the first six months of 1995 increased by $5.5 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 six months 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 six months of 1995 was $63.5 million,
compared to $86.9 million in the same period in 1994. Net cash used by
operations was adversely affected by increased levels of inventories. Accounts
receivable declined $16.5 million from December 31, 1994, and $6.0 million
since July 1, 1994, primarily as the result of the decline in second quarter
1995 wholesale revenues compared to second quarter 1994. Wholesale days sales
outstanding increased to 93 days at June 30, 1995, compared to 88 days at July
1, 1994. Inventories increased $46.7 million since December 31, 1994.
Inventory turns were 1.5 times for the second quarter of 1995, compared to 2.2
times for the same period in 1994.
<PAGE> 14
Form 10Q
Page 12
During the first six months of 1995, $16.6 million of cash was provided from
investing activities, due primarily to $24 million of cash proceeds received
from the agreement with Inchcape plc. These proceeds were partially offset by
capital expenditures for the first six months of 1995 of $7.9 million, compared
to $9.2 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 July 21, 1995, the Company amended the revolving credit
agreement which extends through the end of February 1997, to provide for up to
$50 million in letters of credit under the overall $125 million committed
facility. The Company's debt to capital ratio was 67.8% at June 30, 1995
compared to 61.4% at December 31, 1994 and 62.1% at July 1, 1994.
Management believes that the Company's capital needs for 1995 will be met
through the credit facilities and cash flows from operations, without the need
for additional permanent financing.
<PAGE> 15
Form 10-Q
Page 13
Part II Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Company held its Annual Meeting of Stockholders on May 18,
1995.
(b) At such Annual Meeting proxies were solicited pursuant to
Regulation 14A of the Securities Exchange Act of 1934 and all
nominees for director were elected as indicated by the following
Schedule of votes cast for each director. The holders of Class A
Common Stock elected the following directors:
<TABLE>
<CAPTION>
Total Votes for Each Total Votes Withheld
Nominee Director from Each Director
------- -------- ------------------
<S> <C> <C> <C>
John F. Brennan 7,221,984 105,861
Abraham Zaleznik 7,220,484 107,361
</TABLE>
The holders of Class A Common Stock and the holders of Class B Common
Stock voting together as a single class elected the following
directors:
<TABLE>
<CAPTION>
Total Votes for Each Total Votes Withheld
Nominee Director from Each Director
------- -------- ------------------
<S> <C> <C> <C>
Robert M. Agate 34,575,994 105,661
Jeffrey B. Swartz 34,557,290 124,365
Sidney W. Swartz 34,571,138 110,517
</TABLE>
There were no abstentions or broker non-votes with respect to the
election of the director nominees.
The stockholders approved a proposal to increase the number of
shares reserved for issuance under the Company's 1987 Stock Option
Plan from 1,600,000 to 2,100,000 and to set the maximum number of
shares for which options may be granted thereunder in any year to
any participant at 150,000. There were 32,638,898 votes cast in
favor of this proposal, 351,273 votes cast against this
proposal, 49,085 abstentions and 1,642,399 broker non-votes.
The stockholders approved a proposal to increase the number of
shares reserved for issuance under the Company's 1991 Employee
Stock Purchase Plan from 100,000 to 200,000. There were 32,814,131
votes cast in favor of this proposal, 176,109 votes cast against
this proposal, 49,016 abstentions and 1,642,399 broker non-votes.
Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
Material Contracts
<S> <C>
10.10(b) Amendment No. 1 dated as of April 1, 1995 to Amended and Restated Note Agreements
(c) Amendment No. 2 dated as of June 28, 1995 to Amended and Restated Note Agreements
10.12(b) Amendment No. 1 dated as of April 15, 1995 to Note Agreements
(c) Amendment No. 2 dated as of June 28, 1995 to Note Agreements
</TABLE>
<PAGE> 16
Form 10-Q
Page 14
<TABLE>
<CAPTION>
<S> <C>
10.13 Amendment No. 3 dated as of July 21, 1995 to the 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, which also incorporates Amendment No. 1
dated as of April 19, 1995 and Amendment No. 2 dated as of June 28, 1995.
10.14(b) Amendment No. 1 dated as of April 15, 1995 to Note Agreements
(c) Amendment No. 2 dated as of June 28, 1995 to Note Agreements
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K -- There were no reports on Form 8-K filed
during the period covered by this report.
<PAGE> 17
Form 10-Q
Page 15
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Timberland Company
---------------------------
(Registrant)
Date: August 14, 1995 Keith D. Monda
--------------- ---------------------------
Keith D. Monda
Senior Vice President -
Finance and Administration
and Chief Financial Officer
Date: August 14, 1995 Dennis W. Hagele
--------------- ---------------------------
Dennis W. Hagele
Vice President Finance
and Corporate Controller
(Chief Accounting Officer)
<PAGE> 1
EXHIBIT 10.10(b)
THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
FIRST AMENDMENT
Dated as of
April 15, 1995
Re: Amended and Restated
Note Agreements dated as of April 1, 1994
$35,000,000 9.70% Senior Notes
Due December 1, 1999
To the Holder named in Schedule I
hereto which is a signatory of this
Agreement
Gentlemen:
Reference is made to the separate Amended and Restated Note Agreements,
each dated as of April 1, 1994 (the "Original Note Agreements"), between the
undersigned, THE TIMBERLAND COMPANY, a Delaware corporation (the "Company"), and
the Purchasers named in Schedule I thereto (the "Holders") respectively. Unless
otherwise herein defined or the context hereof otherwise requires, the
capitalized terms in this First Amendment shall have the respective meanings
specified in the Original Note Agreements.
The Company now wishes to amend the Original Note Agreements in the
respects, but only in the respects, hereinafter set forth, and, by your
execution hereof, you hereby agree to such amendments on the terms hereinafter
set forth:
SECTION 1. AMENDMENTS.
SECTION 1.1. THE DEFINITION OF THE TERM "CONSOLIDATED NET INCOME" IN
SECTION 8.1 OF ORIGINAL NOTE AGREEMENTS SHALL BE, AND THE SAME HEREBY IS,
AMENDED AS FOLLOWS:
(A) by deleting the word "and" from the end of clause (j) thereof;
<PAGE> 2
The Timberland Company First Amendment
(B) by deleting the period from the end of clause (k) thereof and adding
the following thereto "; and"; and
(C) by adding the following new clause (l) thereto:
"(l) for any determination of `Consolidated Net Income' on
any date through and including March 31, 1996, certain extraordinary
or non-recurring items or charges in an aggregate amount not to
exceed $17,000,000 (calculated on a pre-tax basis) that are incurred
by the Company solely in connection with the closing by the Company
of its manufacturing facilities located in Boone, North Carolina and
Mountain City, Tennessee and the restructuring by the Company of its
manufacturing facility located in the Dominican Republic; provided
that the closing and the restructuring of such facilities shall have
occurred by March 31, 1996."
SECTION 1.2. THE DEFINITION OF THE TERM "TOTAL EQUITY" IN SECTION 8.1 OF
ORIGINAL NOTE AGREEMENTS SHALL BE, AND THE SAME HEREBY IS, AMENDED TO READ AS
FOLLOWS:
"'Total Equity' as at any date shall mean stockholders'
equity determined in accordance with generally accepted accounting
principles consolidating the Company and its Restricted
Subsidiaries; provided that for the purposes of calculating `Total
Equity' on any date through and including July 31, 1996, those
certain extraordinary or non-recurring items or charges in an
aggregate amount not to exceed $17,000,000 (calculated on a pre-tax
basis) that are incurred by the Company solely in connection with
the closing by the Company of its manufacturing facilities located
in Boone, North Carolina and Mountain City, Tennessee and the
restructuring by the Company of its manufacturing facility located
in the Dominican Republic shall be excluded from such determination
of `Total Equity' so long as the closing and the restructuring of
such facilities shall have occurred by March 31, 1996."
SECTION 1.3. SECTION 5.7 OF THE ORIGINAL NOTE AGREEMENT IS HEREBY
AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
-2-
<PAGE> 3
The Timberland Company First Amendment
"Consolidated Tangible Net Worth. The Company will at all
times keep and maintain Consolidated Tangible Net Worth at an
amount not less than (i) for the fiscal quarter of the Company
ending June 30, 1995, the sum of $80,000,000 plus 25% of
Consolidated Net Income for the fiscal quarter of the Company ended
March 31, 1995 (but without deduction in the case of a deficit in
Consolidated Net Income) and (ii) for each fiscal quarter
thereafter, the sum of (x) the amount required to be maintained
during the immediately preceding fiscal quarter of the Company, and
(y) an amount equal to 25% of Consolidated Net Income for such
preceding fiscal quarter (but without deduction in the case of a
deficit in Consolidated Net Income)."
SECTION 2. MISCELLANEOUS.
Section 2.1. Any Default or Event of Default which might have existed
under the Original Note agreements prior to giving effect to this First
Amendment but which would not constitute such a Default or Event of Default
under the original note agreements as amended by this First Amendment is hereby
waived.
Section 2.2. Any and all notices, requests, certificates and other
instruments executed and delivered after the effective date of this First
Amendment may refer to the "Note Agreements dated as of April 1, 1994" without
making specific reference to this First Amendment, but nevertheless all such
references shall be deemed to include this first amendment unless the context
shall otherwise require.
Section 2.3. This First Amendment shall be construed in connection with
and as part of the Original Note Agreements, and all terms, conditions and
covenants contained in the Original Note Agreements, except as herein modified,
shall be and remain in full force and effect.
Section 2.4. This First Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original but altogether
one and the same instrument.
Section 2.5. Governing law. This First Amendment shall be governed by
and construed in accordance with the laws of the state of illinois.
-3-
<PAGE> 4
The Timberland Company First Amendment
Upon the acceptance of this First Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15,
1995.
THE TIMBERLAND COMPANY
By
Its
------------------------------
Accepted as of April 15, 1995
[VARIATION]
By
Its
------------------------------
By
Its
------------------------------
Holding $[Variation] unpaid principal
amount of the Notes.
-4-
<PAGE> 1
EXHIBIT 10.10(C)
THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
SECOND AMENDMENT
Dated as of
June 28, 1995
Re: Amended and Restated
Note Agreements dated as of April 1, 1994
$35,000,000 9.70% Senior Notes
Due December 1, 1999
To the Holder named in Schedule I
hereto which is a signatory of this
Agreement
Ladies and Gentlemen:
The undersigned, The Timberland Company, a corporation duly organized
and validly existing under the laws of the State of Delaware, (the "Company"),
agrees with you as follows:
SECTION 1. INTRODUCTION.
Reference is made to the separate Amended and Restated Note Agreements,
each dated as of April 1, 1994, as amended by the separate First Amendments
thereto, each dated as of April 15, 1995 collectively, (the "Original Note
Agreements"), between the Company and the Purchasers named in Schedule I
thereto, respectively. Unless otherwise herein defined or the context hereof
otherwise requires, the capitalized terms in this Second Amendment shall have
the respective meanings specified in the Original Note Agreements. The holders
of the Notes at the time of reference are referred to herein as the "Holders".
Reference is also made to that certain Amendment No. 2 to Amended and
Restated Credit Agreement dated as of June 28, 1995 (the "Credit Agreement
Amendment") among the Company, the Banks listed on the signature pages thereof
and Morgan Guaranty Trust Company of New York, as Agent, which is being executed
and delivered concurrently herewith.
<PAGE> 2
The Timberland Company Second Amendment
The Company has requested that, subject to the satisfaction of the
conditions set forth herein, the Original Note Agreements be amended as of June
28, 1995 (the "Effective Date") in the respects, but only in the respects,
hereinafter set forth, and, by your execution hereof, you hereby agree to such
amendments on the terms hereinafter set forth.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to you as follows:
(a) After giving effect to this Second Amendment and the Credit
Agreement Amendment and the transactions contemplated hereby and thereby, no
Default or Event of Default has occurred and is continuing, and no event has
occurred and no condition exists which with the lapse of time or the giving of
notice, or both, would constitute an event of default under any indenture,
agreement, or other instrument under which any Indebtedness of the Company or
any Restricted Subsidiary for borrowed money in an aggregate principal amount in
excess of $1,000,000 is outstanding.
(b) The Company has no Unrestricted Subsidiaries.
SECTION 3. CONDITIONS PRECEDENT.
The effectiveness of this Second Amendment shall be subject to the
following conditions precedent:
Section 3.1. Execution of the Credit Agreement Amendment. The
Company, the Agent named therein and the Required Banks (as defined in the
Credit Agreement) shall have duly executed and delivered the Credit Agreement
Amendment, which shall be a legal, valid, binding and enforceable agreement of
the Company.
Section 3.2. Warranties and Representations True. The warranties
and representations of the Company set forth in Section 2 hereof shall be true
and correct in all material respects on the Effective Date with the same effect
as though made on and as of the Effective Date.
Section 3.3. Payment of Closing Fees. In consideration of your
execution and delivery of this Second Amendment, the Company shall have paid to
each Holder a closing fee in an amount equal to .375% of the outstanding
principal amount of the Notes held by such Holder on the Effective Date.
-2-
<PAGE> 3
The Timberland Company Second Amendment
Section 3.4. Proceedings Satisfactory;. All proceedings taken in
connection with the transactions contemplated or provided for in this Second
Amendment and all documents and papers relating thereto shall be satisfactory to
you and your special counsel. You and your special counsel shall have received
copies of such documents and papers as you or they may reasonably request in
connection therewith, all in form and substance satisfactory to you and your
special counsel.
SECTION 4. AMENDMENTS.
The following amendments to the Original Note Agreements shall become
effective on the Effective Date and shall terminate and be of no further force
and effect on February 28, 1997:
Section 4.1. Amendment to Section 5.7. Section 5.7 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"Section 5.7. Minimum Consolidated Tangible Net Worth.
Consolidated Tangible Net Worth will at no time during any period
set forth below be less than the sum of (i) the amount set forth
below opposite such period and (ii) 80% of the net cash proceeds of
all issuances by the Company of shares of its capital stock after
the Second Amendment Effective Date:
<TABLE>
<CAPTION>
PERIOD
AMOUNT
<S> <C>
Second Amendment Effective Date
through the next to last day of
the third fiscal quarter of 1996 $100,000,000
Last day of the third fiscal quarter
of 1996 through the next to last
day of the fourth fiscal quarter
of 1996 $120,000,000
Last day of the fourth fiscal quarter
of 1996 and thereafter $125,000,000
</TABLE>
-3-
<PAGE> 4
The Timberland Company Second Amendment
"The following terms shall have the following meanings solely for
purposes of this ss.5.7:
"'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 $17,000,000 (calculated on a pre-tax basis) of certain extraordinary
items that may be booked after April 19, 1995) as of such date.
"'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.
"'Investment' means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit or
otherwise."
-4-
<PAGE> 5
The Timberland Company Second Amendment
Section 4.2. Amendments to Section 5.8. Section 5.8 of the Original
Note Agreements shall be, and the same is hereby amended as follows:
(a) Section 5.8(a)(3) is amended in its entirety to read as follows:
"(3) [Intentionally Reserved]".
(b) Section 5.8(a)(5) is amended in its entirety to read as follows:
"(5) Current Debt or Funded Debt of a Restricted
Subsidiary, other than that permitted by ss.5.8(a)(4), provided
that at the time of incurrence thereof and after giving effect
thereto and to the application of the proceeds thereof,
Specified Debt does not exceed 15% of Consolidated Tangible Net
Worth."
Section 4.3. Amendment to Section 5.9. Section 5.9 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"Section 5.9. Fixed Charge Coverage Ratio. The
Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters ending during any period set forth below will not
be less than the ratio set forth opposite such period:
<TABLE>
<CAPTION>
PERIOD RATIO
<S> <C>
First day of the second fiscal quarter
of 1995 through the last day of such
quarter
1.35 to 1
First day of the third fiscal quarter
of 1995 through the last day of the
second fiscal quarter of 1996
0.75 to 1
First day of the third fiscal quarter
of 1996 and thereafter
1.50 to 1"
</TABLE>
-5-
<PAGE> 6
The Timberland Company Second Amendment
"The following terms shall have the following meanings solely for
purposes of this Section 5.9:
"'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 $17,000,000 (calculated on a pre-tax basis)
of certain extraordinary items that may be booked after
April 19, 1995.
"'Consolidated Interest Expense' means, for any
period, the interest expense (less interest income) of the
Company and its Consolidated Subsidiaries determined on a
consolidated basis for such period.
"'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' is defined in
Section 5.7.
"'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)."
Section 4.4. Amendment to Section 5.10. Section 5.10(j) of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
-6-
<PAGE> 7
The Timberland Company Second Amendment
"(j) provided that no Default or Event of Default
exists at the time of creation thereof, other Liens on fixed
assets (in addition to those permitted by the foregoing
provisions of this Section 5.10) if, after giving effect
thereto (and to the application of the proceeds thereof), the
aggregate amount of Specified Debt would not exceed 15% of
Consolidated Tangible Net Worth; and"
Section 4.5. Amendment to Section 5.11. Section 5.11 of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"Section 5.11. 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 5.11 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 5.11.
"The following term shall have the following meaning
solely for purposes of this Section 5.11:
"'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
-7-
<PAGE> 8
The Timberland Company Second Amendment
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."
Section 4.6. Amendment to Section 5.19. Section 5.19(f) of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"(f) Officers Certificates. Within the periods
provided in paragraphs (a) and (b) above, a certificate of an
authorized financial officer of the Company stating that he has
reviewed the provisions of this Agreement and setting forth:
(i) the information and computations (in sufficient detail)
required in order to establish whether the Company was in
compliance with the requirements of Section 5.5 through
Section 5.21, inclusive, at the end of the period covered by
the financial statements then being furnished, (ii) whether
there existed as of the date of such financial statements and
whether, to the best of his knowledge, there exists on the
date of the certificate or existed at any time during the
period covered by such financial statements any Default or
Event of Default and, if any such condition or event exists
on the date of the certificate, specifying the nature and
period of existence thereof and the action the Company is
taking and proposes to take with respect thereto and (iii) the
information and computations (in sufficient detail) required
in order to establish whether the Company was in compliance
with the requirements of Section 5.6 through Section 5.14,
inclusive, and Section 5.17 (as such Sections were in effect
immediately prior to the Second Amendment Effective Date) at
the end of the period covered by the financial statements then
being furnished, and the amount, if any, of the Credit Fee (as
defined in the Second Amendment) to be paid to the holders of
the Notes pursuant to Section 5 of the Second Amendment;"
Section 4.7. Additional Covenants of the Company. The following
Sections 5.20 through 5.24 shall be added to the Original Note Agreements
immediately following Section 5.19, to read in their respective entireties as
follows:
-8-
<PAGE> 9
The Timberland Company Second Amendment
"Section 5.20. Debt. Without limiting the provisions of
Section 5.8 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 the Credit Agreement as in
effect on the date hereof giving effect to Amendment No. 2
thereto, provided that the sum of (i) the aggregate principal
amount of Loans outstanding under the Credit Agreement and (ii)
the aggregate principal amount of Permitted Short-Term Debt
shall not exceed (A) for a minimum of thirty consecutive days in
the period between December 1, 1995 and March 1, 1996,
$20,000,000 and (B) on any day, the Limitation Amount for such
day; and
"(b) Other Debt permitted by Section 5.08 of the
Credit Agreement as in effect on the date hereof giving effect
to Amendment No. 2 thereto.
"The following terms shall have the following meanings solely
for purposes of this Section 5.20:
"'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 5.10 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
-9-
<PAGE> 10
The Timberland Company Second Amendment
Debt is assumed by such Person, and (vii) all Debt of others
guaranteed by such Person.
"'Derivatives Obligations' of any Person means all
obligations of such Person in respect of any rate swap
transaction, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or
equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction
(including any option with respect to any of the foregoing
transactions) or any combination of the foregoing transactions.
"'Limitation Amount' means, for any day set forth, or
for any day during any period set forth, below, the amount set
forth below opposite such day or period:
<TABLE>
<CAPTION>
DAY OR PERIOD LIMITATION
AMOUNT
<S> <C> <C>
Second Amendment Effective Date
through the last day of the
second fiscal quarter of 1995 $100,000,000
First day of the third fiscal
quarter of 1995 through the
next to last day of such
quarter $125,000,000
Last day of the third fiscal
quarter of 1995 through the
next to last day of the fourth
fiscal quarter of 1995 $115,000,000
Last day of the fourth fiscal
quarter of 1995 $ 20,000,000
</TABLE>
-10-
<PAGE> 11
The Timberland Company Second Amendment
<TABLE>
<S> <C>
First day of the first fiscal
quarter of 1996 through the
last day of such quarter $ 30,000,000
First day of the second fiscal
quarter of 1996 through the
last day of such quarter $ 65,000,000
First day of the third fiscal
quarter of 1996 through the
next to last day of the fourth
fiscal quarter of 1996 $100,000,000
Last day of the fourth fiscal
quarter of 1996 and thereafter $ 20,000,000
</TABLE>
"'Loan' means a Domestic Loan, a Euro-Dollar
Loan or a Money Market Loan (each as defined in the
Credit Agreement) 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).
"'Permitted Short-Term Debt' means Debt
(other than Loans or Debt permitted under Section
5.08(g) of the Credit Agreement) of the Company or
any of its Subsidiaries having a maturity, at the
time such Debt is
-11-
<PAGE> 12
The Timberland Company Second Amendment
incurred, of not more than one year from the date
such Debt is incurred.
"Section 5.21. Leverage Ratio. The Leverage Ratio
will at no time during any period or on any day set forth below
exceed the ratio set forth below opposite such period or day:
<TABLE>
<CAPTION>
PERIOD OR DAY LEVERAGE
RATIO
<S> <C> <C>
First day of the second fiscal
quarter of 1995 through the
last day of such quarter 2.25 to 1.00
First day of the third fiscal
quarter of 1995 through the next
to last day of such quarter 2.30 to 1.00
Last day of the third fiscal
quarter of 1995 through the
next to last day of the fourth
fiscal quarter of 1995 2.25 to 1.00
</TABLE>
-12-
<PAGE> 13
The Timberland Company Second Amendment
<TABLE>
<S> <C> <C>
Last day of fourth fiscal quarter
of 1995 1.50 to 1.00
First day of the first fiscal
quarter of 1996 through the last
day of such quarter 1.60 to 1.00
First day of the second fiscal
quarter of 1996 through the
next to last day of the third
fiscal quarter of 1996 1.90 to 1.00
Last day of the third fiscal
quarter of 1996 through the
next to last day of the fourth
fiscal quarter of 1996 1.80 to 1.00
Last day of the fourth fiscal
quarter of 1996 1.25 to 1.00
First day of the first fiscal
quarter of 1997 and thereafter 1.45 to 1.00
</TABLE>
"The following terms shall have the following
meanings solely for purposes of this Section 5.21:
"'Consolidated Debt' means at any date the
Debt of the Company and its Consolidated
Subsidiaries, determined on a consolidated basis as
of such date.
"'Consolidated Subsidiaries' is defined in
Section 5.7.
"'Debt' is defined in Section 5.20.
-13-
<PAGE> 14
The Timberland Company Second Amendment
"'Leverage Ratio' means, for any date, the ratio of
(i) Consolidated Debt on such date to (ii) Consolidated Net
Worth (as defined in Section 5.7) on such date.
"'Loan' is defined in Section 5.20.
"Section 5.22. No Unrestricted Subsidiaries. The Company
shall not designate any Subsidiary as an Unrestricted Subsidiary.
"Section 5.23. Payments with Respect to Credit Agreement.
The Company will not, without the prior written consent of Holders
holding not less than 51% of the unpaid principal amount of the
Notes, directly or indirectly pay or extend, or enter into any
agreement with any of the other Persons party to the Credit Agreement
which provides for the payment or extension by the Company of, any
form of additional compensation or security to any such Person in
consideration for any amendment of, waiver of the requirements of, or
consent to a modification of, Sections 2.13, 5.11, 5.12, 5.13 or 5.14
of the Credit Agreement (or related definitions of terms), as amended
to the date hereof.
"Section 5.24. Restrictive Agreements. (a) The Company
will not, and will not permit any Subsidiary to, enter into any
agreement after the Second Amendment Effective Date which shall
further limit (i) the ability of the Company or any Subsidiary to
amend or otherwise modify this Agreement or any Note, (ii) the
ability of any Subsidiary to make any payments, directly or
indirectly, to the Company, (iii) the ability of any Subsidiary to
guarantee any obligation of the Company under the Agreement or any
Note or (iv) the ability of the Company or any Subsidiary to grant
any Lien on any or all of its property to secure its obligations
under this Agreement, the Notes or any such guarantee; provided that
(x) the agreements and instruments entered into in connection with
the refinancing of any Debt of the Company or any Subsidiary
outstanding on the Second Amendment Effective Date (or on the date
such Subsidiary becomes a Subsidiary) may contain any such
limitations that were contained in the agreements and instruments
governing the Debt so refinanced and (y) it is understood that the
imposition by any governmental entity of any restriction of the
-14-
<PAGE> 15
The Timberland Company Second Amendment
kind set forth in this Section shall not be deemed to be a Default
under this Section.
"(b) The Company will not, and will not permit any
Subsidiary to, enter, after the Second Amendment Effective Date, into
any agreement (including, without limitation, any amendment or
modification of, or supplement to, any outstanding agreement) with
respect to any Debt of the Company or any Subsidiary that contains
conditions, covenants or events of default that are more burdensome
or restrictive to the Company or such Subsidiary than those contained
in the Credit Agreement are to the Company on the Second Amendment
Effective Date.
"The following terms shall have the following meanings
solely for purposes of this Section 5.24:
"'Debt' is defined in Section 5.20.
"'Loan' is defined in Section 5.20."
Section 4.8. Amendment to Section 6.1. Section 6.1(f) of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"(f) Default shall occur in the observance or
performance of any covenant or agreement contained in ss.5.6 through
Section 5.15, inclusive, Section 5.17, Section 5.20, Section 5.21, or
Section 5.23; or"
Section 4.9. Amendments to Section 8.1. The following definitions
shall be added to Section 8.1 of the Original Note Agreements in alphabetical
order and shall read as follows:
"'Credit Agreement' shall mean that certain Amended
and Restated Credit Agreement dated as of March 14, 1995, among the
Company, the Banks listed on the signature pages thereof and Morgan
Guaranty Trust Company of New York, as Agent, as amended to date.
'Second Amendment' shall mean the Second Amendment to
this Agreement dated as of June 28, 1995 between the Company and
you.
-15-
<PAGE> 16
The Timberland Company Second Amendment
'Second Amendment Effective Date' shall mean the date
on which the Second Amendment becomes effective."
SECTION 5. CREDIT FEE.
If, on any interest payment date, the Company is not in compliance
(determined as of the end of the then most recent fiscal quarter of the Company)
with Sections 5.6 through 5.14, inclusive, or Section 5.17 of the Original Note
Agreements (as in effect immediately prior to the Effective Date), the Company
shall pay to each Holder a fee (the "Credit Fee") in an amount equal to .125% of
the outstanding principal amount of the Notes held by such Holder on such
interest payment date (each a "Non-Compliance Date"), before giving effect to
any payment of principal made on the Notes on such Non-Compliance Date.
Each Credit Fee shall be due and payable 10 days following the
delivery to the Holders of the Company's financial statements for the fiscal
quarter immediately preceding the applicable Non-Compliance Date or, if earlier,
on the date such financial statements are required to be delivered to the
holders of the Notes pursuant to Section 5.19 of the Original Note Agreements,
as amended hereby.
In the event that the Company has not delivered the required financial
statements by the date provided in said Section 5.19 for any financial reporting
period ending immediately prior to an interest payment date, such interest
payment date shall be deemed to be a Non-Compliance Date hereunder, and the
Credit Fee relating to such Non-Compliance Date shall become immediately due and
payable.
SECTION 6. MISCELLANEOUS.
Section 6.1. Waiver of Default. Any Default or Event of Default
which might have existed under the Original Note Agreements prior to giving
effect to this Second Amendment but which would not constitute such a Default or
Event of Default under the Original Note Agreements as amended by this Second
Amendment is hereby waived.
Section 6.2. Notices. Any and all notices, requests, certificates
and other instruments executed and delivered after the effective date of this
Second Amendment may refer to the "Note Agreements dated as of April 1, 1994"
without making specific reference to this Second Amendment, but nevertheless all
such references shall be deemed to include this Second Amendment unless the
context shall otherwise require.
Section 6.3. Expenses. The Company will pay all expenses relating to
this Second Amendment in accordance with Section 9.4 of the Original Note
Agreements.
-16-
<PAGE> 17
The Timberland Company Second Amendment
Section 6.4. Construction. This Second Amendment shall be construed
in connection with and as part of the Original Note Agreements, and all terms,
conditions and covenants contained in the Original Note Agreements, except as
herein modified, shall be and remain in full force and effect.
Section 6.5. Counterparts. This Second Amendment may be executed in
any number of counterparts, each executed counterpart constituting an original
but altogether one and the same instrument.
Section 6.6. Governing Law. This Second Amendment shall be governed
by and construed in accordance with the laws of the State of Illinois.
-17-
<PAGE> 18
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of June 28, 1995.
THE TIMBERLAND COMPANY
By
Its
------------------------------
Accepted as of June 28, 1995
[Variation]
By
Its
------------------------------
By
Its
------------------------------
Holding $[Variation] unpaid principal
amount of the Notes.
-18-
<PAGE> 1
EXHIBIT 10.12(b)
THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
FIRST AMENDMENT
Dated as of
April 15, 1995
Re: Note Agreements dated as of April 1, 1994
$65,000,000 7.16% Senior Notes
Due April 15, 2000
To the Holder named in Schedule I
hereto which is a signatory of this
Agreement
Gentlemen:
Reference is made to the separate Note Agreements, each dated as of
April 1, 1994 (the "Original Note Agreements"), between the undersigned, THE
TIMBERLAND COMPANY, a Delaware corporation (the "Company"), and the Purchasers
named in Schedule I thereto (the "Holders") respectively. Unless otherwise
herein defined or the context hereof otherwise requires, the capitalized terms
in this First Amendment shall have the respective meanings specified in the
Original Note Agreements.
The Company now wishes to amend the Original Note Agreements in the
respects, but only in the respects, hereinafter set forth, and, by your
execution hereof, you hereby agree to such amendments on the terms hereinafter
set forth:
SECTION 1. AMENDMENTS.
Section 1.1. The definition of the term "CONSOLIDATED NET INCOME" in
Section 8.1 of ORIGINAL NOTE AGREEMENTS shall be, and the same hereby is,
amended as follows:
(a) by deleting the word "and" from the end of clause (j) thereof;
<PAGE> 2
The Timberland Company First Amendment
(b) by deleting the period from the end of clause (k) thereof and adding
the following thereto "; and"; and
(c) by adding the following new clause (l) thereto:
"(l) for any determination of `Consolidated Net Income' on
any date through and including March 31, 1996, certain extraordinary
or non-recurring items or charges in an aggregate amount not to
exceed $17,000,000 (calculated on a pre-tax basis) that are incurred
by the Company solely in connection with the closing by the Company
of its manufacturing facilities located in Boone, North Carolina and
Mountain City, Tennessee and the restructuring by the Company of its
manufacturing facility located in the Dominican Republic; provided
that the closing and the restructuring of such facilities shall have
occurred by March 31, 1996."
Section 1.2. The definition of the term "TOTAL EQUITY" in SECTION 8.1 of
ORIGINAL NOTE AGREEMENTS shall be, and the same hereby is, amended to read as
follows:
"'Total Equity' as at any date shall mean stockholders'
equity determined in accordance with generally accepted accounting
principles consolidating the Company and its Restricted
Subsidiaries; provided that for the purposes of calculating `Total
Equity' on any date through and including July 31, 1996, those
certain extraordinary or non-recurring items or charges in an
aggregate amount not to exceed $17,000,000 (calculated on a pre-tax
basis) that are incurred by the Company solely in connection with
the closing by the Company of its manufacturing facilities located
in Boone, North Carolina and Mountain City, Tennessee and the
restructuring by the Company of its manufacturing facility located
in the Dominican Republic shall be excluded from such determination
of `Total Equity' so long as the closing and the restructuring of
such facilities shall have occurred by March 31, 1996."
Section 1.3. Section 5.7 of the Original Note Agreement is hereby
amended to read in its entirety as follows:
-2-
<PAGE> 3
The Timberland Company First Amendment
"Consolidated Tangible Net Worth. The Company will at all
times keep and maintain Consolidated Tangible Net Worth at an amount
not less than (i) for the fiscal quarter of the Company ending June
30, 1995, the sum of $80,000,000 plus 25% of Consolidated Net Income
for the fiscal quarter of the Company ended March 31, 1995 (but
without deduction in the case of a deficit in Consolidated Net
Income) and (ii) for each fiscal quarter thereafter, the sum of (x)
the amount required to be maintained during the immediately
preceding fiscal quarter of the Company, and (y) an amount equal to
25% of Consolidated Net Income for such preceding fiscal quarter
(but without deduction in the case of a deficit in Consolidated Net
Income)."
SECTION 2. MISCELLANEOUS.
Section 2.1. Any default or event of default which might have existed
under the Original Note Agreements prior to giving effect to this First
Amendment but which would not constitute such a default or event of default
under the Original Note Agreements as amended by this First Amendment is hereby
waived.
Section 2.2. Any and all notices, requests, certificates and other
instruments executed and delivered after the effective date of this First
Amendment may refer to the "Note Agreements dated as of April 1, 1994" without
making specific reference to this First Amendment, but nevertheless all such
references shall be deemed to include this First Amendment unless the context
shall otherwise require.
Section 2.3. This First Amendment shall be construed in connection with
and as part of the Original Note Agreements, and all terms, conditions and
covenants contained in the original note agreements, except as herein modified,
shall be and remain in full force and effect.
Section 2.4. This First Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original but altogether
one and the same instrument.
Section 2.5. Governing law. This First Amendment shall be governed by
and construed in accordance with the laws of the State of Illinois.
-3-
<PAGE> 4
The Timberland Company First Amendment
Upon the acceptance of this First Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15,
1995.
THE TIMBERLAND COMPANY
By
Its
--------------------------------
Accepted as of April 15, 1995
[VARIATION]
By
Its
--------------------------------
By
Its
--------------------------------
Holding $[Variation] unpaid principal
amount of the Notes.
-4-
<PAGE> 1
EXHIBIT 10.12(c)
THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
SECOND AMENDMENT
Dated as of
June 28, 1995
Re: Note Agreements dated as of April 1, 1994
$65,000,000 7.16% Senior Notes
Due April 15, 2000
To the Holder named in Schedule I
hereto which is a signatory of this
Agreement
Ladies and Gentlemen:
The undersigned, THE TIMBERLAND COMPANY, a corporation duly organized
and validly existing under the laws of the State of Delaware, (the "Company"),
agrees with you as follows:
SECTION 1. INTRODUCTION.
Reference is made to the separate Note Agreements, each dated as of
April 1, 1994, as amended by the separate First Amendments thereto, each dated
as of April 15, 1995 collectively, (the "Original Note Agreements"), between
the Company and the Purchasers named in Schedule I thereto, respectively.
Unless otherwise herein defined or the context hereof otherwise requires, the
capitalized terms in this Second Amendment shall have the respective meanings
specified in the Original Note Agreements. The holders of the Notes at the
time of reference are referred to herein as the "Holders".
Reference is also made to that certain Amendment No. 2 to Amended and
Restated Credit Agreement dated as of June 28, 1995 (the "Credit Agreement
Amendment") among the Company, the Banks listed on the signature pages thereof
and Morgan Guaranty Trust Company of New York, as Agent, which is being
executed and delivered concurrently herewith.
<PAGE> 2
The Timberland Company Second Amendment
The Company has requested that, subject to the satisfaction of the
conditions set forth herein, the Original Note Agreements be amended as of June
28, 1995 (the "Effective Date") in the respects, but only in the respects,
hereinafter set forth, and, by your execution hereof, you hereby agree to such
amendments on the terms hereinafter set forth.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to you as follows:
(a) After giving effect to this Second Amendment and the Credit
Agreement Amendment and the transactions contemplated hereby and thereby, no
Default or Event of Default has occurred and is continuing, and no event has
occurred and no condition exists which with the lapse of time or the giving of
notice, or both, would constitute an event of default under any indenture,
agreement, or other instrument under which any Indebtedness of the Company or
any Restricted Subsidiary for borrowed money in an aggregate principal amount
in excess of $1,000,000 is outstanding.
(b) The Company has no Unrestricted Subsidiaries.
SECTION 3. CONDITIONS PRECEDENT.
The effectiveness of this Second Amendment shall be subject to the
following conditions precedent:
Section 3.1. Execution of the Credit Agreement Amendment. The
Company, the Agent named therein and the Required Banks (as defined in the
Credit Agreement) shall have duly executed and delivered the Credit Agreement
Amendment, which shall be a legal, valid, binding and enforceable agreement of
the Company.
Section 3.2. Warranties and Representations True. The warranties
and representations of the Company set forth in Section 2 hereof shall be true
and correct in all material respects on the Effective Date with the same effect
as though made on and as of the Effective Date.
Section 3.3. Payment of Closing Fees. In consideration of your
execution and delivery of this Second Amendment, the Company shall have paid to
each Holder a closing fee in an amount equal to .375% of the outstanding
principal amount of the Notes held by such Holder on the Effective Date.
-2-
<PAGE> 3
The Timberland Company Second Amendment
Section 3.4. Proceedings Satisfactory. All proceedings taken in
connection with the transactions contemplated or provided for in this Second
Amendment and all documents and papers relating thereto shall be satisfactory
to you and your special counsel. You and your special counsel shall have
received copies of such documents and papers as you or they may reasonably
request in connection therewith, all in form and substance satisfactory to you
and your special counsel.
SECTION 4. AMENDMENTS.
The following amendments to the Original Note Agreements shall become
effective on the Effective Date and shall terminate and be of no further force
and effect on February 28, 1997:
Section 4.1. Amendment to Section 5.7. Section 5.7 of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"Section 5.7. Minimum Consolidated Tangible Net
Worth. Consolidated Tangible Net Worth will at no time during
any period set forth below be less than the sum of (i) the
amount set forth below opposite such period and (ii) 80% of the
net cash proceeds of all issuances by the Company of shares of
its capital stock after the Second Amendment Effective Date:
<TABLE>
<CAPTION>
PERIOD AMOUNT
<S> <C>
Second Amendment Effective Date
through the next to last day of
the third fiscal quarter of 1996 $100,000,000
Last day of the third fiscal quarter
of 1996 through the next to last
day of the fourth fiscal quarter
of 1996 $120,000,000
Last day of the fourth fiscal quarter
of 1996 and thereafter $125,000,000
</TABLE>
-3-
<PAGE> 4
The Timberland Company Second Amendment
"The following terms shall have the following
meanings solely for purposes of this SECTION 5.7:
"'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 $17,000,000 (calculated on a
pre-tax basis) of certain extraordinary items that
may be booked after April 19, 1995) as of such date.
"'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.
"'Investment' means any investment in any
Person, whether by means of share purchase, capital
contribution, loan, time deposit or otherwise."
-4-
<PAGE> 5
The Timberland Company Second Amendment
Section 4.2. Amendments to Section 5.8. Section 5.8 of the
Original Note Agreements shall be, and the same is hereby amended as follows:
(a) Section 5.8(a)(3) is amended in its entirety to read as follows:
"(3) [Intentionally Reserved]".
(b) Section 5.8(a)(5) is amended in its entirety to read as follows:
"(5) Current Debt or Funded Debt of a Restricted
Subsidiary, other than that permitted by SECTION 5.8(a)(4),
provided that at the time of incurrence thereof and after
giving effect thereto and to the application of the proceeds
thereof, Specified Debt does not exceed 15% of Consolidated
Tangible Net Worth."
Section 4.3. Amendment to Section 5.9. Section 5.9 of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"Section 5.9. Fixed Charge Coverage Ratio. The
Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters ending during any period set forth below will
not be less than the ratio set forth opposite such period:
<TABLE>
<CAPTION>
PERIOD RATIO
<S> <C>
First day of the second fiscal
quarter of 1995 through the last day
of such quarter 1.35 to 1
First day of the third fiscal quarter
of 1995 through the last day of the
second fiscal quarter of 1996 0.75 to 1
First day of the third fiscal quarter
of 1996 and thereafter 1.50 to 1"
</TABLE>
-5-
<PAGE> 6
The Timberland Company Second Amendment
"The following terms shall have the following meanings solely for
purposes of this SECTION 5.9:
"'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
$17,000,000 (calculated on a pre-tax basis) of certain
extraordinary items that may be booked after April 19, 1995.
"'Consolidated Interest Expense' means, for any
period, the interest expense (less interest income) of the
Company and its Consolidated Subsidiaries determined on a
consolidated basis for such period.
"'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' is defined in SECTION 5.7.
"'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)."
Section 4.4. Amendment to Section 5.10. Section 5.10(j) of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
-6-
<PAGE> 7
The Timberland Company Second Amendment
"(j) provided that no Default or Event of Default
exists at the time of creation thereof, other Liens on fixed
assets (in addition to those permitted by the foregoing
provisions of this SECTION 5.10) if, after giving effect
thereto (and to the application of the proceeds thereof), the
aggregate amount of Specified Debt would not exceed 15% of
Consolidated Tangible Net Worth; and"
Section 4.5. Amendment to Section 5.11. Section 5.11 of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"Section 5.11. 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 5.11 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 5.11.
"The following term shall have the following meaning
solely for purposes of this SECTION 5.11:
"'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
-7-
<PAGE> 8
The Timberland Company Second Amendment
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."
Section 4.6. Amendment to Section 5.19. Section 5.19(f) of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"(f) Officers' Certificates. Within the periods
provided in paragraphs (a) and (b) above, a certificate of an
authorized financial officer of the Company stating that he
has reviewed the provisions of this Agreement and setting
forth: (i) the information and computations (in sufficient
detail) required in order to establish whether the Company was
in compliance with the requirements of SECTION 5.5 through
SECTION 5.21, inclusive, at the end of the period covered by
the financial statements then being furnished, (ii) whether
there existed as of the date of such financial statements and
whether, to the best of his knowledge, there exists on the
date of the certificate or existed at any time during the
period covered by such financial statements any Default or
Event of Default and, if any such condition or event exists on
the date of the certificate, specifying the nature and period
of existence thereof and the action the Company is taking and
proposes to take with respect thereto and (iii) the
information and computations (in sufficient detail) required
in order to establish whether the Company was in compliance
with the requirements of SECTION 5.6 through SECTION 5.14,
inclusive, and SECTION 5.17 (as such Sections were in effect
immediately prior to the Second Amendment Effective Date) at
the end of the period covered by the financial statements then
being furnished, and the amount, if any, of the Credit Fee (as
defined in the Second Amendment) to be paid to the holders of
the Notes pursuant to Section 5 of the Second Amendment;"
Section 4.7. Additional Covenants of the Company. The following
Sections 5.20 through 5.24 shall be added to the Original Note Agreements
immediately following Section 5.19, to read in their respective entireties as
follows:
-8-
<PAGE> 9
The Timberland Company Second Amendment
"Section 5.20. Debt. Without limiting the provisions of
SECTION 5.8 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 the Credit Agreement
as in effect on the date hereof giving effect to Amendment No.
2 thereto, provided that the sum of (i) the aggregate
principal amount of Loans outstanding under the Credit
Agreement and (ii) the aggregate principal amount of Permitted
Short-Term Debt shall not exceed (A) for a minimum of thirty
consecutive days in the period between December 1, 1995 and
March 1, 1996, $20,000,000 and (B) on any day, the Limitation
Amount for such day; and
"(b) Other Debt permitted by Section 5.08 of the
Credit Agreement as in effect on the date hereof giving effect
to Amendment No. 2 thereto.
"The following terms shall have the following meanings solely
for purposes of this SECTION 5.20:
"'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 5.10
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
-9-
<PAGE> 10
The Timberland Company Second Amendment
Debt is assumed by such Person, and (vii) all Debt of others
guaranteed by such Person.
"'Derivatives Obligations' of any Person means all
obligations of such Person in respect of any rate swap
transaction, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or
equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect
to any of the foregoing transactions) or any combination of
the foregoing transactions.
"'Limitation Amount' means, for any day set forth, or
for any day during any period set forth, below, the amount set
forth below opposite such day or period:
<TABLE>
<CAPTION>
DAY OR PERIOD LIMITATION AMOUNT
<S> <C>
Second Amendment Effective Date
through the last day of the
second fiscal quarter of 1995 $100,000,000
First day of the third fiscal
quarter of 1995 through the
next to last day of such
quarter $125,000,000
Last day of the third fiscal
quarter of 1995 through the
next to last day of the fourth
fiscal quarter of 1995 $115,000,000
Last day of the fourth fiscal
quarter of 1995 $ 20,000,000
</TABLE>
-10-
<PAGE> 11
The Timberland Company Second Amendment
<TABLE>
<S> <C>
First day of the first fiscal
quarter of 1996 through the
last day of such quarter $ 30,000,000
First day of the second fiscal
quarter of 1996 through the
last day of such quarter $ 65,000,000
First day of the third fiscal
quarter of 1996 through the
next to last day of the fourth
fiscal quarter of 1996 $100,000,000
Last day of the fourth fiscal
quarter of 1996 and thereafter $ 20,000,000
</TABLE>
"'Loan' means a Domestic Loan, a Euro-Dollar Loan or
a Money Market Loan (each as defined in the Credit Agreement)
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).
"'Permitted Short-Term Debt' means Debt (other than
Loans or Debt permitted under Section 5.08(g) of the Credit
Agreement) of the Company or any of its Subsidiaries having a
maturity, at the time such Debt is
-11-
<PAGE> 12
The Timberland Company Second Amendment
incurred, of not more than one year from the date such Debt is
incurred.
"Section 5.21. Leverage Ratio. The Leverage Ratio will at
no time during any period or on any day set forth below exceed the ratio
set forth below opposite such period or day:
<TABLE>
<CAPTION>
PERIOD OR DAY LEVERAGE RATIO
<S> <C>
First day of the second fiscal
quarter of 1995 through the
last day of such quarter 2.25 to 1.00
First day of the third fiscal
quarter of 1995 through the next
to last day of such quarter 2.30 to 1.00
Last day of the third fiscal
quarter of 1995 through the
next to last day of the fourth
fiscal quarter of 1995 2.25 to 1.00
</TABLE>
-12-
<PAGE> 13
The Timerland Company Second Amendment
<TABLE>
<S> <C>
Last day of fourth fiscal quarter
of 1995 1.50 to 1.00
First day of the first fiscal
quarter of 1996 through the last
day of such quarter 1.60 to 1.00
First day of the second fiscal
quarter of 1996 through the
next to last day of the third
fiscal quarter of 1996 1.90 to 1.00
Last day of the third fiscal
quarter of 1996 through the
next to last day of the fourth
fiscal quarter of 1996 1.80 to 1.00
Last day of the fourth fiscal
quarter of 1996 1.25 to 1.00
First day of the first fiscal
quarter of 1997 and thereafter 1.45 to 1.00
</TABLE>
"The following terms shall have the following meanings solely
for purposes of this SECTION 5.21:
"'Consolidated Debt' means at any date the Debt of
the Company and its Consolidated Subsidiaries, determined on a
consolidated basis as of such date.
"'Consolidated Subsidiaries' is defined in SECTION
5.7.
"'Debt' is defined in SECTION 5.20.
-13-
<PAGE> 14
The Timberland Company Second Amendment
"'Leverage Ratio' means, for any date, the ratio of
(i) Consolidated Debt on such date to (ii) Consolidated Net
Worth (as defined in Section 5.7) on such date.
"'Loan' is defined in SECTION 5.20.
"Section 5.22. No Unrestricted Subsidiaries. The Company
shall not designate any Subsidiary as an Unrestricted Subsidiary.
"Section 5.23. Payments with Respect to Credit Agreement.
The Company will not, without the prior written consent of Holders
holding not less than 51% of the unpaid principal amount of the Notes,
directly or indirectly pay or extend, or enter into any agreement with
any of the other Persons party to the Credit Agreement which provides
for the payment or extension by the Company of, any form of additional
compensation or security to any such Person in consideration for any
amendment of, waiver of the requirements of, or consent to a
modification of, Sections 2.13, 5.11, 5.12, 5.13 or 5.14 of the Credit
Agreement (or related definitions of terms), as amended to the date
hereof.
"Section 5.24. Restrictive Agreements. (a) The Company will
not, and will not permit any Subsidiary to, enter into any agreement
after the Second Amendment Effective Date which shall further limit (i)
the ability of the Company or any Subsidiary to amend or otherwise
modify this Agreement or any Note, (ii) the ability of any Subsidiary to
make any payments, directly or indirectly, to the Company, (iii) the
ability of any Subsidiary to guarantee any obligation of the Company
under the Agreement or any Note or (iv) the ability of the Company or
any Subsidiary to grant any Lien on any or all of its property to secure
its obligations under this Agreement, the Notes or any such guarantee;
provided that (x) the agreements and instruments entered into in
connection with the refinancing of any Debt of the Company or any
Subsidiary outstanding on the Second Amendment Effective Date (or on the
date such Subsidiary becomes a Subsidiary) may contain any such
limitations that were contained in the agreements and instruments
governing the Debt so refinanced and (y) it is understood that the
imposition by any governmental entity of any restriction of the
-14-
<PAGE> 15
The Timberland Company Second Amendment
kind set forth in this Section shall not be deemed to be a Default under
this Section.
"(b) The Company will not, and will not permit any
Subsidiary to, enter, after the Second Amendment Effective
Date, into any agreement (including, without limitation, any
amendment or modification of, or supplement to, any
outstanding agreement) with respect to any Debt of the Company
or any Subsidiary that contains conditions, covenants or
events of default that are more burdensome or restrictive to
the Company or such Subsidiary than those contained in the
Credit Agreement are to the Company on the Second Amendment
Effective Date.
"The following terms shall have the following
meanings solely for purposes of this SECTION 5.24:
"'Debt' is defined in SECTION 5.20.
"'Loan' is defined in SECTION 5.20."
Section 4.8. Amendment to Section 6.1. Section 6.1(f) of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"(f) Default shall occur in the observance or
performance of any covenant or agreement contained in Section
5.6 through Section 5.15, inclusive, SECTION 5.17, SECTION
5.20, SECTION 5.21, OR SECTION 5.23; or"
Section 4.9. Amendments to Section 8.1. The following definitions
shall be added to Section 8.1 of the Original Note Agreements in alphabetical
order and shall read as follows:
"'Credit Agreement' shall mean that certain Amended
and Restated Credit Agreement dated as of March 14, 1995,
among the Company, the Banks listed on the signature pages
thereof and Morgan Guaranty Trust Company of New York, as
Agent, as amended to date.
'Second Amendment' shall mean the Second Amendment to
this Agreement dated as of June 28, 1995 between the Company
and you.
-15-
<PAGE> 16
The Timberland Company Second Amendment
'Second Amendment Effective Date' shall mean the date
on which the Second Amendment becomes effective."
SECTION 5. CREDIT FEE.
If, on any interest payment date, the Company is not in compliance
(determined as of the end of the then most recent fiscal quarter of the
Company) with Sections 5.6 through 5.14, inclusive, or Section 5.17 of the
Original Note Agreements (as in effect immediately prior to the Effective
Date), the Company shall pay to each Holder a fee (the "Credit Fee") in an
amount equal to .125% of the outstanding principal amount of the Notes held by
such Holder on such interest payment date (each a "Non-Compliance Date"),
before giving effect to any payment of principal made on the Notes on such
Non-Compliance Date.
Each Credit Fee shall be due and payable 10 days following the delivery
to the Holders of the Company's financial statements for the fiscal quarter
immediately preceding the applicable Non-Compliance Date or, if earlier, on the
date such financial statements are required to be delivered to the holders of
the Notes pursuant to Section 5.19 of the Original Note Agreements, as amended
hereby.
In the event that the Company has not delivered the required financial
statements by the date provided in said Section 5.19 for any financial reporting
period ending immediately prior to an interest payment date, such interest
payment date shall be deemed to be a Non-Compliance Date hereunder, and the
Credit Fee relating to such Non-Compliance Date shall become immediately due and
payable.
SECTION 6. MISCELLANEOUS.
Section 6.1. Waiver of Default. Any Default or Event of Default
which might have existed under the Original Note Agreements prior to giving
effect to this Second Amendment but which would not constitute such a Default
or Event of Default under the Original Note Agreements as amended by this
Second Amendment is hereby waived.
Section 6.2. Notices. Any and all notices, requests, certificates
and other instruments executed and delivered after the effective date of this
Second Amendment may refer to the "Note Agreements dated as of April 1, 1994"
without making specific reference to this Second Amendment, but nevertheless
all such references shall be deemed to include this Second Amendment unless the
context shall otherwise require.
Section 6.3. Expenses. The Company will pay all expenses relating
to this Second Amendment in accordance with Section 9.4 of the Original Note
Agreements.
-16-
<PAGE> 17
The Timberland Company Second Amendment
Section 6.4. Construction. This Second Amendment shall be
construed in connection with and as part of the Original Note Agreements, and
all terms, conditions and covenants contained in the Original Note Agreements,
except as herein modified, shall be and remain in full force and effect.
Section 6.5. Counterparts. This Second Amendment may be executed
in any number of counterparts, each executed counterpart constituting an
original but altogether one and the same instrument.
Section 6.6. Governing Law. This Second Amendment shall be
governed by and construed in accordance with the laws of the State of Illinois.
-17-
<PAGE> 18
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of June 28,
1995.
THE TIMBERLAND COMPANY
By
Its
------------------------------
Accepted as of June 28, 1995
[VARIATION]
By
Its
------------------------------
By
Its
------------------------------
Holding $[Variation] unpaid principal
amount of the Notes.
-18-
<PAGE> 1
EXHIBIT 10.13
AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT
AMENDMENT dated as of July 21, 1995 among THE TIMBERLAND COMPANY (the
"Company"), the BANKS listed on the signature pages hereof (the "Banks"), THE
FIRST NATIONAL BANK OF BOSTON, as Issuing Bank (the "Issuing Bank"), and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H :
WHEREAS, the Company, the Banks and the Agent have heretofore entered
into an Amended and Restated Credit Agreement dated as of March 14, 1995 (as
amended through the date hereof, the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement to provide
for letters of credit to be issued by the Issuing Bank, as issuing bank
thereunder;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Agreement shall
have the meaning assigned to such term in the Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Agreement shall from and after the Effective Date (as defined
in Section 4 below) refer to the Agreement as amended hereby.
SECTION 2. Amendment and Restatement of the Agreement. The Agreement
is hereby amended and restated as of the Effective Date to read in its entirety
is set forth in Exhibit A hereto.
SECTION 3. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 4. Counterparts; Effectiveness. This Amendment may be signed
in any number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Amendment shall become effective on the date (the "Effective
Date") upon which the Agent shall have received duly executed counterparts
hereof signed by the Company, the Issuing Bank, the Agent and each of the Banks
(or, in the case of any party as to which an executed counterpart shall not
have been received, the Agent shall have received telegraphic, telex or other
written confirmation from such party of execution of a counterpart hereof by
such party).
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above written.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
Title: Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ R. Blake Witherington
Title: Vice President
ABN AMRO BANK N.V.
By /s/ James E. Davis
Title: Vice President
By /s/ Brian M. Horgan
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF
BOSTON
By /s/ Thomas F. Farley
Title: Director
<PAGE> 3
CHEMICAL BANK
By /s/ Barry K. Bergman
Title: Vice President
THE NORTHERN TRUST COMPANY
By /s/ Curtis C. Tatham III
Title: Commercial Banking Officer
THE BANK OF NOVA SCOTIA
By /s/ Stephen Johnson
Title: Authorized Signatory
BANK HAPOALIM B.M.
By /s/ Nancy Lushan
Title:
By /s/ Martin B. Goodstine
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ R. Blake Witherington
Title: Vice President
THE FIRST NATIONAL BANK OF
BOSTON, as Issuing Bank
By /s/ Thomas F. Farley
Title: Director
<PAGE> 4
EXHIBIT A
$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> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions 1
SECTION 1.02. Accounting Terms and Determinations 21
SECTION 1.03. Types of Borrowings 22
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend 22
SECTION 2.02. Notice of Committed Borrowings 23
SECTION 2.03. Money Market Borrowings 23
SECTION 2.04. Notice to Banks; Funding of Loans 27
SECTION 2.05. Notes 28
SECTION 2.06. Maturity of Loans 28
SECTION 2.07. Method of Electing Interest Rates 29
SECTION 2.08. Interest Rates 30
SECTION 2.09. Letters of Credit 34
SECTION 2.10. Facility Fees 41
SECTION 2.11. Mandatory Termination of Commitments 42
SECTION 2.12. Optional Termination or Reduction of
Commitments 42
SECTION 2.13. Mandatory Prepayments 42
SECTION 2.14. Optional Prepayments 43
SECTION 2.15. General Provisions as to Payments 44
SECTION 2.16. Funding Losses 45
SECTION 2.17. Computation of Interest and Fees 45
SECTION 2.18. Judgment Currency 45
SECTION 2.19. Foreign Subsidiary Costs 46
SECTION 2.20. Cash Collateral Account 46
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness 48
SECTION 3.02. Consequences of Effectiveness 49
SECTION 3.03. Borrowings and Letter of Credit
Issuances 49
SECTION 3.04. First Borrowing by Each Eligible
Subsidiary 50
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Corporate Existence and Power 51
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention 51
SECTION 4.03. Binding Effect 51
SECTION 4.04. Financial Information 52
SECTION 4.05. Litigation 52
SECTION 4.06. Compliance with ERISA 53
SECTION 4.07. Environmental Matters 53
SECTION 4.08. Taxes 53
SECTION 4.09. Subsidiaries 54
SECTION 4.10. Not an Investment Company 54
SECTION 4.11. Full Disclosure 54
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
ARTICLE V
COVENANTS
SECTION 5.01. Information 54
SECTION 5.02. Payment of Obligations 58
SECTION 5.03. Maintenance of Property; Insurance 58
SECTION 5.04. Conduct of Business and Maintenance of
Existence 58
SECTION 5.05. Compliance with Laws 59
SECTION 5.06. Inspection of Property, Books and
Records 59
SECTION 5.07. Fixed Charge Coverage Ratio 59
SECTION 5.08. Debt 60
SECTION 5.09. Minimum Consolidated Tangible Net Worth 61
SECTION 5.10. Restricted Payments 62
SECTION 5.11. Investments 62
SECTION 5.12. Maintenance of Ownership of
Subsidiaries 63
SECTION 5.13. Negative Pledge 63
SECTION 5.14. Consolidations, Mergers and Sales of
Assets 64
SECTION 5.15. Restrictions on Prepayments of and
Amendments to Certain Debt 65
SECTION 5.16. Transactions with Affiliates 65
SECTION 5.17. Use of Proceeds and Letters of Credit 66
SECTION 5.18. Leverage Ratio 66
SECTION 5.19. Restrictive Agreements 67
SECTION 5.20. Current Ratio 67
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default 68
SECTION 6.02. Notice of Default 70
SECTION 6.03. Cash Collateral 71
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization 71
SECTION 7.02. Agent and Affiliates 71
SECTION 7.03. Action by Agent 71
SECTION 7.04. Consultation with Experts 71
SECTION 7.05. Liability of Agent 72
SECTION 7.06. Indemnification 72
SECTION 7.07. Credit Decision 72
SECTION 7.08. Successor Agent 72
SECTION 7.09. Agent's Fee 73
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair 73
SECTION 8.02. Illegality 74
SECTION 8.03. Increased Cost and Reduced Return 75
SECTION 8.04. Taxes 76
SECTION 8.05. Base Rate Loans Substituted for
Affected Fixed Rate Loans 78
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF ELIGIBLE SUBSIDIARIES
SECTION 9.01. Corporate Existence and Power 79
SECTION 9.02. Corporate and Governmental
Authorization; Contravention 79
SECTION 9.03. Binding Effect 79
SECTION 9.04. Taxes 80
ARTICLE X
GUARANTY
SECTION 10.01. The Guaranty 80
SECTION 10.02. Guaranty Unconditional 80
SECTION 10.03. Discharge Only Upon Payment In Full;
Reinstatement in Certain
Circumstances 81
SECTION 10.04. Waiver by the Company 81
SECTION 10.05. Subrogation 82
SECTION 10.06. Stay of Acceleration 82
</TABLE>
<PAGE> 9
<TABLE>
<S> <C>
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices 82
SECTION 11.02. No Waivers 83
SECTION 11.03. Expenses; Documentary Taxes;
Indemnification 83
SECTION 11.04. Sharing of Set-Offs 83
SECTION 11.05. Amendments and Waivers 84
SECTION 11.06. Successors and Assigns 85
SECTION 11.07. Collateral 86
SECTION 11.08. Confidentiality 86
SECTION 11.09. Governing Law; Submission to
Jurisdiction 87
SECTION 11.10. Counterparts; Integration 87
SECTION 11.11. WAIVER OF JURY TRIAL 87
</TABLE>
Schedule I - Existing Debt and Liens
Schedule II - Subsidiaries
Schedule III - Approved Foreign Distributors
Exhibit A - Note
Exhibit B - Notice of Committed Borrowing
Exhibit C - Money Market Quote Invitation
Exhibit D - Money Market Quote
Exhibit E - 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> 10
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.
<PAGE> 11
"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, (i) on any day during the period from and
including the Second Amendment Effective Date through and including the next to
last day of the third fiscal quarter of 1995, the aggregate amount of the
Commitments on such day and (ii) on any other day, the lesser of (A) the
aggregate amount of the Commitments on such day and (B) 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 (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).
"Cash Collateral Account" has the meaning set forth in Section 2.20.
"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).
<PAGE> 12
"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 2.12.
"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 1994 Form 10-K" means the Company's annual report on Form
10-K for 1994 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 March 31, 1995, as filed with the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934.
"Consolidated Current Assets" means at any date the current assets of
the Company and its Subsidiaries determined on a consolidated basis as of such
date.
"Consolidated Current Liabilities" means at any date the current
liabilities of the Company and its Subsidiaries determined on a consolidated
basis as of such date together, without duplication, with Guarantees by the
Company or any of its Subsidiaries of current liabilities of any other Person.
"Consolidated Debt" means at any date the Debt of the Company and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated EBITR" means, for any period, the sum of (i) consolidated
net income of the Company and its Consolidated Subsidiaries for such period
plus (ii) to the extent deducted in determining such consolidated net income,
the sum of (A) Consolidated Interest Expense, (B) Consolidated Rental Expense
(C) consolidated taxes of the Company and its Consolidated Subsidiaries for
such period and (D) up to $17,000,000 (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 (less interest income) 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 $17,000,000
(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.
<PAGE> 13
"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 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).
<PAGE> 14
"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 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.
<PAGE> 15
"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 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).
<PAGE> 16
"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 otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of
a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
(2) with respect to each CD Loan, a period commencing on the date of
borrowing specified in the applicable Notice of Committed Borrowing or on the
date specified in the applicable Notice of Interest Rate Election and ending
30, 60 or 90 days thereafter, as the Borrower may elect in the applicable
notice; provided that:
<PAGE> 17
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b) below) which would otherwise end on a day which is not a
Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar
Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
(3) with respect to each Money Market LIBOR Loan, the period
commencing on the date of borrowing specified in the applicable Notice of Money
Market Borrowing and ending such whole number of months thereafter (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 otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of
a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date; 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 otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise.
"Issuing Bank" means The First National Bank of Boston, in its capacity
as issuer of the Letters of Credit, and its successors in such capacity.
"Letter of Credit" means a letter of credit to be issued hereunder by
the Issuing Bank.
"Letter of Credit Commission Rate" has the meaning set forth in Section
2.09(i).
"Letter of Credit Liabilities" means, with respect to any Bank at any
time, the sum of (i) its participation in the undrawn amount which is then, or
may thereafter become, available for drawing under all outstanding Letters of
Credit (including, with respect to Letters of Credit providing for drawings to
be made in currencies other than U.S. dollars, the U.S. dollar equivalent of
the amount available for drawing thereunder in such other currency, determined
on the basis of the exchange rate that would be applicable pursuant to Section
2.09(e)(i) if such drawing were made at such time) and (ii) its participation
in the amount of each unpaid Reimbursement Obligation for drawings theretofore
made under all Letters of Credit.
"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.
<PAGE> 18
"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.
"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.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, the
Company or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Limitation Amount" means, for any day set forth, or for any day during
any period set forth, below, the amount set forth below opposite such day or
period:
<TABLE>
<CAPTION>
Day or Period Limitation Amount
<S> <C>
Second Amendment Effective Date
through the last day of the
second fiscal quarter of 1995 $100,000,000
First day of the third fiscal
quarter of 1995 through the
next to last day of such
quarter $125,000,000
Last day of the third fiscal
quarter of 1995 through the
next to last day of the fourth
fiscal quarter of 1995 $115,000,000
Last day of the fourth fiscal
quarter of 1995 $ 20,000,000
First day of the first fiscal
quarter of 1996 through the
last day of such quarter $ 30,000,000
First day of the second fiscal
quarter of 1996 through the
last day of such quarter $ 65,000,000
First day of the third fiscal
quarter of 1996 through the
next to last day of the fourth
fiscal quarter of 1996 $100,000,000
Last day of the fourth fiscal
quarter of 1996 and thereafter $ 20,000,000
</TABLE>
<PAGE> 19
"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 or the Reimbursement
Obligations) of the Company and/or one or more of its Subsidiaries, arising in
one or more related or unrelated transactions, in an aggregate principal amount
exceeding $1,000,000.
"Material 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.
<PAGE> 20
"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).
"Notice of Issuance" has the meaning set forth in Section 2.09(b).
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 11.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Factoring Transaction" means any sale or other transfer by
the Company or any of its Subsidiaries of Factorable Receivables, which sale or
transfer does not involve the creation of any recourse obligation in respect
thereof on the part of the Company or any of its Subsidiaries (other than with
respect to matters of title to, and the character (other than the
collectability) of, the Factorable Receivables so sold or transferred);
provided that the aggregate principal amount of Factorable Receivables that may
be sold or transferred pursuant to such sales or transfers during any fiscal
year of the Company may not exceed $15,000,000.
"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.
"Reimbursement Obligation" means an obligation of the Borrower to
reimburse the Issuing Bank pursuant to Section 2.09(e) for the amount of a
drawing under a Letter of Credit.
"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 and participations in Letters of Credit constituting
more than 50% of the sum of (i) the aggregate unpaid principal amount of the
Loans and (ii) the aggregate Letter of Credit Liabilities outstanding.
<PAGE> 21
"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.
"Second Amendment Effective Date" means the date upon which Amendment
No. 2 to the Amended and Restated Credit Agreement dated as of June 28, 1995
among the Company, the Banks and the Agent became effective in accordance with
its terms.
"Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person;
unless otherwise specified, "Subsidiary" means a Subsidiary of the Company.
"Swartz Family" means Sidney W. Swartz, his estate, his spouse, his
lineal descendants, trusts established for his, her or their benefit, the
Swartz Family Charitable Trust and The Sidney W. Swartz 1982 Family Trust.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors
Service, Inc. and not rated lower than A-1 by Standard & Poor's Corporation or
P-1 by Moody's 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.
<PAGE> 22
"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).
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 2.14, 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,
<PAGE> 23
(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 (x) 11:00 A.M. (New York City time) on the third Euro-Dollar
Business Day prior to the date of Borrowing proposed therein, in the case of a
LIBOR Auction or (y) 8:00 A.M. (New York City time) on 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.
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.
<PAGE> 24
(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 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,
<PAGE> 25
(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 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.
<PAGE> 26
(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;
<PAGE> 27
(iii) if the Loans comprising such Group are to be converted, the new
type of Loans and if, after such conversion, such Loans are to be Fixed Rate
Loans, the duration of the initial Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or Euro-Dollar
Loans for an additional Interest Period, the duration of such additional
Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election
shall comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
applicable Borrower pursuant to subsection (a) above, the 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, 7/8 of 1%, (ii) if Level II Status exists on such day, 1% and (iii) if
Level III Status exists on such day, 1-1/8%.
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.
<PAGE> 28
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation, any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. 327.3(d) (or any successor provision) to the Federal Deposit Insurance
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, 3/4 of 1%, (ii) if Level II Status exists on such day, 7/8 of 1%
and (iii) if Level III Status exists on such day, 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.
<PAGE> 29
(d) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the higher of (i) the Euro-Dollar Margin
for such day plus the quotient obtained (rounded upward, if necessary, to the
next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates per annum at
which one day (or, if such amount due remains unpaid more than three
Euro-Dollar Business Days, then for such other period of time not longer than
six months as the Agent may select) deposits in dollars in an amount
approximately equal to such overdue payment due to each of the Euro-Dollar
Reference Banks are offered to such Euro-Dollar Reference Bank in the London
or, in the case of any Reference Bank that does not accept interbank deposits
in London, New York interbank market for the applicable period determined as
provided above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the
circumstances described in clause (a) or (b) of Section 8.01 shall exist, the
rate applicable to Base Rate Loans for such day) and (ii) the sum of the
Euro-Dollar Margin for such day plus the Adjusted Interbank Offered Rate
applicable to such Loan at the date such payment was due.
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall
bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the sum of the
Interbank Offered Rate for such Interest Period (determined in accordance with
Section 2.08(c) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the first day thereof. Any
overdue 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. Letters of Credit.
(a) Commitment to Issue Letters of Credit. Subject to the terms and
conditions hereof, the Issuing Bank agrees to issue letters of credit hereunder
from time to time before the tenth day before the Termination Date upon the
request of any Borrower (the "Letters of Credit"). Upon the date of issuance
by the Issuing Bank of a Letter of Credit, the Issuing Bank shall be deemed,
without further action by any party hereto, to have sold to each Bank, and each
Bank shall be deemed, without further action by any party hereto, to have
purchased from the Issuing Bank, a participation in such Letter of Credit and
the related Letter of Credit Liabilities in the proportion their respective
Commitments bear to the aggregate commitments.
(b) Notice of Issuance.
(i) Any Borrower may request the Issuing Bank to issue a Letter of
Credit in favor of sellers of goods to the Company and its Subsidiaries on any
Domestic Business Day more than ten Domestic Business Days prior to the
Termination Date by delivering to the Issuing Bank, at its address referred to
in Section 11.01, a letter of credit application in the Issuing Bank's form (a
"Notice of Issuance"), completed to the reasonable satisfaction of the Issuing
Bank and specifying the date such Letter of Credit is to be issued, the terms
of such Letter of Credit and the nature of the transactions to be supported
thereby.
<PAGE> 30
(ii) Upon receipt of any Notice of Issuance from the Borrower, the
Issuing Bank shall process such Notice of Issuance in accordance with its
customary procedures and, subject to the terms and conditions hereof, shall
issue such Letter of Credit in accordance with the Company's instructions by
issuing the original of such Letter of Credit to the beneficiary thereof and by
furnishing a copy thereof to the applicable Borrower and, if the Company is not
the applicable Borrower, the Company.
(c) Additional Conditions to Issuance of Letters of Credit. In
addition to the conditions precedent set forth in Article III, the obligations
of the Issuing Bank to issue Letters of Credit pursuant to this Section 2.09
are subject to the additional conditions that (A) each Letter of Credit shall
be in such form and contain such terms as shall be reasonably satisfactory to
the Issuing Bank and (B) no Letter of Credit shall have an expiry date later
than the earlier of (1) ten Domestic Business Days prior to the Termination
Date and (2) six months after the issuance thereof.
(d) Drawings under Letters of Credit.
Upon receipt from the beneficiary of any Letter of Credit of any demand
for payment or notice of a drawing under such Letter of Credit, the Issuing
Bank shall notify the Company and, unless the instructions or documentation
presented with respect to such demand or notice is discrepant with the terms of
such Letter of Credit, make available to the beneficiary in accordance with the
terms of such Letter of Credit the amount of the drawing under such Letter of
Credit. The Issuing Bank shall not honor, without the prior consent of the
Company, any demand for payment or notice of a drawing under a Letter of Credit
for which discrepant instructions or documentation has been presented. The
Issuing Bank shall promptly provide the Company with written, electronic or
oral notification of the existence and nature of any such discrepancy. The
Company shall instruct the Issuing Bank to honor or dishonor such drawing
within three Domestic Business Days of receipt of notification of the
discrepancy.
(e) Reimbursement and Other Payments by the Borrower.
(i) If any amount is drawn under any Letter of Credit, the Company
irrevocably and unconditionally agrees to reimburse the Issuing Bank, in U.S.
dollars, for all amounts paid by the Issuing Bank upon such drawing, without
presentment, demand, protest or other formalities of any kind, together with
any and all reasonable charges and expenses which the Issuing Bank may pay or
incur relative to such drawing and interest on the amount drawn at the rate
applicable to Base Rate Loans for each day from and including the later of the
date such amount is paid by the Issuing Bank and the date notice of such
drawing is given by the Issuing Bank to the Company to but excluding the date
such reimbursement payment is paid by the Company. Such reimbursement payment
shall be due and payable (x) not later than the date the Company receives from
the Issuing Bank written, electronic or oral notification (directly, in the
case of oral notification, to the individual or individuals designated by the
Company from time to time) of such drawing, if such notification is given at or
before 10:30 A.M. (New York City time) on such date, (y) not later than 1:00
P.M. (New York City time) on the first Domestic Business Day succeeding the
date the Company receives such notification, if such notification is given
later than 10:30 A.M. (New York City time) but at or before 4:00 P.M. (New York
City time) or (z) not later than the first Domestic Business Day succeeding the
date the Company receives such notification, if such notification is given
later than 4:00 P.M. (New York City time). If a drawing is payable in a
currency other than U.S. dollars, the Company shall pay the Issuing Bank the
equivalent of the amount of such drawing in U.S. dollars, at the Issuing Bank's
then prevailing exchange rate, determined in each case at the time such drawing
is paid by the Issuing Bank.
(ii) In addition, the Company agrees to pay to the Issuing Bank
interest on any and all amounts unpaid (whether with the proceeds of Loans or
otherwise) by the Company when due hereunder with respect to a Letter of
Credit, for each day from and including the date when such amount becomes due
to but excluding the date such amount is paid in full, whether before or after
judgment, payable on demand, at a rate per annum equal to the sum of 2% plus
the rate applicable to Base Rate Loans for such day.
(f) Payments by Banks with Respect to Letters of Credit.
<PAGE> 31
(i) Each Bank shall make available an amount equal to its ratable
share of any drawing under a Letter of Credit, in Federal or other funds
immediately available in New York City, to the Agent for the account of the
Issuing Bank by 2:00 P.M. (New York City time) on the second Domestic Business
Day following such drawing, together with interest from and including the later
of the date such drawing is paid by the Issuing Bank and the date notice of
such drawing is given by the Issuing Bank to the Company to but excluding the
date such amount is so made available by such Bank on such amount at the
average rate charged to the Issuing Bank on overnight Federal funds
transactions on the date of such drawing as determined by the Issuing Bank, at
the Issuing Bank's address referred to in Section 11.01 hereof; provided that
each Bank's obligation shall be reduced by its pro rata share of any
reimbursement theretofore paid by the Company in respect of such drawing
pursuant to Section 2.09(e). The Issuing Bank shall notify the Agent and the
Agent shall notify each Bank of the amount of such Bank's obligation in respect
of any drawing under a Letter of Credit not later than 1:00 P.M. (New York City
time) on the day such payment by such Bank is due. Each Bank shall be
subrogated to the rights of the Issuing Bank against the Company to the extent
of all amounts due from such Bank to the Issuing Bank, plus interest thereon,
for each day from and including the day such amount is due from such Bank to
the Issuing Bank to but excluding the day the Company makes payment to the
Agent for the account of the Issuing Bank pursuant to subsection (e) above,
whether before or after judgment, at a rate per annum equal to the sum of 2%
plus the rate applicable to Base Rate Loans for such day.
(ii) If any Bank fails to pay any amount required pursuant to clause
2.09(f)(i) on the date on which such payment is due, interest shall accrue on
such Bank's obligation to make such payment, for each day from and including
the date such payment becomes due to but excluding the date such Bank makes
such payment, whether before or after judgment, at a rate per annum equal to
(A) in the case of each day from and including the day such payment is due
through and including the first succeeding Domestic Business Day (and any
intervening days), the average rate charged to the Issuing Bank on overnight
Federal funds transactions for each such day as determined by the Issuing Bank
and (B) thereafter, the sum of 2% plus the rate applicable to Base Rate Loans
for such day. Any payment made by any Bank after 3:00 P.M., New York City
time, on any Domestic Business Day shall be deemed for purposes of the
preceding sentence to have been made on the next succeeding Domestic Business
Day.
(iii) If the Company shall reimburse the Issuing Bank for any drawing
under a Letter of Credit after the Banks shall have made funds available to the
Issuing Bank with respect to such drawing in accordance with clause 2.09(f)(i),
the Issuing Bank shall promptly upon receipt of such reimbursement distribute
to each Bank its pro rata share thereof, including interest, to the extent
received by the Issuing Bank.
(g) The obligations of the Company and each Bank under subsections (e)
and (f) above shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement under all
circumstances whatsoever, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or any
Letter of Credit or any document related hereto or thereto;
(ii) any amendment or waiver of or any consent to departure from all
or any of the provisions of this Agreement or any Letter of Credit or any
document related hereto or thereto;
(iii) the use which may be made of any Letter of Credit by, or any
acts or omission of, a beneficiary of a Letter of Credit (or any Person for
whom the beneficiary may be acting);
(iv) the existence of any claim, set-off, defense or other rights that
the Company may have at any time against a beneficiary of a Letter of Credit
(or any Person for whom the beneficiary may be acting), the Banks, the Issuing
Bank or any other Person, whether in connection with this Agreement or the
Letter of Credit or any document related hereto or thereto or any unrelated
transaction;
(v) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever;
<PAGE> 32
(vi) payment under a Letter of Credit against presentation to the
Issuing Bank of a draft or certificate that does not comply with the terms of
the Letter of Credit, provided that the Issuing Bank's determination that
documents presented under the Letter of Credit comply with the terms thereof
shall not have constituted gross negligence or willful misconduct of the
Issuing Bank; or
(vii) any other act or omission to act or delay of any kind by any
Bank, the Issuing Bank, the Agent or any other Person or any other event or
circumstance whatsoever that might, but for the provisions of this clause
(vii), constitute a legal or equitable discharge of the Company's or such
Bank's obligations hereunder.
(h) The Company hereby indemnifies and holds harmless each Bank, the
Issuing Bank and the Agent from and against any and all claims, damages,
losses, liabilities, costs or expenses which such Bank, the Issuing Bank or the
Agent may incur (including, without limitation, any claims, damages, losses,
liabilities, costs or expenses which the Issuing Bank may incur by reason of or
in connection with the failure of any Bank to fulfill or comply with its
obligations to the Issuing Bank hereunder (but nothing herein contained shall
affect any rights the Company may have against such defaulting Bank)), and none
of the Banks, the Issuing Bank or the Agent nor any of their officers,
directors, employees or agents shall be liable or responsible, by reason of or
in connection with the execution and delivery or transfer of or payment or
failure to pay under any Letter of Credit, including without limitation any of
the circumstances enumerated in subjection (g) above, as well as (i) any error,
omission, interruption or delay in transmission or delivery of any messages, by
mail, cable, telegraph, telex, telecopy or otherwise, (ii) any error in
interpretation of technical terms, (iii) any loss or delay in the transmission
of any document required in order to make a drawing under a Letter of Credit,
(iv) any consequences arising from causes beyond the control of the Issuing
Bank, including, without limitation, any government acts, or any other
circumstances whatsoever in making or failing to make payment under such Letter
of Credit; provided that the Company shall not be required to indemnify the
Issuing Bank, the Agent or any Bank for any claims, damages, losses,
liabilities, costs or expenses, and the Company shall have a claim for direct
(but not consequential) damage suffered by it, to the extent caused by the
gross negligence or willful misconduct of such Bank, the Agent or of the
Issuing Bank in determining whether a request presented under any Letter of
Credit complied with the terms of such Letter of Credit. Nothing in this
subsection (h) is intended to limit this Agreement. To the extent the Company
does not indemnify the Issuing Bank as required by this subsection, the Banks
agree to do so ratably in accordance with their Commitments.
(i) Letter of Credit Commission; Issuing Bank Fees.
(i) The Company shall pay to the Agent for the account of the Banks,
ratably in proportion to their Commitments or, if all Commitments have been
terminated, in proportion to their Commitments immediately before such
termination, a letter of credit commission at the Letter of Credit Commission
Rate on the daily average amount available for drawing (whether or not any
conditions to drawing can then be met) on all outstanding Letters of Credit.
Such letter of credit commission shall accrue from and including the Effective
Date to but excluding the Termination Date (or, if later, the date of
expiration or termination of the last Letter of Credit to expire or be
terminated) and shall be payable quarterly in arrears on each Quarterly Date
and on the date of termination of the Commitments in their entirety (or, if
later, on the date of expiration or termination of the last Letter of Credit to
expire or be terminated).
"Letter of Credit Commission Rate" means, for any day, (i) if Level I
Status exists on such day, 3/4 of 1%, (ii) if Level II Status exists on such
day, 7/8 of 1% and (iii) if Level III Status exists on such day, 1%.
(ii) The Company agrees to pay to the Issuing Bank fees in the amounts
and at the times agreed between the Company and the Issuing Bank.
(j) Further Assurances. The Company hereby agrees, from time to time,
to do and perform any and all acts and to execute any and all further
instruments reasonably requested by the Issuing Bank or the Agent more fully to
effect the purposes of this Section 2.09 and the issuance of the Letters of
Credit.
<PAGE> 33
(k) Provisions Not Exclusive. The provisions of this Section 2.09 in
respect of any Letters of Credit are supplemental to, and not in derogation of,
any rights and remedies of the Issuing Bank, the Agent and the Banks under the
Notices of Issuance related to such Letters of Credit and under other
applicable law. In the event of any conflict between the terms of this
Agreement and the terms of the Notices of Issuance, the terms set forth in this
Agreement shall control.
(l) Issuing Bank Reports. The Issuing Bank will notify the Agent
on a biweekly basis of (i) the aggregate payments made by the Issuing Bank
during the preceding two week period under Letters of Credit, (ii) the
aggregate undrawn amount (including, in the case of Letters of Credit providing
for drawings to be made in currencies other than U.S. dollars, the U.S. dollar
equivalent of such undrawn amount, determined in the basis of the exchange rate
that would be applicable pursuant to Section 2.09(e)(i) if such undrawn amount
were drawn on such day) of Letters of Credit outstanding on the last day of
such two week period and (iii) each payment made by the Issuing Bank that has
not been reimbursed by the Borrower. In addition, the Issuing Bank will
provide to the Agent such information as to the Letters of Credit and payments
and reimbursements made or due with respect thereto as the Agent may, from time
to time, reasonably request.
(m) Letters of Credit may be issued, and notices, requests and other
communications (including, without limitation, Notices of Issuance) to any
Borrower or the Issuing Bank with respect thereto may be issued or transmitted,
in either written or electronic form.
SECTION 2.10. 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 later of the date the Loans shall be repaid in their entirety and the date
of expiration or termination of the last Letter of Credit to expire or to be
terminated, on the daily sum of (A) the aggregate outstanding principal amount
of the Loans and (B) the aggregate Letter of Credit Liabilities. 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 and the date of expiration or
termination of the last Letter of Credit to expire or be terminated.
SECTION 2.11. Mandatory Termination of Commitments. The Commitments
shall terminate in their entirety on the Termination Date.
SECTION 2.12. 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 or Letters of Credit 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 (x) the aggregate principal amount of Loans
outstanding shall not exceed the Available Amount and (y) the sum of the
aggregate principal amount of Loans outstanding and the aggregate Letter of
Credit Liabilities of the several Banks does not exceed the aggregate
Commitments.
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.
<PAGE> 34
(b) If, on any day, the sum of (i) the aggregate principal amount
of Loans outstanding and (ii) the aggregate Letter of Credit Liabilities of the
several Banks shall exceed the aggregate Commitments, 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 sum, Money Market Loans), together with accrued
interest thereon, to the extent necessary to cause such sum, immediately after
such prepayment, to be less than or equal to the aggregate Commitments.
(c) If, on any day, the aggregate Letter of Credit Liabilities
shall exceed $50,000,000, the Borrowers shall pay to the Issuing Bank an amount
equal to such excess, to be deposited with the Issuing Bank in the Cash
Collateral Account to be held, applied or released for application as provided
in Section 2.20.
(d) 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 subsections (a) and (b) 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
subsections (a) and (b) 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 2.16 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. Optional Prepayments. (a) Subject in the case of any
Fixed Rate Borrowing to Section 2.16, any Borrower may, upon notice to the
Agent (i) not later than 11:30 A.M. (New York City time) on the date of
prepayment, in the case of a Group of Base Rate Loans of such Borrower (or any
Money Market Borrowing of such Borrower bearing interest at the Base Rate
pursuant to Section 8.01(a)), (ii) at least two Domestic Business Days prior to
the date of prepayment, in the case of a Group of CD Loans of such Borrower and
(iii) at least three Euro-Dollar Business Days prior to the date of prepayment,
in the case of a Group of Euro-Dollar Loans of such Borrower, prepay a Group of
Loans of such Borrower in whole at any time, or from time to time in part in
amounts aggregating (x) $500,000 or any larger multiple of $100,000, in the
case of a Group of Base Rate Loans or such a Money Market Borrowing or (y)
$1,000,000 or a larger multiple of $100,000, in the case of a Group of CD Loans
or Euro-Dollar Loans, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such Group or Borrowing.
(b) Except as provided in subsection (a) above, Section 2.13 or
Article VI or VIII, no Borrower may prepay all or any portion of the principal
amount of any Money Market Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share, if any, of such prepayment and such notice shall not
thereafter be revocable by the applicable Borrower.
SECTION 2.15. 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.
<PAGE> 35
(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 2.16. 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 2.14(c), 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 2.17. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.18. 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 2.19. 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.
<PAGE> 36
(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.
SECTION 2.20. Cash Collateral Account. (a) All amounts required to
be deposited as cash collateral with the Issuing Bank pursuant to Section
2.13(c) or Section 6.03 shall be deposited in a cash collateral account (the
"Cash Collateral Account") established by the Company with the Issuing Bank, to
be held, applied or released for application as provided in this Section 2.20.
(b) If and when any portion of the Letter of Credit Liabilities on
which any deposit of cash collateral was based (the "Relevant Contingent
Exposure") shall become fixed (a "Direct Exposure") as a result of the payment
by the Issuing Bank of a draft presented under any relevant Letter of Credit,
the amount of such Direct Exposure (but not more than the amount in the Cash
Collateral Account at the time) shall be withdrawn by the Issuing Bank from the
Cash Collateral Account and shall be applied against such Direct Exposure and
the Relevant Contingent Exposure shall thereupon be reduced by such amount. If
at any time the amount in the Cash Collateral Account exceeds the Relevant
Contingent Exposure, the excess amount shall, so long as no Default shall have
occurred and be continuing, be promptly withdrawn by the Issuing Bank and paid
to the Company. If a Default shall have occurred and be continuing, such
excess amount shall be retained in the Cash Collateral Account and, if and when
requested by the Required Banks, shall be withdrawn by the Issuing Bank and
applied first to repay the Reimbursement Obligations and second any remaining
excess shall be paid to the Company.
(c) Interest and other payments and distributions made on or with
respect to the cash collateral held by the Issuing Bank in the Cash Collateral
Account shall be for the account of the Company and shall constitute cash
collateral to be held by the Issuing Bank or returned to the Company in
accordance with subsection (b) of this Section 2.20; provided that the Issuing
Bank shall have no obligation to invest any cash collateral on behalf of the
Company or any other Person. Beyond the exercise of reasonable care in the
custody thereof, the Issuing Bank shall have no duty as to any cash collateral
in its possession or control or in the possession or control of any agent or
bailee or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto. The Issuing Bank shall be
deemed to have exercised reasonable care in the custody and preservation of the
cash collateral in its possession if the cash collateral is accorded treatment
substantially equal to that which it accords its own property, and shall not be
liable or responsible for any loss or damage to any of the cash collateral, or
for any diminution in the value thereof, by reason of the act or omission of
any agent or bailee selected by the Issuing Bank in good faith. All expenses
and liabilities incurred by the Issuing Bank in connection with taking, holding
and disposing of any cash collateral (including customary custody and similar
fees with respect to any cash collateral held directly by the Issuing Bank)
shall be paid by the Company from time to time upon demand. Upon a Default,
the Issuing Bank shall be entitled to apply (and, at the request of the
Required Banks but subject to applicable law, shall apply) cash collateral or
the proceeds thereof to payment of any such expenses, liabilities and fees.
<PAGE> 37
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;
(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.
<PAGE> 38
SECTION 3.03. Borrowings and Letter of Credit Issuances. The
obligation of any Bank to make a Loan on the occasion of any Borrowing, and the
obligation of the Issuing Bank to issue any Letter of Credit, are 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, or a Notice of Issuance as required by Section 2.09(b) as
the case may be;
(c) the fact that, immediately after such Borrowing or the issuance of
such Letter of Credit, as the case may be, (i) the aggregate outstanding
principal amount of the Loans of the several Banks shall not exceed the
Available Amount, (ii) the aggregate Letter of Credit Liabilities of the
several Banks shall not exceed $50,000,000 and (iii) the sum of the aggregate
outstanding principal amount of the Loans and the aggregate Letter of Credit
Liabilities of the several Banks shall not exceed the aggregate Commitments;
(d) the fact that, immediately before and after such Borrowing or
issuance of such Letter of Credit, 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 and each issuance of a Letter of Credit hereunder shall
be deemed to be a representation and warranty by the Borrowers on the date of
such Borrowing or issuance of such Letter of Credit, as the case may be, 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 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.
<PAGE> 39
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, 1994 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
1994 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 March 31, 1995 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, copies of
which have been provided to the Banks, since December 31, 1994 there has been
no material adverse change in the business, financial position or results of
operations of the Company and its Consolidated Subsidiaries, considered as a
whole.
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Company threatened against or
affecting, the Company or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could materially adversely
affect the business, consolidated financial position or consolidated results of
operations of the Company and its Consolidated Subsidiaries, considered as a
whole, or which in any manner draws into question the validity of this
Agreement or the Notes.
<PAGE> 40
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, the Issuing Bank 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, the
Issuing Bank 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.
<PAGE> 41
ARTICLE V
COVENANTS
The Company agrees that, so long as any Bank has any Commitment or
Letter of Credit Liabilities 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;
<PAGE> 42
(f) within five days after any officer of the Company obtains
knowledge of any Default, if such Default is then continuing, a certificate of
the chief financial officer or the chief accounting officer of the Company
setting forth the details thereof and the action which the Company is taking or
proposes to take with respect thereto;
(g) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(h) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) which the Company shall have filed with the Securities and
Exchange Commission;
(i) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section
4043 of ERISA) with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given 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.
<PAGE> 43
SECTION 5.04. Conduct of Business and Maintenance of Existence. The
Company will continue, and will cause each Subsidiary to continue, to engage in
business of the same general type as now conducted by the Company and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and
will cause each Subsidiary to preserve, renew and keep in full force and effect
their respective corporate existence and their respective rights, privileges
and franchises necessary or desirable in the normal conduct of business;
provided that nothing in this Section 5.04 shall prohibit (i) the merger or
consolidation of a Subsidiary with or into another Person if the corporation
surviving such consolidation or merger is a Wholly-Owned Subsidiary or the
merger of a Subsidiary into the Company if, in each case, after giving effect
thereto, no Default shall have occurred and be continuing, (ii) the termination
of the corporate existence of any Subsidiary if such termination is not
materially disadvantageous to the Banks and the Company in good faith
determines that such termination is in the best interest of the Company or
(iii) a sale of capital stock of a Subsidiary permitted under Section 5.12(ii).
SECTION 5.05. Compliance with Laws. The Company will comply, and
cause each Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations and requirements of governmental
authorities (including, without limitation, Environmental Laws and ERISA and
the rules and regulations 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 ending during any
period set forth below will not be less than the ratio set forth opposite such
period:
<TABLE>
<CAPTION>
Period Ratio
<S> <C>
First day of the second
fiscal quarter of 1995
through the last day of
such quarter 1.35 to 1
First day of the third
fiscal quarter of 1995
through the last day of
the second fiscal quarter
of 1996 0.75 to 1
First day of the third
fiscal quarter of 1996
through the last day of
such quarter 1.50 to 1
First day of the fourth
fiscal quarter of 1996
and thereafter 1.75 to 1
</TABLE>
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 consecutive days in the
period between December 1, 1995 and March 1, 1996, $20,000,000 and (B) on any
day, the Limitation Amount for such day;
<PAGE> 44
(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, 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 during any period set forth below be less
than the sum of (i) the amount set forth below opposite such period and (ii)
80% of the net cash proceeds of all issuances by the Company of shares of its
capital stock after the Second Amendment Effective Date:
<TABLE>
<CAPTION>
Period Amount
<S> <C>
Second Amendment Effective Date
through the next to last day of
the third fiscal quarter of 1996 $100,000,000
Last day of the third fiscal quarter
of 1996 through the next to last
day of the fourth fiscal quarter
of 1996 $120,000,000
Last day of the fourth fiscal quarter
of 1996 and thereafter $125,000,000
</TABLE>
<PAGE> 45
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 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;
<PAGE> 46
(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;
(k) Liens on amounts in the Cash Collateral Account securing
obligations of the Borrower with respect to Letters of Credit; and
(l) 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 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.
<PAGE> 47
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 and Letters of Credit. The proceeds of
the Loans made under this Agreement will be used by the Borrowers for general
corporate purposes, including working capital. The Letters of Credit issued
under this Agreement shall be used to support the purchase by the Company and
its Subsidiaries of inventory and raw materials in the ordinary course of
business. None of such proceeds or Letters of Credit 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 or on any day set forth below exceed the ratio set forth
below opposite such period or day:
<TABLE>
<CAPTION>
Period or Day Leverage Ratio
<S> <C>
First day of the second fiscal
quarter of 1995 through the
last day of such quarter 2.25 to 1.00
First day of the third fiscal
quarter of 1995 through the next
to last day of such quarter 2.30 to 1.00
Last day of the third fiscal
quarter of 1995 through the
next to last day of the fourth
fiscal quarter of 1995 2.25 to 1.00
Last day of fourth fiscal quarter
of 1995 1.50 to 1.00
First day of the first fiscal
quarter of 1996 through the last
day of such quarter 1.60 to 1.00
First day of the second fiscal
quarter of 1996 through the
next to last day of the third
fiscal quarter of 1996 1.90 to 1.00
Last day of the third fiscal
quarter of 1996 through the
next to last day of the fourth
fiscal quarter of 1996 1.80 to 1.00
Last day of the fourth fiscal
quarter of 1996 1.25 to 1.00
First day of the first fiscal
quarter of 1997 and thereafter 1.45 to 1.00
</TABLE>
<PAGE> 48
SECTION 5.19. Restrictive Agreements. (a) The Company will not, and
will not permit any Subsidiary to, enter into any agreement after the Second
Amendment Effective Date which shall further limit (i) the ability of the
Company or any Subsidiary to amend or otherwise modify this Agreement or any
Note, (ii) the ability of any Subsidiary to make any payments, directly or
indirectly, to the Company, (iii) the ability of any Subsidiary to guarantee
any obligation of the Company under this Agreement or any Note or (iv) the
ability of the Company or any Subsidiary to grant any Lien on any or all of its
property to secure its obligations under this Agreement, the Notes or any such
guarantee; provided that (x) the agreements and instruments entered into in
connection with the refinancing of any Debt of the Company or any Subsidiary
outstanding on the Second Amendment Effective Date (or on the date such
Subsidiary becomes a Subsidiary) may contain any such limitations that were
contained in the agreements and instruments governing the Debt so refinanced
and (y) it is understood that the imposition by any governmental entity of any
restriction of the kind set forth in this Section shall not be deemed to be a
Default under this Section.
(b) The Company will not, and will not permit any Subsidiary to,
enter, after the Second Amendment Effective Date, into any agreement
(including, without limitation, any amendment or modification of, or supplement
to, any outstanding agreement) with respect to any Debt of the Company or any
Subsidiary that contains conditions, covenants or events of default that are
more burdensome or restrictive to the Company or such Subsidiary than those
contained in the Note Agreements and the Note Agreements relating to the 1994
Private Placement Debt are to the Company on the Second Amendment Effective
Date.
SECTION 5.20. Current Ratio. The ratio of Consolidated Current Assets
to Consolidated Current Liabilities of the Borrower will at no time be less
than 1.25 to 1.00.
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 or any Reimbursement Obligation shall
not be paid when due, or any interest, any fees or any other amount payable
hereunder shall not be paid within two Domestic Business Days of the due date
thereof;
(b) the Company shall fail to observe or perform any covenant
contained in Sections 5.07 to 5.15, inclusive, and 5.17, 5.18 and 5.20;
(c) any Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a)
or (b) above) for 30 days after written notice thereof has been given to the
Company by the 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;
<PAGE> 49
(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
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.
<PAGE> 50
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 and the Issuing Bank thereof.
SECTION 6.03. Cash Collateral. If any Event of Default specified in
clause (g) or (h) of Section 6.01 with respect to the Borrower shall occur, or
the Loans shall otherwise be accelerated or the Commitments terminated pursuant
to Section 6.01, then without any request or the taking of any other action by
the Agent, the Issuing Bank or any of the Banks, the Company shall be obligated
forthwith to pay to the Issuing Bank an amount in immediately available funds
equal to the then aggregate Letter of Credit Liabilities, to be held by the
Issuing Bank as cash collateral as provided in Section 2.20.
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.
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.
<PAGE> 51
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent, the Issuing Bank 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, the Issuing Bank 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, the Issuing Bank 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.
<PAGE> 52
SECTION 8.02. Illegality. If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any 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 the Issuing Bank or 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 either (i) 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 (x) with respect to any CD Loan any
such requirement included in an applicable Domestic Reserve Percentage and (y)
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 or (ii) impose
on the Issuing Bank or any Bank any other condition (including, without
limitation, any assessment for federal deposit insurance) regarding any Letter
of Credit, the Issuing Bank's obligation to issue any Letter of Credit or any
Bank's obligation to pay the Issuing Bank its ratable share of any drawing
under any Letter of Credit, and the result of any event referred to in clause
(i) or (ii) of this subsection 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.
<PAGE> 53
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within 15 days
after demand by such Bank (with a copy to the Agent), the Company shall pay to
such Bank such additional amount or amounts as will compensate such Bank (or
its Parent) for such reduction.
(c) Each of the Issuing Bank and the Banks 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 the Issuing Bank or 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, the
Issuing 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, the
Issuing 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, the Issuing 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, the Issuing 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, the Issuing Bank or the Agent (as the case may be) makes demand
therefor.
<PAGE> 54
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Company (but
only so long as such Bank remains lawfully able to do so), shall provide the
Company and the Agent with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to benefits under an income tax treaty to
which the United States is a party which reduces the rate of withholding tax on
payments of interest or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States. If the form provided by a Bank at the time such Bank first
becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from "Taxes" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to provide
the Company with the appropriate form pursuant to Section 8.04(d) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.04(a) with respect to
Taxes imposed by the United States; provided that should a Bank, which is
otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
each Borrower shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If any Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section 8.04, then such Bank will
change the jurisdiction of its Applicable Lending Office so as to 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.
<PAGE> 55
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
GUARANTY
SECTION 10.01. The Guaranty. The Company hereby unconditionally
guarantees the full and punctual payment of the principal of and interest on
each Note (whether at stated maturity, upon acceleration or otherwise) issued
by any Eligible Subsidiary and 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;
<PAGE> 56
(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, the Issuing Bank, 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.
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.
<PAGE> 57
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices. Except as otherwise expressly provided
herein, 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, the Issuing Bank 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 or the Issuing Bank under Article II or Article VIII shall not be
effective until received.
SECTION 11.02. No Waivers. No failure or delay by the Agent, the
Issuing Bank 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, the Issuing Bank 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, the Issuing Bank 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.
<PAGE> 58
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 and its participation in any Reimbursement
Obligation and interest, if any, thereon (collectively, the "Relevant Debt" of
such Bank) 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
the Relevant Debt of such other Bank, the Bank receiving such proportionately
greater payment shall purchase such participations in the Relevant Debt of 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 Relevant
Debt of the Banks shall be shared by the Banks pro rata; provided that nothing
in this Section shall impair the right of any Bank to exercise any right of
set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other than its
indebtedness hereunder. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation in a
Note or a Reimbursement Obligation, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or counterclaim and
other rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the 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 Issuing Bank or the Agent are affected
thereby, by the Issuing Bank or the Agent as the case may be); 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, the aggregate unpaid principal amount of the Loans or the
aggregate Letter of Credit Liabilities or change 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, the Issuing Bank
and the Agent, such Bank shall remain responsible for the performance of its
obligations hereunder, and the Borrowers, the Issuing Bank 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
2.19 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).
<PAGE> 59
(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, the Issuing Bank and the Agent; provided that (i) any
such assignment must be in an amount of at least $5,000,000, (ii) if an
Assignee is an affiliate of such transferor Bank, no such consent shall be
required and (iii) such assignment may, but need not, include rights of the
transferor Bank in respect of outstanding Money Market Loans. Upon execution
and delivery of such instrument and payment by such Assignee to such transferor
Bank of an amount equal to the purchase price agreed between such transferor
Bank and such Assignee, such Assignee shall be a Bank party to this Agreement
and shall have all the rights and obligations of a Bank with a Commitment as
set forth in such instrument of assumption, and the transferor Bank shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the transferor
Bank, the Agent and the Borrowers shall make appropriate 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 (and, in the
case of any such Assignee to whom any Letter of Credit Liabilities have been
assigned, the Issuing Bank) 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,
the Issuing Bank 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.
<PAGE> 60
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 BORROWER, THE AGENT,
THE ISSUING BANK AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
COMPANY
THE TIMBERLAND COMPANY
By
Title:
200 Domain Drive
Stratham, NH 03885
Attention: Nancy A. Wels
Facsimile transmission
number: 603-773-1645
<TABLE>
<CAPTION>
Commitments
BANKS
<S> <C>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
Title:
ABN AMRO BANK N.V.
By
Title:
By
Title:
THE FIRST NATIONAL BANK OF
BOSTON
By
Title:
</TABLE>
<PAGE> 61
<TABLE>
<S> <C>
CHEMICAL BANK
By
Title:
THE NORTHERN TRUST COMPANY
By
Title:
THE BANK OF NOVA SCOTIA
By
Title:
BANK HAPOALIM B.M.
By
Title:
By
Title:
_________________
Total Commitments
$ 125,000,000
=================
</TABLE>
<PAGE> 62
AGENT
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent
By
Title:
60 Wall Street
New York, New York 10260-0060
Attention: Blake Witherington
Telex number: 177615
Facsimile transmission
number: (212) 648-5018
ISSUING BANK
THE FIRST NATIONAL BANK OF
BOSTON, as Issuing Bank
By
Title:
P.O. Box 1763
Boston, Massachusetts 02105
Attention: International and
Banking Department
Telex number: 4886527
Swiftcode: FNBBUS33
Facsimile transmission
number: (617) 434-5414 or
(617) 434-8360
<PAGE> 63
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> 64
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Type Amount Amount of
of of Principal Notation
Date Loan Loan Repaid Made By
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 65
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> 66
Dated: _____________, 199_
Very truly yours,
[BORROWER]
By: ________________________
Title:
<PAGE> 67
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> 68
EXHIBIT D
FORM OF MONEY MARKET QUOTE
To: [Name of Borrower] (the "Borrower")
Re: Money Market Quote to the Borrower
In response to your invitation dated _____________, 19__, we hereby make
the following Money Market Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following Interest Periods and at the following
rates:
<TABLE>
<CAPTION>
Principal Interest Money Market
Amount Period [Margin][Absolute Rate]
<S> <C> <C>
$
$
</TABLE>
[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> 69
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.
<PAGE> 70
The opinions expressed below are limited to matters governed by the laws
of The Commonwealth of Massachusetts, the General Corporation Law of the State
of Delaware and the federal laws of the United States. With respect to the
opinions expressed in paragraphs 2 and 4 below concerning (i) the qualification
and good standing of the Company as a foreign corporation under the laws of New
Hampshire and Tennessee and (ii) the qualification and good standing of The
Outdoor Footwear Company, a Delaware corporation ("TOFC"), as a foreign
corporation under the laws of Puerto Rico, such opinions are based solely upon
certificates from officials of such jurisdictions, copies of which have been
furnished to you.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware with corporate powers
adequate for the execution, delivery and performance of the 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.
<PAGE> 71
We call your attention to the fact that John E. Beard is the Secretary
of the Company. Our opinions expressed herein do not include matters which may
have come to the attention of John E. Beard in that capacity and which have not
been referred to us for substantive legal advice.
Our opinions that the Credit Agreement and the Notes being delivered to
the Banks today are legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms are subject to
(i) bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and (ii) general
principles of equity, regardless of whether applied in proceedings in equity or
at law. Such opinions are also subject to the following qualifications:
(a) the enforceability of the provisions of the Credit Agreement
providing for indemnification may be affected by public policy considerations or
court decisions which may limit the right of the indemnified party to obtain
indemnification;
(b) we express no opinion as to the enforceability of any provision of
the Credit Agreement which purports to grant the right of setoff to a purchaser
of a participation in the obligations of the Company under the Credit Agreement
and the Notes from a bank party to the Credit Agreement; and
(c) we express no opinion as to the enforceability of any provision of
the Credit Agreement to the extent it requires the Company to indemnify any of
you or any other party against loss in obtaining the currency due under the
Credit Agreement from a court judgment, order, award or decision in another
currency.
In addition, we call your attention to the fact that certain waivers
contained in the Credit Agreement may be 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> 72
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> 73
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> 74
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.
This instrument shall be construed in accordance with and governed by
the laws of the State of New York.
Very truly yours,
[NAME OF ELIGIBLE SUBSIDIARY]
By
----------------------------
Title:
The undersigned hereby confirms that the status of [name of Eligible
Subsidiary] as an Eligible Subsidiary for purposes of the Credit Agreement
described above is terminated as of the date hereof.
THE TIMBERLAND COMPANY
By
----------------------------
Title:
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> 75
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> 76
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 and participate in Letters of Credit 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
participations in outstanding Letters of Credit, 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 and the
assumption by the Assignee of a corresponding portion of the Assignor's
participation in Letters of Credit outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, the Company, the
Issuing Bank 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.
<PAGE> 77
SECTION 4. Consent of the Company and the Agent. This Agreement is
conditioned upon the consent of the Company, the Issuing Bank and the Agent
pursuant to Section 11.06(c) of the Credit Agreement. The execution of this
Agreement by the Company, the Issuing Bank 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 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:
THE FIRST NATIONAL BANK OF
BOSTON, as Issuing Bank
By
----------------------------
Title:
<PAGE> 1
Exhibit 10.14(b)
THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
FIRST AMENDMENT
Dated as of
April 15, 1995
Re: Note Agreements dated as of December 15, 1994
$106,000,000 8.94% Senior Notes
Due December 15, 2001
To the Holder named in Schedule I
hereto which is a signatory of this
Agreement
Gentlemen:
Reference is made to the separate Note Agreements, each dated as of
December 15, 1994 (the "Original Note Agreements"), between the undersigned, THE
TIMBERLAND COMPANY, a Delaware corporation (the "Company"), and the Purchasers
named in Schedule I thereto (the "Holders") respectively. Unless otherwise
herein defined or the context hereof otherwise requires, the capitalized terms
in this First Amendment shall have the respective meanings specified in the
Original Note Agreements.
The Company now wishes to amend the Original Note Agreements in the
respects, but only in the respects, hereinafter set forth, and, by your
execution hereof, you hereby agree to such amendments on the terms hereinafter
set forth:
SECTION 1. AMENDMENTS.
Section 1.1. The definition of the term "Consolidated Net Income" in
Section 8.1 of Original Note Agreements shall be, and the same hereby is,
amended as follows:
(a) by deleting the word "and" from the end of clause (j) thereof;
<PAGE> 2
The Timberland Company First Amendment
(b) by deleting the period from the end of clause (k) thereof and adding
the following thereto "; and"; and
(c) by adding the following new clause (l) thereto:
"(l) for any determination of 'Consolidated Net Income' on any
date through and including March 31, 1996, certain extraordinary or
non-recurring items or charges in an aggregate amount not to exceed
$17,000,000 (calculated on a pre-tax basis) that are incurred by the
Company solely in connection with the closing by the Company of its
manufacturing facilities located in Boone, North Carolina and Mountain
City, Tennessee and the restructuring by the Company of its
manufacturing facility located in the Dominican Republic; provided
that the closing and the restructuring of such facilities shall have
occurred by March 31, 1996."
Section 1.2. The definition of the term "Total Equity" in Section 8.1 of
Original Note Agreements shall be, and the same hereby is, amended to read as
follows:
"'Total Equity' as at any date shall mean stockholders' equity
determined in accordance with generally accepted accounting principles
consolidating the Company and its Restricted Subsidiaries; provided
that for the purposes of calculating 'Total Equity' on any date
through and including July 31, 1996, those certain extraordinary or
non-recurring items or charges in an aggregate amount not to exceed
$17,000,000 (calculated on a pre-tax basis) that are incurred by the
Company solely in connection with the closing by the Company of its
manufacturing facilities located in Boone, North Carolina and Mountain
City, Tennessee and the restructuring by the Company of its
manufacturing facility located in the Dominican Republic shall be
excluded from such determination of 'Total Equity' so long as the
closing and the restructuring of such facilities shall have occurred
by March 31, 1996."
Section 1.3. Section 5.7 of the Original Note Agreement is hereby amended
to read in its entirety as follows:
-2-
<PAGE> 3
The Timberland Company First Amendment
"Consolidated Tangible Net Worth;. The Company will at all
times keep and maintain Consolidated Tangible Net Worth at an amount
not less than (i) for the fiscal quarter of the Company ending June
30, 1995, the sum of $80,000,000 plus 25% of Consolidated Net Income
for the fiscal quarter of the Company ended March 31, 1995 (but
without deduction in the case of a deficit in Consolidated Net Income)
and (ii) for each fiscal quarter thereafter, the sum of (x) the amount
required to be maintained during the immediately preceding fiscal
quarter of the Company, and (y) an amount equal to 25% of Consolidated
Net Income for such preceding fiscal quarter (but without deduction in
the case of a deficit in Consolidated Net Income)."
SECTION 2. MISCELLANEOUS.
Section 2.1. Any Default or Event of Default which might have existed
under the Original Note Agreements prior to giving effect to this First
Amendment but which would not constitute such a Default or Event of Default
under the Original Note Agreements as amended by this First Amendment is hereby
waived.
Section 2.2. Any and all notices, requests, certificates and other
instruments executed and delivered after the effective date of this First
Amendment may refer to the "Note Agreements dated as of December 15, 1994"
without making specific reference to this First Amendment, but nevertheless all
such references shall be deemed to include this First Amendment unless the
context shall otherwise require.
Section 2.3. This First Amendment shall be construed in connection with
and as part of the Original Note Agreements, and all terms, conditions and
covenants contained in the Original Note Agreements, except as herein modified,
shall be and remain in full force and effect.
Section 2.4. This First Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original but altogether
one and the same instrument.
Section 2.5. Governing Law. This First Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
-3-
<PAGE> 4
The Timberland Company First Amendment
Upon the acceptance of this First Amendment by Holders holding at least
51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of April 15,
1995.
THE TIMBERLAND COMPANY
By
Its
----------------------------
Accepted as of April 15, 1995
[VARIATION]
By
Its
----------------------------
By
Its
----------------------------
Holding $[Variation] unpaid
principal amount of the Notes.
-4-
<PAGE> 1
Exhibit 10.14(c)
THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
SECOND AMENDMENT
Dated as of
June 28, 1995
Re: Note Agreements dated as of December 15, 1994
$106,000,000 8.94% Senior Notes
Due December 15, 2001
To the Holder named in Schedule I
hereto which is a signatory of this
Agreement
Ladies and Gentlemen:
The undersigned, THE TIMBERLAND COMPANY, a corporation duly organized
and validly existing under the laws of the State of Delaware, (the "Company"),
agrees with you as follows:
SECTION 1. INTRODUCTION.
Reference is made to the separate Note Agreements, each dated as of
December 15, 1994, as amended by the separate First Amendments thereto, each
dated as of April 15, 1995 collectively, (the "Original Note Agreements"),
between the Company and the Purchasers named in Schedule I thereto,
respectively. Unless otherwise herein defined or the context hereof otherwise
requires, the capitalized terms in this Second Amendment shall have the
respective meanings specified in the Original Note Agreements. The holders of
the Notes at the time of reference are referred to herein as the "Holders".
Reference is also made to that certain Amendment No. 2 to Amended and
Restated Credit Agreement dated as of June 28, 1995 (the "Credit Agreement
Amendment") among the Company, the Banks listed on the signature pages thereof
and Morgan Guaranty Trust Company of New York, as Agent, which is being executed
and delivered concurrently herewith.
<PAGE> 2
The Timberland Company Second Amendment
The Company has requested that, subject to the satisfaction of the
conditions set forth herein, the Original Note Agreements be amended as of June
28, 1995 (the "Effective Date") in the respects, but only in the respects,
hereinafter set forth, and, by your execution hereof, you hereby agree to such
amendments on the terms hereinafter set forth.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to you as follows:
(a) After giving effect to this Second Amendment and the Credit
Agreement Amendment and the transactions contemplated hereby and thereby, no
Default or Event of Default has occurred and is continuing, and no event has
occurred and no condition exists which with the lapse of time or the giving of
notice, or both, would constitute an event of default under any indenture,
agreement, or other instrument under which any Indebtedness of the Company or
any Restricted Subsidiary for borrowed money in an aggregate principal amount in
excess of $1,000,000 is outstanding.
(b) The Company has no Unrestricted Subsidiaries.
SECTION 3. CONDITIONS PRECEDENT.
The effectiveness of this Second Amendment shall be subject to the
following conditions precedent:
Section 3.1. Execution of the Credit Agreement Amendment. The Company,
the Agent named therein and the Required Banks (as defined in the Credit
Agreement) shall have duly executed and delivered the Credit Agreement
Amendment, which shall be a legal, valid, binding and enforceable agreement of
the Company.
Section 3.2. Warranties and Representations True. The warranties and
representations of the Company set forth in Section 2 hereof shall be true and
correct in all material respects on the Effective Date with the same effect as
though made on and as of the Effective Date.
Section 3.3. Payment of Closing Fees. In consideration of your
execution and delivery of this Second Amendment, the Company shall have paid to
each Holder a closing fee in an amount equal to .375% of the outstanding
principal amount of the Notes held by such Holder on the Effective Date.
-2-
<PAGE> 3
The Timberland Company Second Amendment
Section 3.4. Proceedings Satisfactory. All proceedings taken in
connection with the transactions contemplated or provided for in this Second
Amendment and all documents and papers relating thereto shall be satisfactory to
you and your special counsel. You and your special counsel shall have received
copies of such documents and papers as you or they may reasonably request in
connection therewith, all in form and substance satisfactory to you and your
special counsel.
SECTION 4. AMENDMENTS.
The following amendments to the Original Note Agreements shall become
effective on the Effective Date and shall terminate and be of no further force
and effect on February 28, 1997:
Section 4.1. Amendment to Section 5.7. Section 5.7 of the Original Note
Agreements shall be, and the same is hereby amended in its entirety as follows:
"Section 5.7. Minimum Consolidated Tangible Net Worth.
Consolidated Tangible Net Worth will at no time during any period
set forth below be less than the sum of (i) the amount set forth
below opposite such period and (ii) 80% of the net cash proceeds
of all issuances by the Company of shares of its capital stock
after the Second Amendment Effective Date:
PERIOD AMOUNT
Second Amendment Effective Date
through the next to last day of the
third fiscal quarter of 1996 $100,000,000
Last day of the third fiscal
quarter of 1996 through the next to
last day of the fourth fiscal
quarter of 1996 $120,000,000
Last day of the fourth fiscal
quarter of 1996 and thereafter $125,000,000
-3-
<PAGE> 4
The Timberland Company Second Amendment
"The following terms shall have the following meanings
solely for purposes of this SECTION.5.7:
"'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
$17,000,000 (calculated on a pre-tax basis) of certain
extraordinary items that may be booked after April 19, 1995)
as of such date.
"'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.
"'Investment' means any investment in any Person,
whether by means of share purchase, capital contribution,
loan, time deposit or otherwise."
-4-
<PAGE> 5
The Timberland Company Second Amendment
Section 4.2. Amendments to Section 5.8. Section 5.8 of the Original
Note Agreements shall be, and the same is hereby amended as follows:
(a) Section 5.8(a)(3) is amended in its entirety to read as follows:
"(3) [Intentionally Reserved]".
(b) Section 5.8(a)(5) is amended in its entirety to read as follows:
"(5) Current Debt or Funded Debt of a Restricted Subsidiary,
other than that permitted by SECTION.5.8(A)(4), provided that at the time of
incurrence thereof and after giving effect thereto and to the application of the
proceeds thereof, Specified Debt does not exceed 15% of Consolidated Tangible
Net Worth."
Section 4.3. Amendment to Section 5.9. Section 5.9 of the Original Note
Agreements shall be, and the same is hereby amended in its entirety as follows:
"Section 5.9. Fixed Charge Coverage Ratio. The Fixed Charge
Coverage Ratio for any period of four consecutive fiscal quarters
ending during any period set forth below will not be less than
the ratio set forth opposite such period:
PERIOD RATIO
First day of the second fiscal
quarter of 1995 through the last
day of such quarter 1.35 to 1
First day of the third fiscal
quarter of 1995 through the last
day of the second fiscal quarter of
1996 0.75 to 1
First day of the third fiscal
quarter of 1996 and thereafter 1.50 to 1"
-5-
<PAGE> 6
The Timberland Company Second Amendment
"THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS SOLELY FOR
PURPOSES OF THIS SECTION.5.9:
"'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 $17,000,000 (calculated on a pre-tax basis) of
certain extraordinary items that may be booked after April
19, 1995.
"'Consolidated Interest Expense' means, for any period,
the interest expense (less interest income) of the Company
and its Consolidated Subsidiaries determined on a
consolidated basis for such period.
"'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' is defined in SECTION.5.7.
"'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)."
Section 4.4. Amendment to Section 5.10. Section 5.10(j) of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
-6-
<PAGE> 7
The Timberland Company Second Amendment
"(j) provided that no Default or Event of Default exists at
the time of creation thereof, other Liens on fixed assets (in
addition to those permitted by the foregoing provisions of this
Section 5.10) if, after giving effect thereto (and to the
application of the proceeds thereof), the aggregate amount of
Specified Debt would not exceed 15% of Consolidated Tangible Net
Worth; and"
Section 4.5. Amendment to Section 5.11. Section 5.11 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"Section 5.11. 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 5.11 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 5.11.
"The following term shall have the following meaning solely
for purposes of this Section 5.11:
"'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
-7-
<PAGE> 8
The Timberland Company Second Amendment
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."
Section 4.6. Amendment to Section 5.19. Section 5.19(f) of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"(f) Officers' Certificates. Within the periods provided in
paragraphs (a) and (b) above, a certificate of an authorized
financial officer of the Company stating that he has reviewed the
provisions of this Agreement and setting forth: (i) the
information and computations (in sufficient detail) required in
order to establish whether the Company was in compliance with the
requirements of Section 5.5 through Section 5.21, inclusive, at
the end of the period covered by the financial statements then
being furnished, (ii) whether there existed as of the date of
such financial statements and whether, to the best of his
knowledge, there exists on the date of the certificate or existed
at any time during the period covered by such financial
statements any Default or Event of Default and, if any such
condition or event exists on the date of the certificate,
specifying the nature and period of existence thereof and the
action the Company is taking and proposes to take with respect
thereto and (iii) the information and computations (in sufficient
detail) required in order to establish whether the Company was in
compliance with the requirements of Section 5.6 through Section
5.14, inclusive, and Section 5.17 (as such Sections were in
effect immediately prior to the Second Amendment Effective Date)
at the end of the period covered by the financial statements then
being furnished, and the amount, if any, of the Credit Fee (as
defined in the Second Amendment) to be paid to the holders of the
Notes pursuant to Section 5 of the Second Amendment;"
Section 4.7. Additional Covenants of the Company. The following
Sections 5.20 through 5.24 shall be added to the Original Note Agreements
immediately following Section 5.19, to read in their respective entireties as
follows:
-8-
<PAGE> 9
The Timberland Company Second Amendment
"Section 5.20. Debt. Without limiting the provisions of
Section 5.8 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 the Credit Agreement as in
effect on the date hereof giving effect to Amendment No. 2
thereto, provided that the sum of (i) the aggregate
principal amount of Loans outstanding under the Credit
Agreement and (ii) the aggregate principal amount of
Permitted Short-Term Debt shall not exceed (A) for a minimum
of thirty consecutive days in the period between December 1,
1995 and March 1, 1996, $20,000,000 and (B) on any day, the
Limitation Amount for such day; and
"(b) Other Debt permitted by Section 5.08 of the Credit
Agreement as in effect on the date hereof giving effect to
Amendment no. 2 thereto.
"The following terms shall have the following meanings
solely for purposes of this Section 5.20:
"'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 5.10 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
-9-
<PAGE> 10
The Timberland Company Second Amendment
Debt is assumed by such Person, and (vii) all Debt of others
guaranteed by such Person.
"'Derivatives Obligations' of any Person means all
obligations of such Person in respect of any rate swap
transaction, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity
or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect
to any of the foregoing transactions) or any combination of
the foregoing transactions.
"'Limitation Amount' means, for any day set forth, or
for any day during any period set forth, below, the amount
set forth below opposite such day or period:
DAY OR PERIOD LIMITATION AMOUNT
Second Amendment Effective Date
through the last day of the second
fiscal quarter of 1995 $100,000,000
First day of the third fiscal
quarter of 1995 through the next
to last day of such quarter $125,000,000
Last day of the third fiscal
quarter of 1995 through the next
to last day of the fourth fiscal
quarter of 1995 $115,000,000
Last day of the fourth fiscal
quarter of 1995 $ 20,000,000
-10-
<PAGE> 11
The Timberland Company Second Amendment
First day of the first fiscal
quarter of 1996 through the last
day of such quarter $ 30,000,000
First day of the second fiscal
quarter of 1996 through the last
day of such quarter $ 65,000,000
First day of the third fiscal
quarter of 1996 through the next
to last day of the fourth fiscal
quarter of 1996 $100,000,000
Last day of the fourth fiscal
quarter of 1996 and thereafter $ 20,000,000
"'Loan' means a Domestic Loan, a Euro-Dollar Loan or a
Money Market Loan (each as defined in the Credit Agreement)
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).
"'Permitted Short-Term Debt' means Debt (other than
Loans or Debt permitted under Section 5.08(g) of the Credit
Agreement) of the Company or any of its Subsidiaries having
a maturity, at the time such Debt is
-11-
<PAGE> 12
The Timberland Company Second Amendment
incurred, of not more than one year from the date such Debt is
incurred.
"Section 5.21. Leverage Ratio. The Leverage Ratio will at no time
during any period or on any day set forth below exceed the ratio set
forth below opposite such period or day:
<TABLE>
<CAPTION>
PERIOD OR DAY LEVERAGE RATIO
<S> <C>
First day of the second fiscal
quarter of 1995 through the
last day of such quarter 2.25 to 1.00
First day of the third fiscal
quarter of 1995 through the next
to last day of such quarter 2.30 to 1.00
Last day of the third fiscal
quarter of 1995 through the
next to last day of the fourth
fiscal quarter of 1995 2.25 to 1.00
</TABLE>
-12-
<PAGE> 13
The Timberland Company Second Amendment
<TABLE>
<S> <C>
Last day of fourth fiscal quarter
of 1995 1.50 to 1.00
First day of the first fiscal
quarter of 1996 through the last
day of such quarter 1.60 to 1.00
First day of the second fiscal
quarter of 1996 through the
next to last day of the third
fiscal quarter of 1996 1.90 to 1.00
Last day of the third fiscal
quarter of 1996 through the
next to last day of the fourth
fiscal quarter of 1996 1.80 to 1.00
Last day of the fourth fiscal
quarter of 1996 1.25 to 1.00
First day of the first fiscal
quarter of 1997 and thereafter 1.45 to 1.00
</TABLE>
"The following terms shall have the following meanings solely for
purposes of this Section 5.21:
"'Consolidated Debt' means at any date the Debt of the
Company and its Consolidated Subsidiaries, determined on a
consolidated basis as of such date.
"'Consolidated Subsidiaries' is defined in Section 5.7.
"'Debt' is defined in Section 5.20.
-13-
<PAGE> 14
The Timberland Company Second Amendment
"'Leverage Ratio' means, for any date, the ratio of (i)
Consolidated Debt on such date to (ii) Consolidated Net Worth (as
defined in Section 5.7) on such date.
"'Loan' is defined in Section 5.20.
"Section 5.22. No Unrestricted Subsidiaries. The Company shall
not designate any Subsidiary as an Unrestricted Subsidiary.
"Section 5.23. Payments with Respect to Credit Agreement. The
Company will not, without the prior written consent of Holders holding
not less than 51% of the unpaid principal amount of the Notes, directly
or indirectly pay or extend, or enter into any agreement with any of
the other Persons party to the Credit Agreement which provides for the
payment or extension by the Company of, any form of additional
compensation or security to any such Person in consideration for any
amendment of, waiver of the requirements of, or consent to a
modification of, Sections 2.13, 5.11, 5.12, 5.13 or 5.14 of the Credit
Agreement (or related definitions of terms), as amended to the date
hereof.
"Section 5.24. Restrictive Agreements. (a) The Company will not,
and will not permit any Subsidiary to, enter into any agreement after
the Second Amendment Effective Date which shall further limit (i) the
ability of the Company or any Subsidiary to amend or otherwise modify
this Agreement or any Note, (ii) the ability of any Subsidiary to make
any payments, directly or indirectly, to the Company, (iii) the ability
of any Subsidiary to guarantee any obligation of the Company under the
Agreement or any Note or (iv) the ability of the Company or any
Subsidiary to grant any Lien on any or all of its property to secure
its obligations under this Agreement, the Notes or any such guarantee;
provided that (x) the agreements and instruments entered into in
connection with the refinancing of any Debt of the Company or any
Subsidiary outstanding on the Second Amendment Effective Date (or on
the date such Subsidiary becomes a Subsidiary) may contain any such
limitations that were contained in the agreements and instruments
governing the Debt so refinanced and (y) it is understood that the
imposition by any governmental entity of any restriction of the
-14-
<PAGE> 15
The Timberland Company Second Amendment
kind set forth in this Section shall not be deemed to be a Default
under this Section.
"(b) The Company will not, and will not permit any Subsidiary to,
enter, after the Second Amendment Effective Date, into any agreement
(including, without limitation, any amendment or modification of, or
supplement to, any outstanding agreement) with respect to any Debt of
the Company or any Subsidiary that contains conditions, covenants or
events of default that are more burdensome or restrictive to the
Company or such Subsidiary than those contained in the Credit Agreement
are to the Company on the Second Amendment Effective Date.
"The following terms shall have the following meanings solely for
purposes of this Section 5.24:
"'Debt' is defined in Section 5.20.
"'Loan' is defined in Section 5.20."
Section 4.8. Amendment to Section 6.1. Section 6.1(f) of the Original Note
Agreements shall be, and the same is hereby amended in its entirety as follows:
"(f) Default shall occur in the observance or performance of any
covenant or agreement contained in Section 5.6 through Section 5.15,
inclusive, Section 5.17, Section 5.20, Section 5.21, or Section 5.23;
or"
Section 4.9. Amendments to Section 8.1. The following definitions shall be
added to Section 8.1 of the Original Note Agreements in alphabetical order and
shall read as follows:
"'Credit Agreement' shall mean that certain Amended and Restated
Credit Agreement dated as of March 14, 1995, among the Company, the
Banks listed on the signature pages thereof and Morgan Guaranty Trust
Company of New York, as Agent, as amended to date.
'Second Amendment' shall mean the Second Amendment to this
Agreement dated as of June 28, 1995 between the Company and you.
-15-
<PAGE> 16
The Timberland Company Second Amendment
'Second Amendment Effective Date' shall mean the date on which the
Second Amendment becomes effective."
SECTION 5. CREDIT FEE.
If, on any interest payment date, the Company is not in compliance
(determined as of the end of the then most recent fiscal quarter of the Company)
with Sections 5.6 through 5.14, inclusive, or Section 5.17 of the Original Note
Agreements (as in effect immediately prior to the Effective Date), the Company
shall pay to each Holder a fee (the "Credit Fee") in an amount equal to .125% of
the outstanding principal amount of the Notes held by such Holder on such
interest payment date (each a "Non-Compliance Date"), before giving effect to
any payment of principal made on the Notes on such Non-Compliance Date.
Each Credit Fee shall be due and payable 10 days following the delivery to
the Holders of the Company's financial statements for the fiscal quarter
immediately preceding the applicable Non-Compliance Date or, if earlier, on the
date such financial statements are required to be delivered to the holders of
the Notes pursuant to Section 5.19 of the Original Note Agreements, as amended
hereby.
In the event that the Company has not delivered the required financial
statements by the date provided in said Section 5.19 for any financial reporting
period ending immediately prior to an interest payment date, such interest
payment date shall be deemed to be a Non-Compliance Date hereunder, and the
Credit Fee relating to such Non-Compliance Date shall become immediately due and
payable.
SECTION 6. MISCELLANEOUS.
Section 6.1. Waiver of Default. Any Default or Event of Default which
might have existed under the Original Note Agreements prior to giving effect to
this Second Amendment but which would not constitute such a Default or Event of
Default under the Original Note Agreements as amended by this Second Amendment
is hereby waived.
Section 6.2. Notices. Any and all notices, requests, certificates and
other instruments executed and delivered after the effective date of this Second
Amendment may refer to the "Note Agreements dated as of December 15, 1994"
without making specific reference to this Second Amendment, but nevertheless all
such references shall be deemed to include this Second Amendment unless the
context shall otherwise require.
Section 6.3. Expenses. The Company will pay all expenses relating to this
Second Amendment in accordance with Section 9.4 of the Original Note Agreements.
-16-
<PAGE> 17
The Timberland Company Second Amendment
Section 6.4. Construction. This Second Amendment shall be construed in
connection with and as part of the Original Note Agreements, and all terms,
conditions and covenants contained in the Original Note Agreements, except as
herein modified, shall be and remain in full force and effect.
Section 6.5. Counterparts. This Second Amendment may be executed in any
number of counterparts, each executed counterpart constituting an original but
altogether one and the same instrument.
Section 6.6. Governing Law. This Second Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
-17-
<PAGE> 18
The Timberland Company Second Amendment
Upon the acceptance of this Second Amendment by Holders holding at
least 51% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of June 28, 1995.
THE TIMBERLAND COMPANY
By
Its
----------------------------
Accepted as of June 28, 1995
[VARIATION]
By
Its
----------------------------
By
Its
----------------------------
Holding $[Variation] unpaid
principal amount of the Notes.
-18-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1995 AND THE
CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,846
<SECURITIES> 0
<RECEIVABLES> 111,975
<ALLOWANCES> 6,008
<INVENTORY> 264,948
<CURRENT-ASSETS> 409,962
<PP&E> 90,513
<DEPRECIATION> 37,200
<TOTAL-ASSETS> 501,676
<CURRENT-LIABILITIES> 146,698
<BONDS> 206,826
<COMMON> 109
0
0
<OTHER-SE> 132,899
<TOTAL-LIABILITY-AND-EQUITY> 501,676
<SALES> 266,726
<TOTAL-REVENUES> 266,726
<CGS> 185,675
<TOTAL-COSTS> 185,675
<OTHER-EXPENSES> 842
<LOSS-PROVISION> 2,491
<INTEREST-EXPENSE> 10,841
<INCOME-PRETAX> (31,390)
<INCOME-TAX> (11,928)
<INCOME-CONTINUING> (19,462)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,462)
<EPS-PRIMARY> (1.75)
<EPS-DILUTED> 0
</TABLE>
