<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 28, 1996
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 2, 1996 8,346,073 shares of the registrant's Class A Common Stock were
outstanding and 2,734,451 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 28, 1996 and December 31, 1995
Condensed Consolidated Statements of Operations - 4
For the three and six months ended June 28, 1996
and June 30, 1995
Condensed Consolidated Statements of Cash Flows - 5
For the six months ended June 28, 1996 and
June 30, 1995
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 13-14
</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 28, 1996, and the related
condensed consolidated statements of operations for the three-month and
six-month periods ended June 28, 1996 and June 30, 1995, and the related
Condensed Consolidated Statements of Cash Flows for the six-month periods ended
June 28, 1996 and June 30, 1995. 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, 1995, and the related consolidated statements of
operations, changes in stockholders' equity, and cash flows for the year then
ended (not presented herein); and, in our report dated February 7, 1996, 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, 1995, 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 17, 1996
<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 28, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Current assets
Cash and equivalents $ 19,937 $ 38,389
Accounts receivable, net 87,251 95,786
Inventories 209,018 180,636
Prepaid expenses 11,748 12,752
Deferred and refundable income taxes 11,282 10,267
--------- ---------
Total current assets 339,236 337,830
--------- ---------
Property, plant and equipment 99,523 95,937
Less accumulated depreciation and amortization (49,560) (43,533)
--------- ---------
Net property, plant and equipment 49,963 52,404
--------- ---------
Excess of cost over fair value of net assets
acquired, net 23,429 24,271
--------- ---------
Other assets, net 5,445 6,903
--------- ---------
$ 418,073 $ 421,408
========= =========
</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 28, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Current liabilities
Current maturities of long-term obligations $ 7,755 $ 7,733
Accounts payable 29,718 25,207
Accrued expenses
Payroll and related 9,305 7,882
Interest and other 26,409 28,001
Income taxes payable 1,081 892
--------- ---------
Total current liabilities 74,268 69,715
--------- ---------
Long-term obligations, less current maturities 199,071 199,454
--------- ---------
Deferred income taxes 10,019 10,018
--------- ---------
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; 8,364,457 shares issued
at June 28, 1996 and 8,316,554 shares at
December 31, 1995 84 83
Class B Common Stock, $.01 par value (10 votes per share);
Convertible into Class A shares on a one-for-one basis; 15,000,000 shares
authorized; 2,734,451 shares issued at June 28, 1996 and
2,735,381 shares at December 31, 1995 27 27
Additional paid-in capital 60,341 59,716
Retained earnings 72,326 80,181
Cumulative translation adjustment 2,057 2,334
Less treasury stock at cost, 18,369 shares at June 28,
1996 and December 31, 1995 (120) (120)
134,715 142,221
--------- ---------
$ 418,073 $ 421,408
========= =========
</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 28, June 30, June 28, June 30,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 113,648 $ 125,143 $ 241,332 $ 266,726
Cost of goods sold 73,567 89,064 155,226 185,675
--------- --------- --------- ---------
Gross profit 40,081 36,079 86,106 81,051
--------- --------- --------- ---------
Operating expenses
Selling 33,753 34,312 66,217 67,803
General and administrative 11,529 12,053 21,587 23,724
Amortization of goodwill 421 421 842 842
Restructuring charge -- 16,000 -- 16,000
--------- --------- --------- ---------
Total operating expenses 45,703 62,786 88,646 108,369
--------- --------- --------- ---------
Operating loss (5,622) (26,707) (2,540) (27,318)
--------- --------- --------- ---------
Other expense (income)
Interest expense 5,489 5,725 10,287 10,841
Other, net (216) 441 (359) (6,769)
--------- --------- --------- ---------
Total other expense 5,273 6,166 9,928 4,072
--------- --------- --------- ---------
Loss before income taxes (10,895) (32,873) (12,468) (31,390)
--------- --------- --------- ---------
Benefit for income taxes (4,015) (12,492) (4,613) (11,928)
--------- --------- --------- ---------
Net loss $ (6,880) $ (20,381) $ (7,855) $ (19,462)
========= ========= ========= =========
Loss per share $ (.61) $ (1.83) $ (.70) $ (1.75)
========= ========= ========= =========
Weighted average shares outstanding and share
equivalents 11,225 11,120 11,194 11,130
========= ========= ========= =========
</TABLE>
See accompanying 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 28, June 30,
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (7,855) $(19,462)
Adjustments to reconcile net loss
to net cash used in operating activities:
Deferred income taxes 1 250
Depreciation and amortization 10,394 8,629
Gain on distributorship transaction -- (7,358)
Restructuring charge -- 9,914
Gain on sale of equipment -- (127)
Increase (decrease) in cash from changes in working
capital items, net of effects of business
dispositions:
Accounts receivable 8,072 12,700
Inventories (28,521) (52,034)
Prepaid expenses 1,330 2,494
Accounts payable 4,427 (1,554)
Accrued expenses (5) 3,015
Income taxes (829) (19,923)
-------- --------
Net cash used in operating activities (12,986) (63,456)
-------- --------
Cash flows from investing activities:
Proceeds from distributorship transaction 681 24,000
Proceeds from sale of equipment -- 1,756
Additions to property, plant and equipment, net (6,410) (7,903)
Other, net 189 (1,267)
-------- --------
Net cash provided by (used) in investing activities (5,540) 16,586
-------- --------
Cash flows from financing activities:
Net borrowings under short-term credit facilities -- 42,470
Proceeds from long-term obligations -- 525
Payments on long-term debt and capital lease obligations (361) (692)
Issuance of common stock 626 668
-------- --------
Net cash provided by financing activities 265 42,971
-------- --------
Effect of exchange rate changes on cash (191) 364
Net decrease in cash and equivalents (18,452) (3,535)
Cash and equivalents at beginning of period 38,389 6,381
-------- --------
Cash and equivalents at end of period $ 19,937 $ 2,846
======== ========
Supplemental disclosures of cash flow information:
Interest paid $ 9,331 $ 10,518
Income tax (refund) paid (3,788) 7,744
</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)
(Dollars in thousands except per share data)
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, 1995.
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 28, 1996 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. Inventories consist of the following
<TABLE>
<CAPTION>
June 28, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Raw materials $ 12,714 $ 10,374
Work-in-process 5,321 5,494
Finished goods 190,983 164,768
-------- --------
$209,018 $180,636
======== ========
</TABLE>
4. Indebtedness
On June 21, 1996, the Company entered into a new unsecured committed
revolving credit agreement (the "Agreement"), with a group of banks.
The Agreement, which replaced the Company's existing revolving credit
facility, provides for up to $80,000 in letters of credit under an
overall $100,000 committed facility expiring on June 21, 1998. Under
the terms of the Agreement, the Company may borrow at interest rates
based upon the lenders' cost of funds. The Agreement provides for a
facility fee of 3/8% per annum on the full commitment, places
limitations on the payment of dividends and the incurrence of
additional debt, and also contains certain other financial and
operating covenants.
5. New Accounting Pronouncements
The Company has adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-lived Assets and for Long-lived Assets to Be Disposed Of",
effective January 1, 1996. SFAS No. 121 requires that long-lived assets
and certain identifiable intangibles held and used by an entity be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Adopting SFAS No. 121 had no material effect on the Company's
consolidated financial statements.
<PAGE> 9
Form 10-Q
Page 7
THE TIMBERLAND COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-Based Compensation", which was adopted
by the Company effective January 1, 1996. SFAS No. 123 requires
expanded disclosures of stock-based compensation arrangements with
employees and encourages (but does not require) compensation cost to
be measured based on the fair value of the equity instrument awarded.
Companies are permitted to continue to apply APB Opinion No. 25, which
recognizes compensation cost based on the intrinsic value of the
equity instrument awarded. The Company will continue to apply APB
Opinion No. 25 to its stock-based compensation awards to employees and
will disclose the required pro forma effect on net income and earnings
per share in the 1996 annual consolidated financial statements.
6. 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 work force due to a reorganized
management structure. These actions resulted in a one-time pre-tax
charge of $16,000. 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 third-party contract
manufacturers.
Of the total charge for restructuring, $9,914 related to anticipated
losses associated with the disposal of assets and is a non-cash item,
$3,891 related to payments for contractual lease obligations and
expenditures to close idle facilities, and $2,195 relates to payments
for severance and other employee liabilities.
The Company has substantially completed these restructuring actions,
with the exception of the sale of certain manufacturing equipment which
is expected to occur by the end of 1996. At June 28, 1996, these assets
amounted to $1,414 and are included in property, plant and equipment.
Cash expenditures related to the restructuring plan of $5,400 have been
incurred as of June 28, 1996. The Company has funded the restructuring
plan from internal sources and available borrowing capacity.
7. Other Income
The first half results of 1995 include a pre-tax gain of $7,358 from
the Company's appointment in January 1995 of Inchcape plc as exclusive
distributor of Timberland(R) products in the Asia/Pacific region, and
the related sale of Timberland's Australian and New Zealand
subsidiaries.
<PAGE> 10
Form 10-Q
Page 8
THE TIMBERLAND COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
8. Legal Proceedings
The Company is involved in various litigation and legal matters which
have arisen in the ordinary course of business. Management believes
that the ultimate resolution of any existing matter will not have a
material adverse 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 plaintiffs' motion,
assented to by defendants, to consolidate the two actions. On June 23,
1995, plaintiffs filed a consolidated amended complaint (the "Amended
Complaint") with the District Court. The Amended Complaint alleges that
defendants violated 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 Class A 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. On March 18, 1996, the
District Court denied defendants' motion to dismiss the Amended
Complaint. On March 19, 1996, the District Court granted plaintiffs'
motion for class certification for all purchasers of the Company's
Class A Common Stock between May 12, 1994 and December 9, 1994.
Management believes this action is without merit and intends to defend
it vigorously. Accordingly, at this time, management does not expect
the outcome of such litigation to have a material adverse effect on the
Company's consolidated financial statements.
<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 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 28, June 30, June 28, June 30,
1996 1995 1996 1995
---------------- ---------------- ---------- -------------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 64.7 71.2 64.3 69.6
----- ----- ----- -----
Gross profit 35.3 28.8 35.7 30.4
----- ----- ----- -----
Operating expenses
Selling 29.7 27.4 27.4 25.4
General and administrative 10.1 9.6 8.9 8.9
Amortization of goodwill .4 .3 .3 .3
Restructuring charge -- 12.8 -- 6.0
----- ----- ----- -----
Total operating expenses 40.2 50.2 36.7 40.6
----- ----- ----- -----
Operating loss (4.9) (21.3) (1.1) (10.2)
----- ----- ----- -----
Other expense (income)
Interest expense 4.8 4.6 4.3 4.1
Other, net (.2) .4 (.1) (2.5)
----- ----- ----- -----
Total other expense 4.6 4.9 4.1 1.5
----- ----- ----- -----
Loss before income taxes (9.6) (26.3) (5.2) (11.8)
Benefit for income taxes (3.5) (10.0) (1.9) (4.5)
----- ----- ----- -----
Net loss (6.1)% (16.3)% (3.3)% (7.3)%
===== ===== ===== =====
</TABLE>
Note: Percentages may not add due to rounding.
<PAGE> 12
Form 10-Q
Page 10
Second Quarter 1996 Compared with Second Quarter 1995
Revenues for the second quarter of 1996 were $113.6 million, a decrease of 9.2%
compared to the $125.1 million reported in the second quarter of 1995.
Domestic revenues for the second quarter of 1996 were $79.9 million, a decline
of $14.7 million, or 15.5%, from the same period in 1995. Most of the decline
is a result of demand softening in the Company's domestic wholesale footwear
business, where unit sales of performance sandals and women's footwear were
down, and an insufficient number of successful new products were introduced. In
addition, $4.2 million of the decline is attributable to a non-recurring
licensing fee received in the second quarter of last year.
International revenues for the second quarter of 1996 were $33.7 million, an
increase of $3.2 million, or 10.5%, over the comparable prior year period.
International revenues comprised 29.7% of total second quarter 1996 revenues,
up from 24.4% in the second quarter of 1995. Most of the growth occurred in
Italy, where revenues nearly doubled as compared to the second quarter of last
year, due in part to the addition of 12 franchised stores which opened in the
second half of 1995 and during 1996. Revenues also increased in the U.K.
Footwear revenues decreased $5.0 million, or 5.4%, in the second quarter of
1996, compared to the same period in 1995 primarily as a result of fewer unit
sales. Revenues attributable to apparel and accessories decreased $3.8 million,
or 13.2%, in the second quarter of 1996 compared to the same period in 1995,
due primarily to fewer unit sales. Retail revenues for the second quarter of
1996 were $27.1 million, representing 23.9% of total revenues in the second
quarter of 1996 compared to 18.6% in the second quarter of 1995. At June 28,
1996, there were 30 specialty stores and 35 factory outlet stores owned and
operated by Timberland compared to 26 specialty stores and 27 factory outlet
stores at June 30, 1995.
Gross profit as a percentage of revenue for the second quarter of 1996 was
35.3%, up 6.5 points compared to 28.8% for the second quarter of 1995. The
improvement was achieved in all business units, particularly in domestic
footwear, which benefited from cost reductions, lower levels of returns and
allowances, and a better sales mix.
Operating expenses were $45.7 million in the second quarter of 1996, down 2.3%
from the $46.8 million reported in the second quarter of 1995 (exclusive of a
one-time $16.0 million pre-tax manufacturing restructuring charge). The $1.1
million decrease compared to the prior year period was primarily attributable to
reductions in selling expense, due to fewer unit sales, and in general and
administrative expenses.
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 and the
elimination of approximately 1,800 positions. 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 third-party manufacturers.
Of the total charge for restructuring in 1995, $9.9 million related to
anticipated losses associated with the disposal of assets and is a non-cash
item, $3.9 million related to payments for contractual lease obligations and
expenditures to close idle facilities, and $2.2 million relates to payments for
severance and other employee liabilities.
<PAGE> 13
Form 10-Q
Page 11
The Company has substantially completed these restructuring actions with the
exception of the sale of certain manufacturing equipment which is expected to
occur by the end of 1996. Cash expenditures related to the restructuring plan of
$5.4 million have been incurred as of June 28, 1996. The Company has funded the
cost of the restructuring plan from internal sources and available borrowing
capacity.
Interest expense for the second quarter of 1996 decreased by $.2 million to $5.5
million from the comparable period in 1995. The decrease is due to a reduction
in long-term debt and the absence of short-term borrowings during the second
quarter of 1996.
Six Months ended June 28, 1996 Compared with Six Months ended June 30, 1995
Revenues for the first six months of 1996 were $241.3 million, a decrease of
9.5% from the $266.7 million for the comparable period in 1995. Revenues for the
first six months of 1995 include a $4.2 million non-recurring licensing fee
received in connection with a licensing agreement.
Gross profit as a percentage of revenues for the first six months of 1996 was
35.7%, compared to 30.4% for the comparable period in 1995. The improvement is
attributable to the same factors cited for the percentage increase in the second
quarter of 1996 compared to the second quarter of 1995.
Operating expenses for the first half of 1996 decreased $3.8 million to $88.6
million from $92.4 million (exclusive of a one-time pre-tax manufacturing
restructuring charge) for the comparable period in 1995. The dollar decrease
compared to prior year was primarily attributable to a reduction in selling
expense, due to fewer unit sales, and in general and administrative expenses.
Interest expense for the first six months of 1996 was $10.3 million, a decrease
of $.5 million from the comparable period in 1995, due to a reduction in
long-term debt and the absence of short-term borrowings during the first half of
1996.
For the first six months of 1995, other expense (income) includes a
non-recurring pre-tax gain of $7.4 million, or $0.41 per share, 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.
The effective tax rate for the first six months of 1996 was 37%, compared to a
rate of 38% for the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
Cash used by operations during the first six months of 1996 amounted to $13.0
million, compared to $63.5 million used during the same period in 1995.
Accounts receivable declined $8.5 million from year end 1995, and wholesale
days sales outstanding decreased to 84 days at June 28, 1996 from 93 days at
June 30,1995. Inventories were $209.0 million at June 28, 1996, a $55.9
million, or 21.1% decline from June 30, 1995. Inventory turns were 1.5 times
for the second quarter of 1996, compared to 1.4 times for the second quarter of
1995.
<PAGE> 14
Form 10-Q
Page 12
During the first six months of 1996, $5.5 million of cash was used in investing
activities compared to $16.6 million being provided in the same period in 1995,
due primarily to $24 million of cash proceeds received from the agreement with
Inchcape plc. Capital expenditures for the first six months of 1996 were $5.7
million, compared to $7.9 million for the same period in 1995. During the first
six months of 1996, $.3 million of cash was provided by financing activities
compared to $43.0 million of cash provided in the second quarter of 1995. Short-
term borrowings accounted for $42.5 million of the cash provided by financing
activities for the first six months of 1995.
The Company uses unsecured revolving and committed lines of credit as the
primary sources of financing for its seasonal and other working capital
requirements. The Company did not draw on its seasonal bank lines of credit
during the first six months of 1996. The Company expects to utilize its short-
term bank lines in the third quarter for seasonal working capital requirements.
On June 21, 1996, the Company entered into a new unsecured committed revolving
credit agreement (the "Agreement"), with a group of banks. The Agreement, which
replaced the Company's existing revolving credit facility, provides for up to
$80 million in letters of credit under an overall $100 million committed
facility expiring on June 21, 1998. Under the terms of the Agreement, the
Company may borrow at interest rates based upon the lender's cost of funds. The
Agreement provides for a facility fee of 3/8% per annum on the full commitment,
places limitations on the payment of dividends and the incurrence of additional
debt, and also contains certain other financial and operating covenants. The
Company's debt to capital ratio was 60.6% at June 28, 1996, compared to 59.3%
at December 31, 1995 and 67.8% at June 30, 1995.
Management believes that the Company's capital needs for 1996 will be met
through its existing credit facilities and cash flows from operations without
the need for additional permanent financing. However, as discussed in an exhibit
to the Company's Form 10-K for the year ended December 31, 1995, entitled
"Cautionary Statements for Purposes of the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995", several risks and uncertainties could
cause the Company to need to raise additional capital through equity and/or debt
financing. The availability and terms of any such financing would be subject to
prevailing market conditions and other factors at that time.
<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 16,
1996.
(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>
John F. Brennan 7,168,271 42,637
Abraham Zaleznik 6,698,952 511,956
</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>
Robert M. Agate 34,511,831 43,587
Ian W. Diery 34,511,231 44,187
John A. Fitzsimmons 34,511,931 43,487
Jeffrey B. Swartz 34,508,649 46,769
Sidney W. Swartz 34,510,631 44,787
</TABLE>
There were no abstentions or broker non-votes with respect to the
election of the director nominees.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Description
------- -----------
10.10(d) Amendment No. 3 dated as of June 21, 1996 to
Note Agreements
10.12(d) Amendment No. 3 dated as of June 21, 1996 to
Note Agreements
10.13(a) Credit Agreement dated as of June 21, 1996
among The Timberland Company, certain banks
listed therein and Morgan Guaranty Trust
Company of New York, as Agent
10.14(d) Amendment No. 3 dated as of June 21, 1996 to
Note Agreements
27 Financial Data Schedule
(b) Reports on Form 8-K -- There were no reports on Form 8-K filed
during the period covered by this report.
<PAGE> 16
Form 10-Q
Page 14
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Timberland Company
-------------------------
(Registrant)
Date: August 12, 1996 /s/ Keith D. Monda
--------------- ------------------
Keith D. Monda
Senior Vice President -
Finance and Administration
and Chief Financial Officer
Date: August 12, 1996 /s/ Dennis W. Hagele
--------------- --------------------
Dennis W. Hagele
Vice President Finance
and Corporate Controller
(Chief Accounting Officer)
<PAGE> 1
Exhibit 10.10(d)
THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
THIRD AMENDMENT
Dated as of
June 21, 1996
Re: 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 and by the separate Second Amendments
thereto, each dated as of June 21, 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 Third 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 Credit Agreement dated as of
June 21, 1996 (the "Credit Agreement") 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.
The Company has requested that, subject to the satisfaction of the
conditions set forth herein, the Original Note Agreements be amended as of June
21, 1996 (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.
<PAGE> 2
The Timberland Company Third Amendment
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to you as follows:
(a) After giving effect to this Third Amendment and the Credit
Agreement 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 Third Amendment shall be subject to the
following conditions precedent:
Section 3.1. Execution of the Credit Agreement. The Company, the Agent
named therein and the banks listed on the signature pages thereof shall have
duly executed and delivered the Credit Agreement, 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. Proceedings Satisfactory. All proceedings taken in
connection with the transactions contemplated or provided for in this Third
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, except with respect to the amendment to Section 5.19
of the Original Note Agreements which shall remain in full force and effect
until all amounts under the Original Note Agreements and the Notes have been
paid in full, shall terminate and be of no further force and effect on June 21,
1998:
-2-
<PAGE> 3
The Timberland Company Third Amendment
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 be less than the sum of
(i) $90,000,000, (ii) 60% of Consolidated Net Income for each fiscal
quarter beginning with the third fiscal quarter of 1996 which has ended
at or before such time for which Consolidated Net Income is positive
and (iii) 75% of the net cash proceeds of all issuances by the Company
of shares of its capital stock after the Third Amendment Effective Date
and at or before such time.
"The following terms shall have the following meanings solely
for purposes of this Section 5.7:
"'Consolidated Net Income' means, for any fiscal
period, the net 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 any
write-ups or write-downs resulting from foreign currency
translations after December 31, 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, 1995 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,
-3-
<PAGE> 4
The Timberland Company Third Amendment
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."
Section 4.2. 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>
Third Amendment Effective Date
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 1.00 to 1
First day of the fourth fiscal
quarter of 1996 through the
last day of such quarter 1.10 to 1
First day of the first fiscal
quarter of 1997 through the
last day of the second fiscal
quarter of 1997 1.25 to 1.00
First day of the third fiscal
quarter of 1997 through the
last day of such quarter 1.40 to 1.00
First day of the fourth fiscal
quarter of 1997 and thereafter 1.50 to 1.00
</TABLE>
-4-
<PAGE> 5
The Timberland Company Third 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 and (C) consolidated taxes of the Company and
its Consolidated Subsidiaries for such period.
"'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 4.3. 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 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.
-5-
<PAGE> 6
The Timberland Company Third Amendment
"The following terms shall have the following meanings solely
for purposes of this Section 5.11:
"'Consolidated Net Income' is defined in Section 5.7.
"'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 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."
Section 4.4. Amendment to Section 5.17(j). Section 5.17(j) of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"(j) Restricted Investments; provided that the aggregate
amount of Restricted Investments does not exceed $10,000,000 at any one
time outstanding."
Section 4.5. Amendment to Section 5.19. Section 5.19 of the Original
Note Agreements shall be, and the same is hereby amended as set forth below:
(a) Section 5.19(a) and (b) is hereby amended as follows:
"(a) Quarterly Statements. As soon as available and in any
event within 45 days after the end of each quarterly fiscal period
(except the last) of each fiscal year, duplicate copies of:
(1) consolidated and consolidating balance sheets of the
Company and its Restricted Subsidiaries and of the Company and its
consolidated Subsidiaries as of the close of such quarter setting
forth, in the case of such consolidated statements, in comparative form
the amount for the end of the preceding fiscal year,
-6-
<PAGE> 7
The Timberland Company Third Amendment
(2) consolidated and consolidating statements of
income of the Company and its Restricted Subsidiaries and of
the Company and its consolidated Subsidiaries for such
quarterly period, setting forth, in the case of such
consolidated statements, in comparative form the amount for
the corresponding period of the preceding fiscal year, and
(3) consolidated statements of cash flows of the
Company and its Restricted Subsidiaries and of the Company and
its consolidated Subsidiaries for the portion of the fiscal
year ending with such quarter, setting forth in comparative
form the amount from the corresponding period of the preceding
fiscal year,
all in reasonable detail and certified as complete and
correct, by an authorized financial officer of the Company,
provided, that so long as the Unrestricted Subsidiaries of the
Company taken as a whole do not constitute a Significant
Subsidiary, the Company shall not be required to deliver to
you financial statements of the Company and its Restricted
Subsidiaries referred to in paragraphs (1), (2) and (3) of
this Section 5.19(a);
"(b) Annual Statements. As soon as available and in
any event within 90 days after the close of each fiscal year
of the Company, duplicate copies of:
(1) consolidated and consolidating balance sheets of
the Company and its Restricted Subsidiaries and of the Company
and its consolidated Subsidiaries as of the close of such
fiscal year, and
(2) consolidated and consolidating statements of
income and stockholders' equity and cash flows of the Company
and its Restricted Subsidiaries and of the Company and its
consolidated Subsidiaries for such fiscal year.
in each case setting forth in comparative form the
consolidated figures for the preceding fiscal year, all in
reasonable detail and accompanied by an opinion thereon of a
firm of independent public accountants of recognized national
standing selected by the Company to the effect that the
consolidated financial statements have been prepared in
accordance with generally accepted accounting principles
consistently applied (except for changes in application in
which such accountants concur) and present fairly the
financial condition of the companies reported on and that the
examination of such accountants in connection with such
financial statements has been made in accordance with
generally accepted auditing standards and accordingly,
includes such tests of the
-7-
<PAGE> 8
The Timberland Company Third Amendment
accounting records and such other auditing procedures as were
considered necessary in the circumstances, provided, that so
long as the Unrestricted Subsidiaries of the Company taken as
a whole do not constitute a Significant Subsidiary, the
Company shall not be required to deliver to you financial
statements of the Company and its Restricted Subsidiaries
referred to in paragraphs (1) and (2) of this Section
5.19(b)."
(b) Section 5.19(g) is hereby amended by deleting "and" where
it appears at the end thereof.
(c) Section 5.19(h) is hereby amended by deleting the period
at the end thereof and inserting "; and".
(d) Section 5.19 is hereby amended by inserting the following
at the end thereof:
"(i) ERISA Reports. 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
-8-
<PAGE> 9
The Timberland Company Third Amendment
applicable member of the ERISA Group is required or proposes
to take.
The following terms shall have the following meanings solely
for purposes of this Section 5.19(i):
"'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.
"'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.
"'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.
"'PBGC' means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of
its functions under ERISA.
"'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."
-9-
<PAGE> 10
The Timberland Company Third Amendment
Section 4.6. Amendment to Section 5.20. Section 5.20 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"Section 5.20. Debt. (a) In addition to 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:
"(i) Debt outstanding under the Credit Agreement as
in effect on the Third Amendment Effective Date, provided that
for a minimum of thirty consecutive days in the period between
November 1 and March 1 (inclusive) of every 12 months there
shall be no Loans outstanding under the Credit Agreement and
no Permitted Short-Term Debt outstanding; and
"(ii) Other Debt permitted by Section 5.08
of the Credit Agreement as in effect on the Third
Amendment Effective Date.
"(b) The daily average outstanding Debt of the Company and its
Subsidiaries in respect of trade letters of credit (other than Letters
of Credit (as defined in the Credit Agreement as in effect on the Third
Amendment Effective Date)) during any fiscal quarter of the Company
shall not exceed the daily average outstanding Letter of Credit
Liabilities (as defined in the Credit Agreement as in effect on the
Third Amendment Effective Date) in respect of Trade Letters of Credit
(as defined in the Credit Agreement as in effect on the Third Amendment
Effective Date) during such fiscal quarter.
"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
5.20(b), all contingent obligations) of such Person to
reimburse or prepay any bank or other Person in respect of
-10-
<PAGE> 11
The Timberland Company Third Amendment
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.
"'Loan' means a Base Rate Loan, a Euro-Dollar Loan or
a Money Market Loan (each as defined in the Credit Agreement
as in effect on the Third Amendment Effective Date) and
"Loans" means Base Rate Loans, Euro-Dollar Loans or Money
Market Loans or any combination of the foregoing.
"'Permitted Short-Term Debt' means Debt (other than
Loans or Debt permitted under Section 5.08(a)(vii) of the
Credit Agreement) of the Company or any of its Subsidiaries
that is payable on demand or that has a maturity, at the time
such Debt is incurred or at any time which such maturity is
extended, of not more than one year from the date such Debt is
incurred or such maturity is extended, as the case may be."
Section 4.7. Amendment to Section 5.21. Section 5.21 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"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>
Third Amendment Effective Date
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 1.10 to 1.00
First day of the first fiscal
quarter of 1997 through the
last day of such quarter 1.40 to 1.00
First day of the second fiscal quarter
of 1997 through the next to last
day of the third fiscal quarter
of 1997 1.60 to 1.00
</TABLE>
-11-
<PAGE> 12
The Timberland Company Third Amendment
<TABLE>
<S> <C>
Last day of the third fiscal
quarter of 1997 through the next
to last day of the fourth fiscal
quarter of 1997 1.45 to 1.00
Last day of the fourth fiscal
quarter of 1997 1.00 to 1.00
First day of the first fiscal
quarter of 1998 through the
last day of such quarter 1.15 to 1.00
First day of the second fiscal
quarter of 1998 and thereafter 1.35 to 1.00
</TABLE>
"The following terms shall have the following meanings solely
for purposes of this Section 5.21:
"'Adjusted Consolidated Cash Holdings' means, for any
date the excess, if any, of (i) the sum of cash and Temporary
Cash Investments of the Company and its Subsidiaries
determined on a consolidated basis on such date over (ii)
$5,000,000.
"'Bank' means each bank listed on the signature pages
to the Credit Agreement, each assignee which becomes a Bank
pursuant to Section 11.06(c) of the Credit Agreement, and
their respective successors.
"'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 Subsidiary' is defined in Section 5.7.
"'Debt' is defined in Section 5.20.
"'Investment' is defined in Section 5.7.
"'Leverage Ratio' means, for any date, the ratio of
(i) Consolidated Debt less Adjusted Consolidated Cash Holdings
on such date to (ii) Consolidated Net Worth (as defined in
Section 5.7) on such date.
"'Loan' is defined in Section 5.20.
-12-
<PAGE> 13
The Timberland Company Third Amendment
"'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 Ratings Service 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
Ratings Service or Aa or higher by Moody's Investors Service,
Inc. or (B) any Bank, (iv) money market funds which invest
only in securities described in clauses (i), (ii) and (iii)(x)
above or (v) repurchase agreements with respect to securities
described in clause (i) above entered into with an office of a
bank or trust company meeting the criteria specified in clause
(iii) above; provided in each case that such Investment
matures within one year from the date of acquisition thereof
by the Company or a Subsidiary."
Section 4.8. Amendment to Section 5.23. Section 5.23 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"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)."
Section 4.9. Amendment to Section 5.24. Section 5.24 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"Section 5.24. Restrictive Agreements. (a) The Company will
not, and will not permit any Subsidiary to, enter into any
-13-
<PAGE> 14
The Timberland Company Third Amendment
agreement after the Third 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 Third 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 Third 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 Third 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 4.10. Amendments to Section 8.1. (a) The following definitions
shall be added to Section 8.1 of the Original Note Agreements in alphabetical
order and shall read as follows:
"'Third Amendment' shall mean the Third Amendment to this
Agreement dated as of June 21, 1996 between the Company and you.
"'Third Amendment Effective Date' shall mean the date on which
the Third Amendment becomes effective."
-14-
<PAGE> 15
The Timberland Company Third Amendment
(b) The definition of Credit Agreement contained in Section 8.1 of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"'Credit Agreement' shall mean that certain Credit Agreement
dated as of June 21, 1996, 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."
SECTION 5. EFFECTIVENESS OF ORIGINAL NOTE AGREEMENTS; PAYMENT OF CREDIT
FEE.
Section 5.1. Effectiveness of Original Note Agreements. The Company
hereby agrees that (i) the terms and provisions of the Original Note Agreements,
as amended by this Third Amendment, are hereby ratified and confirmed and (ii)
notwithstanding anything to the contrary contained in the Second Amendments
referred to in Section 1 hereof, the amendments contained in Sections 4.2, 4.4,
4.6, 4.7 (only with respect to the addition of Section 5.22 entitled "No
Unrestricted Subsidiaries"), 4.8 and 4.9 (only with respect to the definitions
of "Second Amendment" and "Second Amendment Effective Date") of the Second
Amendments referred to in Section 1 hereof shall remain in full force and effect
until June 21, 1998.
Section 5.2. Payment of Credit Fee. The Company hereby reaffirms its
obligation to pay the Credit Fee (as defined in the Second Amendments referred
to in Section 1 hereof) pursuant to and in accordance with the terms of Section
5 of the Second Amendments referred to in Section 1 hereof.
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 Third Amendment but which would not constitute such a Default or Event of
Default under the Original Note Agreements as amended by this Third 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 Third
Amendment may refer to the "Note Agreements dated as of April 1, 1994" without
making specific reference to this Third Amendment, but nevertheless all such
references shall be deemed to include this Third Amendment unless the context
shall otherwise require.
Section 6.3. Expenses. The Company will pay all expenses relating to
this Third Amendment in accordance with Section 9.4 of the Original Note
Agreements.
Section 6.4. Construction. This Third Amendment shall be construed in
connection with and as part of the Original Note Agreements, and all terms,
conditions and covenants
-15-
<PAGE> 16
The Timberland Company Third Amendment
contained in the Original Note Agreements, except as herein modified, shall be
and remain in full force and effect.
Section 6.5. Counterparts. This Third 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 Third Amendment shall be governed by
and construed in accordance with the laws of the State of Illinois.
-16-
<PAGE> 17
The Timberland Company Third Amendment
Upon the acceptance of this Third 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 21, 1996.
THE TIMBERLAND COMPANY
By ________________________________
Its ____________________________
Accepted as of June 21, 1996
(HOLDER)
By ________________________________
Its ____________________________
By ________________________________
Its ____________________________
Holding $((Holder Amount)) unpaid
principal amount of the Notes.
-17-
<PAGE> 18
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
HOLDERS NOTES HELD
<S> <C>
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY $12,800,000
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Department -- Securities Division
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) $ 3,200,000
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
Attention: Investment Department/Private Placements, SC #1303
SUN LIFE INSURANCE AND ANNUITY COMPANY OF $ 800,000
NEW YORK
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
Attention: Investment Department/Private Placements, #1303
NORTHERN LIFE INSURANCE COMPANY $ 1,600,000
c/o ReliaStar Investment Research, Inc.
100 Washington Avenue South, Suite 800
Minneapolis, Minnesota 55401-2121
Attention: James Tobin
NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY $ 3,600,000
c/o ReliaStar Investment Research, Inc.
100 Washington Avenue South, Suite 800
Minneapolis, Minnesota 55401-2147
Attention: James Tobin
GUARANTEE MUTUAL LIFE COMPANY $ 1,600,000
1 Guarantee Center
8801 Indian Hills Drive
Omaha, Nebraska 68114
Attention: Investment Division
BENEFICIAL STANDARD LIFE INSURANCE COMPANY $ 2,400,000
c/o Conseco, inc
P. O. Box 1911
Carmel, Indiana 46032
Attention: Investment Accounting
</TABLE>
SCHEDULE I
(to Third Amendment)
<PAGE> 19
<TABLE>
<S> <C>
FARM BUREAU LIFE INSURANCE COMPANY $ 800,000
c/o Farm Bureau Insurance Group
Investment Division
7373 West Saginaw, P.O. Box 30400
Lansing, Michigan 48917
Attention: Steven Harkness, Portfolio Manager
FB ANNUITY COMPANY $ 800,000
c/o Farm Bureau Insurance Group
Investment Division
7373 West Saginaw, P.O. Box 30400
Lansing, Michigan 48917
Attention: Steven Harkness, Portfolio Manager
FARM BUREAU MUTUAL INSURANCE COMPANY $ 400,000
OF MICHIGAN
c/o Farm Bureau Insurance Group
Investment Division
7373 West Saginaw, P.O. Box 30400
Lansing, Michigan 48917
Attention: Steven Harkness, Portfolio Manager
</TABLE>
I-2
<PAGE> 1
EXHIBIT 10.12(d)
THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
THIRD AMENDMENT
Dated as of
June 21, 1996
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 and by the separate Second Amendments thereto, each dated
as of June 21, 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 Third 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 Credit Agreement dated as of
June 21, 1996 (the "Credit Agreement") 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.
The Company has requested that, subject to the satisfaction of the
conditions set forth herein, the Original Note Agreements be amended as of June
21, 1996 (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.
<PAGE> 2
The Timberland Company Third Amendment
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to you as follows:
(a) After giving effect to this Third Amendment and the Credit
Agreement 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 Third Amendment shall be subject to the
following conditions precedent:
Section 3.1. Execution of the Credit Agreement. The Company, the Agent
named therein and the banks listed on the signature pages thereof shall have
duly executed and delivered the Credit Agreement, 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. Proceedings Satisfactory. All proceedings taken in
connection with the transactions contemplated or provided for in this Third
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, except with respect to the amendment to
Section 5.19 of the Original Note Agreements which shall remain in full force
and effect until all amounts under the Original Note Agreements and the Notes
have been paid in full, shall terminate and be of no further force and effect on
June 21, 1998:
-2-
<PAGE> 3
The Timberland Company Third Amendment
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 be less than the sum of
(i) $90,000,000, (ii) 60% of Consolidated Net Income for each fiscal
quarter beginning with the third fiscal quarter of 1996 which has ended
at or before such time for which Consolidated Net Income is positive
and (iii) 75% of the net cash proceeds of all issuances by the Company
of shares of its capital stock after the Third Amendment Effective Date
and at or before such time.
"The following terms shall have the following meanings solely
for purposes of this Section 5.7:
"'Consolidated Net Income' means, for any fiscal
period, the net 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 any
write-ups or write-downs resulting from foreign currency
translations after December 31, 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, 1995 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,
-3-
<PAGE> 4
The Timberland Company Third Amendment
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."
Section 4.2. 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> <C>
Third Amendment
Effective Date
through the last day
of the second fiscal 0.75 to 1
quarter of 1996
First day of the
third fiscal quarter
of 1996 through the 1.00 to 1
last day of such
quarter
First day of the
fourth fiscal quarter
of 1996 through the
last day of such 1.10 to 1
quarter
First day of the
first fiscal quarter
of 1997 through the
last day of the 1.25 to 1.00
second fiscal quarter
of 1997
First day of the
third fiscal quarter
of 1997 through the 1.40 to 1.00
last day of such
quarter
First day of the
fourth fiscal quarter
of 1997 and 1.50 to 1.00
thereafter
</TABLE>
-4-
<PAGE> 5
The Timberland Company Third 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 and (C) consolidated
taxes of the Company and its Consolidated Subsidiaries for such period.
"'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 4.3. 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 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.
-5-
<PAGE> 6
The Timberland Company Third Amendment
"The following terms shall have the following meanings solely
for purposes of this Section 5.11:
"'Consolidated Net Income' is defined in Section 5.7.
"'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 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."
Section 4.4. Amendment to Section 5.17(j). Section 5.17(j) of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"(j) Restricted Investments; provided that the aggregate
amount of Restricted Investments does not exceed $10,000,000 at any one
time outstanding."
Section 4.5. Amendment to Section 5.19. Section 5.19 of the Original
Note Agreements shall be, and the same is hereby amended as set forth below:
(a) Section 5.19(a) and (b) is hereby amended as follows:
"(a) Quarterly Statements. As soon as available and
in any event within 45 days after the end of each quarterly
fiscal period (except the last) of each fiscal year, duplicate
copies of:
(1) consolidated and consolidating balance sheets of
the Company and its Restricted Subsidiaries and of the Company
and its consolidated Subsidiaries as of the close of such
quarter setting forth, in the case of such consolidated
statements, in comparative form the amount for the end of the
preceding fiscal year,
-6-
<PAGE> 7
The Timberland Company Third Amendment
(2) consolidated and consolidating statements of income of the
Company and its Restricted Subsidiaries and of the Company and its
consolidated Subsidiaries for such quarterly period, setting forth, in
the case of such consolidated statements, in comparative form the
amount for the corresponding period of the preceding fiscal year, and
(3) consolidated statements of cash flows of the Company and
its Restricted Subsidiaries and of the Company and its consolidated
Subsidiaries for the portion of the fiscal year ending with such
quarter, setting forth in comparative form the amount from the
corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and correct, by an
authorized financial officer of the Company, provided, that so long as
the Unrestricted Subsidiaries of the Company taken as a whole do not
constitute a Significant Subsidiary, the Company shall not be required
to deliver to you financial statements of the Company and its
Restricted Subsidiaries referred to in paragraphs (1), (2) and (3) of
this Section 5.19(a);
"(b) Annual Statements. As soon as available and in any event
within 90 days after the close of each fiscal year of the Company,
duplicate copies of:
(1) consolidated and consolidating balance sheets of the
Company and its Restricted Subsidiaries and of the Company and its
consolidated Subsidiaries as of the close of such fiscal year, and
(2) consolidated and consolidating statements of income and
stockholders' equity and cash flows of the Company and its Restricted
Subsidiaries and of the Company and its consolidated Subsidiaries for
such fiscal year.
in each case setting forth in comparative form the consolidated figures
for the preceding fiscal year, all in reasonable detail and accompanied
by an opinion thereon of a firm of independent public accountants of
recognized national standing selected by the Company to the effect that
the consolidated financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied
(except for changes in application in which such accountants concur)
and present fairly the financial condition of the companies reported on
and that the examination of such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards and accordingly, includes such tests of the
-7-
<PAGE> 8
The Timberland Company Third Amendment
accounting records and such other auditing procedures as were
considered necessary in the circumstances, provided, that so long as
the Unrestricted Subsidiaries of the Company taken as a whole do not
constitute a Significant Subsidiary, the Company shall not be required
to deliver to you financial statements of the Company and its
Restricted Subsidiaries referred to in paragraphs (1) and (2) of this
Section 5.19(b)."
(b) Section 5.19(g) is hereby amended by deleting "and" where it
appears at the end thereof.
(c) Section 5.19(h) is hereby amended by deleting the period at the end
thereof and inserting "; and".
(d) Section 5.19 is hereby amended by inserting the following at the
end thereof:
"(i) ERISA Reports. 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
-8-
<PAGE> 9
The Timberland Company Third Amendment
applicable member of the ERISA Group is required or proposes to take.
The following terms shall have the following meanings solely for purposes of
this Section 5.19(i):
"'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.
"'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.
"'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.
"'PBGC' means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"'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."
-9-
<PAGE> 10
The Timberland Company Third Amendment
Section 4.6. Amendment to Section 5.20. Section 5.20 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"Section 5.20. Debt. (a) In addition to 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:
"(i) Debt outstanding under the Credit Agreement as
in effect on the Third Amendment Effective Date, provided that
for a minimum of thirty consecutive days in the period between
November 1 and March 1 (inclusive) of every 12 months there
shall be no Loans outstanding under the Credit Agreement and
no Permitted Short-Term Debt outstanding; and
"(ii) Other Debt permitted by Section 5.08 of the
Credit Agreement as in effect on the Third Amendment
Effective Date.
"(b) The daily average outstanding Debt of the Company and its
Subsidiaries in respect of trade letters of credit (other than Letters
of Credit (as defined in the Credit Agreement as in effect on the Third
Amendment Effective Date)) during any fiscal quarter of the Company
shall not exceed the daily average outstanding Letter of Credit
Liabilities (as defined in the Credit Agreement as in effect on the
Third Amendment Effective Date) in respect of Trade Letters of Credit
(as defined in the Credit Agreement as in effect on the Third Amendment
Effective Date) during such fiscal quarter.
"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
5.20(b), all contingent obligations) of such Person to
reimburse or prepay any bank or other Person in respect of
-10-
<PAGE> 11
The Timberland Company Third Amendment
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. "'Loan' means a Base Rate Loan, a Euro-Dollar Loan or a Money
Market Loan (each as defined in the Credit Agreement as in effect on
the Third Amendment Effective Date) and "Loans" means Base Rate Loans,
Euro-Dollar Loans or Money Market Loans or any combination of the
foregoing. "'Permitted Short-Term Debt' means Debt (other than Loans or
Debt permitted under Section 5.08(a)(vii) of the Credit Agreement) of
the Company or any of its Subsidiaries that is payable on demand or
that has a maturity, at the time such Debt is incurred or at any time
which such maturity is extended, of not more than one year from the
date such Debt is incurred or such maturity is extended, as the case
may be." Section 4.7. Amendment to Section 5.21. Section 5.21 of the
Original Note Agreements shall be, and the same is hereby amended in
its entirety as follows: "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: PERIOD OR
DAY LEVERAGE RATIO
Third Amendment Effective Date
through the next to last day of the
fourth fiscal quarter of 1996 1.80 to 1.00
-11-
<PAGE> 12
The Timberland Company Third Amendment
Last day of the fourth fiscal
quarter of 1996 1.10 to 1.00
First day of the first fiscal
quarter of 1997 through the
last day of such quarter 1.40 to 1.00
First day of the second fiscal quarter
of 1997 through the next to last
day of the third fiscal quarter
of 1997 1.60 to 1.00
Last day of the third fiscal
quarter of 1997 through the next
to last day of the fourth fiscal
quarter of 1997 1.45 to 1.00
Last day of the fourth fiscal
quarter of 1997 1.00 to 1.00
First day of the first fiscal
quarter of 1998 through the
last day of such quarter 1.15 to 1.00
First day of the second fiscal
quarter of 1998 and thereafter 1.35 to 1.00
"The following terms shall have the following
meanings solely for purposes of this Section 5.21:
"'Adjusted Consolidated Cash Holdings' means, for any
date the excess, if any, of (i) the sum of cash and Temporary
Cash Investments of the Company and its Subsidiaries determined
on a consolidated basis on such date over (ii) $5,000,000.
"'Bank' means each bank listed on the signature pages
to the Credit Agreement, each assignee which becomes a Bank
pursuant to Section 11.06(c) of the Credit Agreement, and their
respective successors.
"'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 Subsidiary' is defined in Section 5.7.
"'Debt' is defined in Section 5.20.
"'Investment' is defined in Section 5.7.
"'Leverage Ratio' means, for any date, the ratio of
(i) Consolidated Debt less Adjusted Consolidated Cash Holdings
on such date to (ii) Consolidated Net Worth (as defined in
Section 5.7) on such date.
"'Loan' is defined in Section 5.20.
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<PAGE> 13
The Timberland Company Third Amendment
"'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 Ratings Service 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 Ratings Service or Aa or
higher by Moody's Investors Service, Inc. or (B) any Bank, (iv)
money market funds which invest only in securities described in
clauses (i), (ii) and (iii)(x) above or (v) repurchase
agreements with respect to securities described in clause (i)
above entered into with an office of a bank or trust company
meeting the criteria specified in clause (iii) above; provided
in each case that such Investment matures within one year from
the date of acquisition thereof by the Company or a
Subsidiary."
Section 4.8. Amendment to Section 5.23. Section 5.23 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"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)."
Section 4.9. Amendment to Section 5.24. Section 5.24 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"Section 5.24. Restrictive Agreements. (a) The Company will
not, and will not permit any Subsidiary to, enter into any
-13-
<PAGE> 14
The Timberland Company Third Amendment
agreement after the Third 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 Third 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 Third 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 Third 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 4.10. Amendments to Section 8.1.
(a) The following definitions shall be added to Section 8.1 of the Original Note
Agreements in alphabetical order and shall read as follows:
"'Third Amendment' shall mean the Third Amendment
to this Agreement dated as of June 21, 1996 between the Company
and you.
"'Third Amendment Effective Date' shall mean the
date on which the Third Amendment becomes effective."
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<PAGE> 15
The Timberland Company Third Amendment
(b) The definition of Credit Agreement contained in Section 8.1 of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"'Credit Agreement' shall mean that certain Credit Agreement
dated as of June 21, 1996, 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."
Section 5. EFFECTIVENESS OF ORIGINAL NOTE AGREEMENTS; PAYMENT OF CREDIT
FEE.
Section 5.1. Effectiveness of Original Note Agreements. The Company
hereby agrees that (i) the terms and provisions of the Original Note Agreements,
as amended by this Third Amendment, are hereby ratified and confirmed and (ii)
notwithstanding anything to the contrary contained in the Second Amendments
referred to in Section 1 hereof, the amendments contained in Sections 4.2, 4.4,
4.6, 4.7 (only with respect to the addition of Section 5.22 entitled "No
Unrestricted Subsidiaries"), 4.8 and 4.9 (only with respect to the definitions
of "Second Amendment" and "Second Amendment Effective Date") of the Second
Amendments referred to in Section 1 hereof shall remain in full force and effect
until June 21, 1998.
Section 5.2. Payment of Credit Fee. The Company hereby reaffirms its
obligation to pay the Credit Fee (as defined in the Second Amendments referred
to in Section 1 hereof) pursuant to and in accordance with the terms of Section
5 of the Second Amendments referred to in Section 1 hereof.
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 Third Amendment but which would not constitute such a Default or Event of
Default under the Original Note Agreements as amended by this Third 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 Third
Amendment may refer to the "Note Agreements dated as of April 1, 1994" without
making specific reference to this Third Amendment, but nevertheless all such
references shall be deemed to include this Third Amendment unless the context
shall otherwise require.
Section 6.3. Expenses. The Company will pay all expenses relating to
this Third Amendment in accordance with Section 9.4 of the Original Note
Agreements.
Section 6.4. Construction. This Third Amendment shall be construed in
connection with and as part of the Original Note Agreements, and all terms,
conditions and covenants
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<PAGE> 16
The Timberland Company Third Amendment
contained in the Original Note Agreements, except as herein modified, shall be
and remain in full force and effect.
Section 6.5. Counterparts. This Third 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 Third Amendment shall be governed by
and construed in accordance with the laws of the State of Illinois.
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<PAGE> 17
The Timberland Company Third Amendment
Upon the acceptance of this Third 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 21, 1996.
THE TIMBERLAND COMPANY
By
---------------------------------
Its
---------------------------------
Accepted as of June 21, 1996
(HOLDER)
By
---------------------------------
Its
---------------------------------
By
---------------------------------
Its
---------------------------------
Holding $(Holder Amount) unpaid principal
amount of the Notes.
-17-
<PAGE> 18
Schedule I
<TABLE>
<CAPTION>
Principal Amount of
HOLDERS Notes Held
<S> <C>
Principal Mutual Life Insurance Company $20,000,000
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Department--Securities
Division
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) $10,000,000
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
Attention: Investment Department/Private
Placements, SC #1303
NORTHERN LIFE INSURANCE COMPANY $5,500,000
c/o ReliaStar Investment Research, Inc.
100 Washington Avenue South, Suite 800
Minneapolis, Minnesota 55401-2121
Attention: James Tobin
NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY $2,000,000
c/o ReliaStar Investment Research, Inc.
100 Washington Avenue South, Suite 800
Minneapolis, Minnesota 55401-2147
Attention: James Tobin
GUARANTEE MUTUAL LIFE COMPANY $3,000,000
1 Guarantee Center
8801 Indian Hills Drive
Omaha, Nebraska 68114
Attention: Investment Division
GE CAPITAL ASSURANCE COMPANY TRUST $10,000,000
c/o GNA Corporation
Two Union Square, Suite 5600
P.O. Box 490
Seattle, Washington 98111-0490
Attention: Dan Greenshields
THE NORTH ATLANTIC LIFE INSURANCE COMPANY OF $1,500,000
AMERICA
c/o ReliaStar Investment Research, Inc.
100 Washington Avenue South, Suite 800
Minneapolis, Minnesota 55401-2147
Attention: James Tobin
</TABLE>
SCHEDULE I
(TO THIRD AMENDMENT)
<PAGE> 19
<TABLE>
<CAPTION>
Principal Amount of
HOLDERS Notes Held
<S> <C>
THE FRANKLIN LIFE INSURANCE COMPANY $5,000,000
c/o American General Corporation
P. O. Box 3247
Houston, Texas 77253-3247
[2929 Allen Parkway
Houston, Texas 77019-2155]
Attention: Investment Research Department, A37-01
CENTURY LIFE OF AMERICA $3,000,000
c/o CUNA Mutual Insurance Group
Securities Management Department
5910 Mineral Point Road
Madison, Wisconsin 53705
Attention: Private Placements
CUNA MUTUAL INSURANCE SOCIETY $2,000,000
c/o CUNA Mutual Insurance Group
Securities Management Department
5910 Mineral Point Road
Madison, Wisconsin 53705
Attention: Private Placements
TMG LIFE INSURANCE COMPANY $3,000,000
401 North Executive Drive
Brookfield, Wisconsin 53008-0980
</TABLE>
I-2
<PAGE> 1
EXHIBIT 10.13A
[CONFORMED COPY]
$100,000,000
CREDIT AGREEMENT
dated as of
June 21, 1996
among
The Timberland Company
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE> 2
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS
<S> <C>
SECTION 1.01. Definitions .............................................................1
SECTION 1.02. Accounting Terms and Determinations.........................................16
SECTION 1.03. Types of Borrowings.........................................................16
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend.........................................................17
SECTION 2.02. Notice of Committed Borrowings..............................................17
SECTION 2.03. Money Market Borrowings.....................................................18
SECTION 2.04. Notice to Banks; Funding of Loans...........................................21
SECTION 2.05. Notes ............................................................22
SECTION 2.06. Maturity of Loans...........................................................23
SECTION 2.07. Method of Electing Interest Rates...........................................23
SECTION 2.08. Interest Rates ............................................................24
SECTION 2.09. Letters of Credit...........................................................27
SECTION 2.10. Facility Fees ............................................................33
SECTION 2.11. Mandatory Termination of Commitments........................................33
SECTION 2.12. Optional Termination or Reduction of Commitments............................33
SECTION 2.13. Mandatory Prepayments.......................................................33
SECTION 2.14. Optional Prepayments........................................................34
SECTION 2.15. General Provisions as to Payments...........................................35
SECTION 2.16. Funding Losses ............................................................35
SECTION 2.17. Computation of Interest and Fees............................................36
SECTION 2.18. Judgment Currency...........................................................36
SECTION 2.19. Foreign Subsidiary Costs....................................................36
SECTION 2.20. Cash Collateral Account.....................................................37
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness ............................................................38
</TABLE>
- --------
*The Table of Contents is not a part of this Agreement.
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 3.02. Borrowings and Letter of Credit Issuances...................................39
SECTION 3.03. First Borrowing by Each Eligible Subsidiary.................................40
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Corporate Existence and Power...............................................41
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention...............................................41
SECTION 4.03. Binding Effect ............................................................41
SECTION 4.04. Financial Information.......................................................41
SECTION 4.05. Litigation ............................................................42
SECTION 4.06. Compliance with ERISA.......................................................42
SECTION 4.07. Environmental Matters.......................................................42
SECTION 4.08. Taxes ............................................................43
SECTION 4.09. Subsidiaries ............................................................43
SECTION 4.10. Not an Investment Company...................................................43
SECTION 4.11. Full Disclosure ............................................................43
SECTION 4.12. Existing Letters of Credit and Continuing Money Market
Loans.......................................................44
ARTICLE V
COVENANTS
SECTION 5.01. Information ............................................................44
SECTION 5.02. Payment of Obligations......................................................46
SECTION 5.03. Maintenance of Property; Insurance..........................................46
SECTION 5.04. Conduct of Business and Maintenance of Existence............................47
SECTION 5.05. Compliance with Laws........................................................47
SECTION 5.06. Inspection of Property, Books and Records...................................47
SECTION 5.07. Fixed Charge Coverage Ratio.................................................47
SECTION 5.08. Debt ............................................................48
SECTION 5.09. Minimum Consolidated Tangible Net Worth.....................................50
SECTION 5.10. Restricted Payments.........................................................50
SECTION 5.11. Investments ............................................................50
SECTION 5.12. Maintenance of Ownership of Subsidiaries....................................51
SECTION 5.13. Negative Pledge ............................................................51
SECTION 5.14. Consolidations, Mergers and Sales of Assets.................................52
SECTION 5.15. Restrictions on Prepayments of and Amendments to
Certain Debt................................................52
SECTION 5.16. Transactions with Affiliates................................................53
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 5.17. Use of Proceeds and Letters of Credit.......................................53
SECTION 5.18. Leverage Ratio ............................................................54
SECTION 5.19. Restrictive Agreements......................................................55
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default...........................................................55
SECTION 6.02. Notice of Default...........................................................58
SECTION 6.03. Cash Collateral ............................................................58
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization...............................................58
SECTION 7.02. Agent and Affiliates........................................................58
SECTION 7.03. Action by Agent ............................................................58
SECTION 7.04. Consultation with Experts...................................................58
SECTION 7.05. Liability of Agent..........................................................59
SECTION 7.06. Indemnification ............................................................59
SECTION 7.07. Credit Decision ............................................................59
SECTION 7.08. Successor Agent ............................................................59
SECTION 7.09. Agent's Fee ............................................................60
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair......................................................60
SECTION 8.02. Illegality ............................................................61
SECTION 8.03. Increased Cost and Reduced Return...........................................61
SECTION 8.04. Taxes ............................................................63
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate
Loans.......................................................65
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF ELIGIBLE SUBSIDIARIES
SECTION 9.01. Corporate Existence and Power...............................................65
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 9.02. Corporate and Governmental Authorization;
Contravention...............................................66
SECTION 9.03. Binding Effect ............................................................66
SECTION 9.04. Taxes ............................................................66
ARTICLE X
GUARANTY
SECTION 10.01. The Guaranty ............................................................66
SECTION 10.02. Guaranty Unconditional.....................................................66
SECTION 10.03. Discharge Only Upon Payment In Full; Reinstatement in
Certain Circumstances.......................................67
SECTION 10.04. Waiver by the Company......................................................68
SECTION 10.05. Subrogation ............................................................68
SECTION 10.06. Stay of Acceleration.......................................................68
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices ............................................................68
SECTION 11.02. No Waivers ............................................................69
SECTION 11.03. Expenses; Documentary Taxes; Indemnification...............................69
SECTION 11.04. Sharing of Set-Offs........................................................69
SECTION 11.05. Amendments and Waivers.....................................................70
SECTION 11.06. Successors and Assigns.....................................................70
SECTION 11.07. Collateral ............................................................72
SECTION 11.08. Confidentiality............................................................72
SECTION 11.09. Governing Law; Submission to Jurisdiction..................................72
SECTION 11.10. Counterparts; Integration..................................................73
SECTION 11.11. WAIVER OF JURY TRIAL.......................................................73
</TABLE>
iv
<PAGE> 6
Schedule I - Existing Debt and Liens
Schedule II - Subsidiaries
Schedule III - Existing Letters of Credit
Schedule IV - Continuing Money Market Loans
Exhibit A - Note
Exhibit B - Notice of Committed Borrowing
Exhibit C - Money Market Quote Invitation
Exhibit D - Money Market Quote
Exhibit E - Opinion of Counsel for the Company
Exhibit F - Opinion of Special Counsel for the Agent
Exhibit G - Form of Election to Participate
Exhibit H - Form of Election to Terminate
Exhibit I - Opinion of Counsel for the Borrower
Exhibit J - Form of Assignment and Assumption
Agreement
v
<PAGE> 7
CREDIT AGREEMENT
AGREEMENT dated as of June 21, 1996 among THE TIMBERLAND COMPANY, the
BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Adjusted Consolidated Cash Holdings" means, for any date, the excess,
if any, of (i) the sum of cash and Temporary Cash Investments of the Company and
its Subsidiaries determined on a consolidated basis on such date over (ii)
$5,000,000.
"Adjusted Interbank Offered Rate" has the meaning set forth in Section
2.08(b).
"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.
<PAGE> 8
"Agent" means Morgan Guaranty Trust Company of New York in its capacity
as agent for the Banks hereunder, and its successors in such capacity.
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Base Rate 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.
"Assignee" has the meaning set forth in Section 11.06(c).
"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.
"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).
2
<PAGE> 9
"Cash Collateral Account" has the meaning set forth in Section 2.20.
"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 1995 Form 10-K" means the Company's annual report on Form
10-K for 1995 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, 1996, as filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934.
"Consolidated Debt" means at any date the Debt of the Company and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated EBITR" means, for any period, the sum of (i) consolidated
net income of the Company and its Consolidated Subsidiaries for such period plus
(ii) to the extent deducted in determining such consolidated net income, the sum
of (A) Consolidated Interest Expense, (B) Consolidated Rental Expense and (C)
consolidated taxes of the Company and its Consolidated Subsidiaries for such
period.
"Consolidated Interest Expense" means, for any period, the interest
expense (less interest income) of the Company and its Consolidated Subsidiaries
determined on a consolidated basis for such period.
"Consolidated Net Income" means, for any fiscal period, the net income
of the Borrower 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
3
<PAGE> 10
any write-ups or write-downs resulting from foreign currency translations after
December 31, 1995) as of such date.
"Consolidated Rental Expense" means, for any period, the rental expense
of the Company and its Consolidated Subsidiaries (other than with respect to
capital leases) determined on a consolidated basis for such period.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Company in
its consolidated financial statements if such statements were prepared as of
such date.
"Consolidated Tangible Net Worth" means at any date Consolidated Net
Worth less the consolidated Intangible Assets of the Company and its
Consolidated Subsidiaries, all determined as of such date. For purposes of this
definition "Intangible Assets" means the amount (to the extent reflected in
determining such Consolidated Net Worth) of (i) all write-ups (other than
write-ups of assets of a going concern business made within twelve months after
the acquisition of such business) subsequent to December 31, 1995 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(f).
"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, 5.08(b) 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.
4
<PAGE> 11
"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.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 3.01.
"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 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
5
<PAGE> 12
theretofore incurred. The Agent shall promptly give notice to the Banks of the
receipt of any Election to Participate or Election to Terminate.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment, including, without limitation, ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Company, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Company and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or (ii) an overdue amount which was a
Euro-Dollar Loan immediately before it became overdue.
"Euro-Dollar Margin" has the meaning set forth in Section 2.08(b).
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.08(b) on the basis of an Adjusted Interbank Offered Rate.
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"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.08(b).
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Credit Agreement" means the $125,000,000 Credit Agreement
dated as of May 4, 1994 among the Timberland Company, the banks listed therein
and Morgan Guaranty Trust Company of New York, as agent, as amended through the
date hereof.
"Existing Letter of Credit" means a Letter of Credit outstanding under
the Existing Credit Agreement.
"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).
"Fixed Rate Loans" means 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.
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<PAGE> 14
"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 Euro-Dollar 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(b).
"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;
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<PAGE> 15
(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 Money Market LIBOR 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 unless, in the case of
any Interest Period of at least one month, 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 of at least one month 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
(3) 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 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
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<PAGE> 16
(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 Standby Letter of Credit or a Trade Letter
of Credit.
"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 2.75
to 1.0 and (ii) the Leverage Ratio as of the last day of each fiscal quarter
included in the Calculation Period with respect to such date is less than 0.75
to 1.0.
"Level II Status" exists on any date if (i) Level I Status does not
exist, (ii) the Fixed Charge Coverage Ratio for the Calculation Period with
respect to such date is greater than 2.25 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 1.0 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 less Adjusted Consolidated Cash Holdings on such date to (ii) Consolidated
Net Worth on such date.
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"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.
"Loan" means a Base Rate Loan, a Euro-Dollar Loan or a Money Market
Loan and "Loans" means Base Rate 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 $1,000,000.
"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.
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<PAGE> 18
"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.
"1994 Private Placement Debt" means April 1994 Private Placement Debt
and December 1994 Private Placement Debt.
"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 to it, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as defined
in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section
2.03(d)).
"Notice of Interest Rate Election" has the meaning set forth in
Section 2.07(a).
"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).
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<PAGE> 19
"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(a)(vii)) of the Company or any of its Subsidiaries
that is payable on demand or that has a maturity, at the time such Debt is
incurred or at any time at which such maturity is extended, of not more than one
year from the date such Debt is incurred or such maturity is extended, as the
case may be.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivi sion 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 principal London offices of ABN AMRO
Bank N.V., The First National Bank of Boston and Morgan Guaranty Trust
Company of New York.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
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<PAGE> 20
"Reimbursement Obligation" means an obligation of the Company 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.
"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
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.
"Standby Letter of Credit" means a letter of credit issued or to be
issued (or deemed issued pursuant to Section 2.09(a)(ii)) hereunder by the
Issuing Bank, other than a Trade Letter of Credit.
"Standby Letter of Credit Commission Rate" has the meaning set forth in
Section 2.09(i).
"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
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<PAGE> 21
States or any agency thereof, (ii) commercial paper rated at least A-1 by
Standard & Poor's Ratings Service 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 Ratings Service or Aa or higher by Moody's Investors Service, Inc. or (B)
any Bank, (iv) money market funds which invest only in securities described in
clauses (i), (ii) and (iii)(x) above or (v) repurchase agreements with respect
to securities described in clause (i) above entered into with an office of a
bank or trust company meeting the criteria specified in clause (iii) above;
provided in each case that such Investment matures within one year from the date
of acquisition thereof by the Company or a Subsidiary.
"Termination Date" means the second anniversary of the date hereof or,
if such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar
Business Day.
"Trade Letter of Credit" means a letter of credit issued or to be
issued (or deemed issued pursuant to Section 2.09(a)(ii)) hereunder by the
Issuing Bank to facilitate the payment of the purchase price for the acquisition
by the Company and the Subsidiaries of a specific shipment or shipments of
inventory and raw materials in the ordinary course of their business where the
intended and expected means of payment of such purchase price is through a
drawing under such letter of credit.
"Trade Letter of Credit Commission Rate" has the meaning set forth in
Section 2.09(i).
"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.
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"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 similar shareholdings by directors 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).
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ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make loans to the Company
or any Eligible Subsidiary pursuant to this Section from time to time before the
Termination Date in amounts such that the outstanding aggregate principal amount
of Committed Loans and the aggregate Letter of Credit Liabilities of such Bank
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 Euro-Dollar 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 and (y) 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 Base Rate Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to
bear interest initially at the Base Rate or at a Euro-Dollar Rate,
and
(iv) in the case of a Euro-Dollar Borrowing, the duration
of the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
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SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed Borrowings pursuant
to Section 2.01, any Borrower may, as set forth in this Section, request the
Banks prior to the Termination Date to make offers to make Money Market Loans to
the Borrower. The Banks may, but shall have no obligation to, make such offers
and the Borrower may, but shall have no obligation to, accept any such offers in
the manner set forth in this Section.
(b) Invitation for Money Market Quotes. When a Borrower wishes to request
offers to make Money Market Loans under this Section, it shall transmit to the
Banks by telex or facsimile transmission an Invitation for Money Market Quotes
substantially in the form of Exhibit C hereto so as to be received no later than
(x) 9:00 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 $500,000
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 $60,000,000,
(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 three Euro-Dollar
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<PAGE> 25
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) 10:30 A.M. (New
York City time) on the third Euro-Dollar Business Day prior to the proposed date
of Borrowing, in the case of a LIBOR Auction or (y) 9:15 A.M. (New York City
time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction
(or, in either case, such other time or date as the Company and the Agent shall
have mutually agreed and shall have notified to the Banks not later than the
date of the Invitation for Money Market Quotes for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be effective). Subject to
Articles III and VI, any Money Market Quote so made shall be irrevocable except
with the written consent of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form of Exhibit
D hereto and shall in any case specify:
(A) the proposed date of Borrowing, which shall be the
proposed date of Borrowing set forth in the corresponding Invitation
for Money Market Quotes,
(B) the principal amount of the Money Market Loan for which
each such offer is being made, which principal amount (w) may be
greater than or less than the Commitment of the quoting Bank, (x)
must be $500,000 or a larger multiple of $100,000, (y) may not
exceed the principal amount of Money Market Loans for which offers
were requested and (z) may be subject to an aggregate limitation as
to the principal amount of Money Market Loans for which offers being
made by such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or below
the applicable Interbank Offered Rate (the "Money Market Margin")
offered for each such Money Market Loan, expressed as a percentage
(specified to the nearest 1/10,000 of 1%) to be added to or
subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000 of 1%) (the
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"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 (x) 11:30 A.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) 11:00 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 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,
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(ii) the principal amount of each Money Market Borrowing must
be $500,000 or a larger multiple of $100,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as
the case may be,
(iv) immediately after the making of the Money Market Loans to
be made pursuant to all accepted Money Market Quotes, the sum of (A)
the aggregate principal amount of all Money Market Loans outstanding
and (B) the aggregate principal amount of all Permitted Short-Term
Debt outstanding shall not exceed $60,000,000, 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 $500,000, as the Borrower may deem appropriate) in proportion to the
aggregate principal amounts of such offers.
(f) On and as of the Effective Date, each Continuing Money Market Loan
shall be deemed to be a Money Market Loan hereunder and to have been made
pursuant to this Section 2.03 on the date upon which such Continuing Money
Market Loan was made under the Existing Credit Agreement, notwithstanding that
such date is prior to the Effective Date.
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
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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.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(b) or
3.03(a), the Agent shall forward such Note to such Bank. Each Bank shall record
the date, amount and type of each Loan made by it to each Borrower and the date
and amount of each payment of principal made with respect thereto, and may, if
such Bank so elects in connection with any transfer or enforcement of its Note
of any Borrower, endorse on the schedule forming a part thereof appropriate
notations to evidence the foregoing information with respect to each such Loan
to such Borrower then outstanding; provided that the failure of any Bank to make
any such
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<PAGE> 29
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 Euro-Dollar Loans as of any
Euro-Dollar Business Day; and
(ii) if such Loans are Euro-Dollar Loans, the applicable
Borrower may elect to convert such Loans to Base Rate 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. 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 Euro-Dollar 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.
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(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
Notice applies;
(ii) the date on which the conversion or continuation selected
in such Notice is to be effective, which shall comply with the
applicable clause of subsection (a) above;
(iii) whether the Loans comprising such Group are to be
converted and if, after such conversion, such Loans are to be
Euro-Dollar Loans, the duration of the initial Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as 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
Euro-Dollar 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 Euro-Dollar 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 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
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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 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 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.
(c) 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
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dollars in an amount approximately equal to such overdue payment due to each of
the Reference Banks are offered to such 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.
(d) 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(b) 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.
(e) 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.
(f) 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.
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SECTION 2.09. Letters of Credit.
(a) Commitment to Issue Letters of Credit.
(i) 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.
(ii) Notwithstanding any reference in any Existing Letter of Credit to the
Existing Credit Agreement, on and as of the Effective Date, each Existing Letter
of Credit shall be deemed to be a Letter of Credit and to have been issued
pursuant to clause (i) above on the Effective Date.
(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.
(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
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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 (or such greater number as the
Issuing Bank shall, in its discretion, agree) 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.
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(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.
(i) Each Bank shall make available an amount, in U.S. dollars (determined
in accordance with the last sentence of Section 2.09(e)(i), in the case of
drawings paid in a currency other than U.S. dollars) 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
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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;
(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
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(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 subsection (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 (x) at the Trade 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 Trade Letters
of Credit and (y) at the Standby 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
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Standby Letters of Credit. Such letter of credit commissions 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).
"Standby 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%.
"Trade Letter of Credit Commission Rate" means, for any day, (i) if Level
I Status exists on such day, 3/8 of 1%, (ii) if Level II Status exists on such
day, 5/8 of 1% and (iii) if Level III Status exists on such day, 3/4 of 1%.
(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.
(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.
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(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 and Letter of Credit Liabilities) a facility fee
at the rate of 3/8 of 1% per annum. Such facility fee shall accrue (i) from and
including the Effective Date to but excluding the Termination Date (or earlier
date of termination of the Commitments in their entirety), on the daily average
aggregate amount of the Commitments (whether used or unused) and (ii) from and
including such Termination Date or earlier date of termination to but excluding
the 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 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, 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
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necessary to cause such sum, immediately after such prepayment, to be less than
or equal to the aggregate Commitments.
(b) If, on any day, the aggregate Letter of Credit Liabilities shall
exceed the lesser of (i) the aggregate Commitments and (ii) $80,000,000, 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.
(c) Each prepayment of Loans required by this Section 2.13 shall be made
with respect to such Group or Groups of Loans and (subject to the limitations
set forth in subsection (a) above) such Money Market Borrowing or Borrowings as
the Borrowers may specify by notice to the Agent at or before the time of such
prepayment and shall be applied to prepay Loans comprising each such Group of
Loans or Loans comprising each such Money Market Borrowing pro rata; provided
that (i) subject to the limitations set forth in subsection (a) above, the
Borrowers shall specify Groups of Loans and Money Market Borrowings for
prepayment so as to minimize the amounts payable by the Borrowers pursuant to
Section 2.16 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 Euro-Dollar
Loans as the Agent may determine, until all such Groups of Euro-Dollar 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)) and (ii) 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 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.
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(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 Base Rate Loans or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from a Borrower prior to
the date on which any payment is due from such Borrower to the Banks hereunder
that such Borrower will not make such payment in full, the Agent may assume that
such Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank. If and
to the extent that such Borrower shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.16. 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(c), 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
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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
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Bank to be material, by reason of the fact that such Eligible Subsidiary is
incorporated in, or conducts business in, a jurisdiction outside the United
States of America, the Company shall indemnify such Bank for such increased cost
or reduction within 15 days after demand by such Bank (with a copy to the
Agent). A certificate of such Bank claiming compensation under this subsection
(a) and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error.
(b) Each Bank will promptly notify the Company and the Agent of any event
of which it has knowledge that will entitle such Bank to additional interest or
payments pursuant to subsection (a) and will designate a different Applicable
Lending Office, if, in the judgment of such Bank, such designation will avoid
the need for, or reduce the amount of, such compensation and will not be
otherwise disadvantageous to such Bank.
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(b) 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
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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.
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 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 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;
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(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 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) receipt by the Agent and Issuing Bank of evidence satisfactory to the
Agent and (in the case of Existing Letters of Credit) the Issuing Bank that each
Continuing Money Market Loan and each Existing Letter of Credit shall have been
amended to the extent, if any, necessary to reflect the fact that on and after
the Effective Date such Continuing Money Market Loan or Existing Letter of
Credit shall be deemed to have been made or issued hereunder;
(f) 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 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 Effective Date (including, without limitation, all letter
of credit commissions accrued thereunder in respect of Existing Letters of
Credit, whether or not otherwise then due and payable, but excluding interest
accrued but not otherwise payable thereunder in respect of Continuing Money
Market Loans), shall have been paid in full and all commitments under the
Existing Credit Agreement shall have been terminated; and all amounts due and
payable to the banks or the agent hereunder shall have been paid in full; and
(g) 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 Effective
Date, and such notice shall be conclusive and binding on all parties hereto.
SECTION 3.02. Borrowings and Letter of Credit Issuances. The obligation of
any Bank to make a Loan on the occasion of any Borrowing (including the deemed
making of Money Market Loans pursuant to Section 2.03(f)), and the obligation of
the Issuing Bank to issue any Letter of Credit (including the deemed issuance of
the initial Letters of Credit pursuant to Section 2.09(a)(ii)), are subject to
the satisfaction of the following conditions:
(a) the fact that the Effective Date shall have occurred on or prior to
June __, 1996;
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(b) except in the case of the deemed issuance of the initial Letters of
Credit pursuant to Section 2.09(a)(ii) or of Money Market Loans pursuant to
Section 2.03(f), 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 Letter of Credit
Liabilities of the several Banks shall not exceed $80,000,000 and (ii) 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 3.03. First Borrowing by Each Eligible Subsidiary. The obligation
of each Bank to make a Loan on the occasion of the first Borrowing by each
Eligible Subsidiary is subject to the satisfaction of the following further
conditions:
(a) receipt by the Agent for the account of each Bank of a duly executed
Note of such Eligible Subsidiary dated on or before the date of such Borrowing
complying with the provisions of Section 2.05;
(b) receipt by the Agent of an opinion of counsel for such Eligible
Subsidiary acceptable to the Agent, substantially in the form of 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.
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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, 1995 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 1995
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.
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(b) The unaudited consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of March 31, 1996 and the related unaudited
consolidated statements of operations, changes in stockholders' equity and cash
flow for the three 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 three 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, 1995 there has been no
material adverse change in the business, financial position or results of
operations of the Company and its Consolidated Subsidiaries, considered as a
whole.
SECTION 4.05. Litigation. There is no action, suit or proceeding pending
against, or to the knowledge of the Company threatened against or affecting, the
Company or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of an adverse decision which could materially adversely affect the business,
consolidated financial position or consolidated results of operations of the
Company and its Consolidated Subsidiaries, considered as a whole, or which in
any manner draws into question the validity of this Agreement or the Notes.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the currently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect 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
42
<PAGE> 49
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
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<PAGE> 50
and its Consolidated Subsidiaries, considered as a whole, or the ability of the
Company to perform its obligations under this Agreement and the Notes.
SECTION 4.12. Existing Letters of Credit and Continuing Money Market
Loans. Schedule III hereto identifies each Existing Letter of Credit outstanding
as of the date hereof and as of the Effective Date, and Schedule IV hereto
identifies each Continuing Money Market Loans outstanding as of the date hereof
and as of the Effective Date.
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
44
<PAGE> 51
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
and (ii) 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 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;
(f) promptly upon the mailing thereof to the shareholders of the Company
generally, copies of all financial statements, reports and proxy statements so
mailed;
(g) 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;
(h) 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
45
<PAGE> 52
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
(i) 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
46
<PAGE> 53
furnish to the Banks, upon request from the Agent, information presented in
reasonable detail as to the insurance so carried.
SECTION 5.04. Conduct of Business and Maintenance of Existence. The
Company will continue, and will cause each Subsidiary to continue, to engage in
business of the same general type as now conducted by the Company and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and
will cause each Subsidiary to preserve, renew and keep in full force and effect
their respective corporate existence and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business; provided
that nothing in this Section 5.04 shall prohibit (i) the merger or consolidation
of a Subsidiary with or into another Person if the corporation surviving such
consolidation or merger is a Wholly-Owned Subsidiary or the merger of a
Subsidiary into the Company if, in each case, after giving effect thereto, no
Default shall have occurred and be continuing, (ii) the termination of the
corporate existence of any Subsidiary if such termination is not materially
disadvantageous to the Banks and the Company in good faith determines that such
termination is in the best interest of the Company or (iii) a sale of capital
stock of a Subsidiary permitted under Section 5.12(ii).
SECTION 5.05. Compliance with Laws. The Company will comply, and will
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:
47
<PAGE> 54
<TABLE>
<CAPTION>
PERIOD RATIO
- ------ -----
<S> <C>
Effective Date through
the last day of the second
fiscal quarter of 1996 0.75 to 1.00
The first day of the third
fiscal quarter of 1996
through the last day of
such quarter 1.00 to 1.00
First day of the fourth
fiscal quarter of 1996
through the last day of
such quarter 1.10 to 1.00
First day of the first
fiscal quarter of 1997
through the last day of
the second fiscal quarter
of 1997 1.25 to 1.00
First day of the third fiscal
quarter of 1997 through
the last day of such quarter 1.40 to 1.00
First day of the fourth
fiscal quarter of 1997
and thereafter 1.50 to 1.00
</TABLE>
SECTION 5.08. Debt. (a) 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:
(i) Debt outstanding under this Agreement and the Notes, provided
that for a minimum of thirty consecutive days in the period between
November 1 and March 1 (inclusive) of every 12 months there shall be no
Loans outstanding under this Agreement and no Permitted Short-Term Debt
outstanding;
(ii) Debt of any of the Company's Subsidiaries owing to the Company
or any of its Wholly-Owned Subsidiaries permitted by Section 5.11;
(iii) Debt of the Company owing to Wholly-Owned Subsidiaries of the
Company;
48
<PAGE> 55
(iv) 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;
(v) 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;
(vi) Permitted Short-Term Debt of the Company in an aggregate
principal amount at any time outstanding not to exceed $30,000,000,
provided that for a minimum of thirty consecutive days in the period
between November 1 and March 1 of every 12 months there shall be no such
Debt outstanding and no Loans outstanding under this Agreement;
(vii) 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;
(viii) 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;
(ix) the Hewlett-Packard construction allowance in an aggregate
principal amount not to exceed $3,500,000;
(x) 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;
(xi) 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
(xii) 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.
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<PAGE> 56
(b) The daily average outstanding Debt of the Company and its
Subsidiaries in respect of trade letters of credit (other than Letters of
Credit) during any fiscal quarter of the Company shall not exceed the daily
average outstanding Letter of Credit Liabilities in respect of Trade Letters
of Credit during such fiscal quarter.
SECTION 5.09. Minimum Consolidated Tangible Net Worth. Consolidated
Tangible Net Worth will at no time be less than the sum of (i) $90,000,000, (ii)
60% of Consolidated Net Income for each fiscal quarter beginning with the third
fiscal quarter of 1996 which has ended at or before such time for which
Consolidated Net Income is positive and (iii) 75% of the net cash proceeds of
all issuances by the Company of shares of its capital stock after the Effective
Date and at or before such time.
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 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(a)(iii) or
5.08(a)(v); and
50
<PAGE> 57
(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;
(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
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<PAGE> 58
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(a);
(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 if
(A) the Company 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(a)(viii), 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
52
<PAGE> 59
or (B) any 1994 Private Placement Debt; provided that the Company may make such
voluntary repayments and prepayments in an aggregate amount of up to $10,000,000
in any fiscal year of the Company if, during the period from and including the
sixtieth day prior to any such repayment or prepayment to and including the
thirtieth day after such repayment or prepayment, there shall be no Loans or
Permitted Short-Term Debt outstanding.
(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
ninety-first day after the Termination Date.
SECTION 5.16. Transactions with Affiliates. The Company will not, and will
not permit any Subsidiary to, directly or indirectly, pay any funds to or for
the account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate; provided, however, that the foregoing provisions of this Section 5.16
shall not prohibit (a) the Company from declaring or paying any lawful dividend
so long as, after giving effect thereto, no Default shall have occurred and be
continuing, (b) the Company or any Subsidiary from making sales to or purchases
from any Affiliate and, in connection therewith, extending credit or making
payments, or from making payments for services rendered by any Affiliate, if
such sales or purchases are made or such services are rendered in the ordinary
course of business and on terms and conditions at least as favorable to the
Company or such Subsidiary as the terms and conditions which would apply in a
similar transaction with a Person not an Affiliate, (c) the Company or any
Subsidiary from making payments of principal, interest and premium on any Debt
of the Company or such Subsidiary held by an Affiliate if the terms of such Debt
are substantially as favorable to the Company or such Subsidiary as the terms
which could have been obtained at the time of the creation of such Debt from a
lender which was not an Affiliate and (d) the Company or any Subsidiary from
participating in, or effecting any transaction in connection with, any joint
enterprise or other joint arrangement with any Affiliate if the Company or such
Subsidiary participates in the ordinary course of its business and on a basis no
less advantageous than the basis on which such Affiliate participates.
SECTION 5.17. Use of Proceeds and Letters of Credit. The proceeds of the
Loans made (or deemed made pursuant to Section 2.03(f)) under this Agreement
will be used by the Borrowers for general corporate purposes,
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<PAGE> 60
including working capital. The Letters of Credit issued (or deemed issued
pursuant to Section 2.09(a)(ii)) 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>
Effective Date 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 1.10 to 1.00
First day of the first fiscal
quarter of 1997 through
the last day of such quarter 1.40 to 1.00
First day of the second fiscal
quarter of 1997 through the
next to last day of the third
fiscal quarter of 1997 1.60 to 1.00
Last day of the third fiscal quarter
of 1997 through the next to last day
of the fourth fiscal quarter of 1997 1.45 to 1.00
Last day of the fourth fiscal quarter
of 1997 1.00 to 1.00
First day of the first fiscal
quarter of 1998 through the last
day of such quarter 1.15 to 1.00
First day of the second fiscal
quarter of 1998 and
thereafter 1.35 to 1.00
</TABLE>
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<PAGE> 61
SECTION 5.19. Restrictive Agreements.
(a) The Company will not, and will not permit any Subsidiary to, enter
into any agreement after the 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 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 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 Effective Date.
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 and 5.18;
(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;
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(d) any representation, warranty, certification or statement made by
any Borrower in this Agreement or in any certificate, financial statement
or other document delivered pursuant to this Agreement shall prove to have
been incorrect in any material respect when made (or deemed made);
(e) the Company or any Subsidiary shall fail to make any payment in
respect of any Material Financial Obligation when due or within any
applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or, with the
giving of notice or lapse of time or both, would enable) the holder of
such Debt or any Person acting on such holder's behalf to accelerate the
maturity thereof;
(g) the Company or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Company or any Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Company or any Subsidiary under the federal bankruptcy laws as now or
hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $1,000,000 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
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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 $1,000,000;
(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.
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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.
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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 or issuance of a Letter of Credit 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.
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
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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 Euro-Dollar or Money
Market LIBOR 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 Interbank Offered Rate, as determined by the Agent, will not
adequately and fairly reflect the cost to such Banks of funding their
Euro-Dollar Loans 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 Euro-Dollar Loans, or of the applicable Banks that shall have submitted
Money Market Quotes in respect of such Money Market LIBOR Borrowing to make
Money Market LIBOR Loans, shall be suspended, and (ii) each outstanding
Euro-Dollar Loan 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
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Fixed Rate Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a
Committed Borrowing, such Borrowing shall instead be made as a Base Rate
Borrowing, and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR
Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear
interest for each day from and including the first day to but excluding the last
day of the Interest Period applicable thereto at the Base Rate for such day.
SECTION 8.02. Illegality. If, on or after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any 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
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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 with respect to
any Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar
Reserve Percentage), special deposit, insurance assessment 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.
(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.
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(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").
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(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.
(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.
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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, or
to convert outstanding Loans to any Borrower into or to continue outstanding
Loans to any Borrower as Euro-Dollar Loans, 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 EuroDollar 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) Euro-Dollar Loans shall instead be Base
Rate Loans (on which interest and principal shall be payable contemporaneously
with the related Euro-Dollar Loans of the other Banks), and
(b) if Base Rate Loans are substituted for Euro-Dollar Loans, after each
of its Euro-Dollar Loans 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 Euro-Dollar 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 Euro-Dollar Loan shall be converted into a Euro-Dollar
Loan on the first day of the next succeeding Interest Period applicable to the
related Euro-Dollar Loans of the other Banks.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF ELIGIBLE SUBSIDIARIES
Each Eligible Subsidiary shall be deemed by the execution and delivery of
its Election to Participate to have represented and warranted as of the date
thereof that:
SECTION 9.01. Corporate Existence and Power. It is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is a Wholly-Owned Subsidiary of the Company.
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SECTION 9.02. Corporate and Governmental Authorization; Contravention. The
execution and delivery by it of its Election to Participate and the performance
by it of this Agreement and its Notes, are within its corporate powers, have
been duly authorized by all necessary corporate action, require no action by or
in respect of, or filing with, any governmental body, agency or official and do
not contravene, or constitute a default under, any provision of applicable law
or regulation or of its certificate 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 Subsidiary.
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:
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(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any Eligible Subsidiary under this
Agreement or any Note, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement or any Note;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of any Eligible Subsidiary under this
Agreement or any Note;
(iv) any change in the corporate existence, structure or ownership
of any Eligible Subsidiary, or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting any Eligible Subsidiary or its
assets or any resulting release or discharge of any obligation of any
Eligible Subsidiary contained in this Agreement or any Note;
(v) the existence of any claim, set-off or other rights which the
Company may have at any time against any Eligible Subsidiary, the Agent,
any Bank or any other Person, whether in connection herewith or with any
unrelated transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against any
Eligible Subsidiary for any reason of this Agreement or any Note, or any
provision of applicable law or regulation purporting to prohibit the
payment by any Eligible Subsidiary of the principal of or interest on any
Note or any other amount payable by it under this Agreement; or
(vii) any other act or omission to act or delay of any kind by any
Eligible Subsidiary, the Agent, 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
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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.
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
68
<PAGE> 75
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.
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
69
<PAGE> 76
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.
70
<PAGE> 77
(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).
(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
71
<PAGE> 78
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 the provisions of 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
72
<PAGE> 79
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 11.10. Counterparts; Integration. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement 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.
73
<PAGE> 80
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
COMPANY
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
-------------------------
Title: Treasurer
200 Domain Drive
Stratham, NH 03885
Attention: Carden N. Welsh
Facsimile transmission
number: 603-773-1645
74
<PAGE> 81
<TABLE>
<CAPTION>
Commitments BANKS
- ----------- -----
<S> <C>
$30,000,000 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By /s/ Sandra J.S. Kurek
------------------------------------
Title: Associate
$20,000,000 ABN AMRO NORTH AMERICA,
INC., AS AGENT FOR ABN
AMRO BANK N.V.
By /s/ Carol A. Levine
------------------------------------
Title: Senior Vice President
and Managing Director
By /s/ James E. Davis
------------------------------------
Title: Vice President
$20,000,000 THE FIRST NATIONAL BANK
OF BOSTON
By /s/ Chris Francis
------------------------------------
Title: Vice President
$15,000,000 THE NORTHERN TRUST
COMPANY
By /s/ James C. McCall III
------------------------------------
Title: Vice President
</TABLE>
75
<PAGE> 82
<TABLE>
<CAPTION>
Commitments BANKS
- ----------- -----
<S> <C>
$15,000,000 CREDIT LYONNAIS NEW YORK
BRANCH
By /s/ Jacques-Yves Mulliez
------------------------------------
Title: Senior Vice President
- -----------------
Total Commitments
$ 100,000,000
=================
</TABLE>
76
<PAGE> 83
AGENT
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Agent
By /s/ Sandra J.S. Kurek
-------------------------------
Title: Associate
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 /s/ Chris Francis
-------------------------------
Title: Vice President
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
77
<PAGE> 84
EXHIBIT A
FORM OF NOTE
New York, New York
________ __, 199_
For value received, [NAME OF BORROWER], a [jurisdiction of
incorporation] corporation (the "Borrower"), promises to pay to the order of
[NAME OF BANK] (the "Bank"), for the account of its Applicable Lending Office,
the unpaid principal amount of each Loan made by the Bank to the Borrower
pursuant to the Credit Agreement referred to below on the Termination Date
provided for in the Credit Agreement. The Borrower promises to pay interest on
the unpaid principal amount of each such Loan on the dates and at the rate or
rates provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty Trust Company of
New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated
as of June 21, 1996 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.
1
<PAGE> 85
[The Timberland Company has, pursuant to the provisions of the Credit
Agreement, unconditionally guaranteed the payment in full of the principal of
and interest on this note.]*
[NAME OF BORROWER]
By
-------------------------
Title:
- --------
*To be deleted in case of Notes executed and delivered by the Company.
2
<PAGE> 86
LOANS AND PAYMENTS OF PRINCIPAL
Amount of
Type Amount of Principal Notation
Date of Loan Loan Repaid Made By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
<PAGE> 87
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: $100,000,000 Credit Agreement dated as of June 21, 1996 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]/[Euro-Dollar]
Initial Interest Period: ***
-----------
- --------
*Not earlier than the third Euro-Dollar Business Day after the date of the
Notice of Committed Borrowing, in the case of a Euro-Dollar Borrowing; may be
the same day as the Notice of Committed Borrowing, in the case of a Base Rate
Borrowing.
**Must be a multiple of $100,000 and, for a Base Rate Borrowing, at least
$500,000 and, for a Euro-Dollar Borrowing, at least $1,000,000.
***One, two, three or six months, for a Euro-Dollar Borrowing; does not
apply for a Base Rate Borrowing.
1
<PAGE> 88
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 [10:30 A.M.]* [9:15
A.M.]** New York City time) on [date].***
[NAME OF BORROWER]
By
-------------------
Authorized Officer****
- --------
*To be included for LIBOR Auctions only.
**To be included for Absolute Rate Auctions only.
***The third Euro-Dollar Business Day prior to the Date of Borrowing, for a
LIBOR Auction, or the Date of Borrowing, for an Absolute Rate Auction.
****For the Company, the President, the Executive Vice President, the
Senior Vice President - Finance and Administration, the Vice President - Finance
or the Treasurer only.
2
<PAGE> 89
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
To: [Name of Bank]
From: [Name of Borrower] (the "Borrower")
Re: $100,000,000 Credit Agreement dated as of June 21, 1996 among
The Timberland Company, the Banks listed on the signature pages
thereof and Morgan Guaranty Trust Company of New York, as
Agent (the "Credit Agreement")
---------------------------------------------------------------
Pursuant to Section 2.03 of the Credit Agreement we are pleased to
invite you to submit Money Market Quotes to us for the following proposed Money
Market Borrowing(s):
Date of Borrowing: *
--------------------
Principal Amount** Interest Period***
$
- --------
*Must be at least three Euro-Dollar Business Days after the date of the
Invitation, for a LIBOR Auction; may be the date of the Invitation, for an
Absolute Rate Auction.
**Amount must be $500,000 or a larger multiple of $100,000.
***Not less than 7 days in the case of a LIBOR Auction, subject to the
provisions of the definition of Interest Period.
1
<PAGE> 90
Dated: __________ __, 199_
Very truly yours,
[BORROWER]
By:
-----------------------------
Title:*
- --------
*For the Company, the President, the Executive Vice President, the
Senior Vice President - Finance and Administration, the Vice President - Finance
or the Treasurer only.
2
<PAGE> 91
EXHIBIT D
FORM OF MONEY MARKET QUOTE
To: [Name of Borrower] (the "Borrower")
Re: Money Market Quote to the Borrower
In response to your invitation dated , 19 , we
------------- --
hereby make the following Money Market Quote on the following terms:
1. Quoting Bank:
--------------------------------
2. Person to contact at Quoting Bank:
-----------------------------
3. Date of Borrowing: *
--------------------
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following Interest Periods and at the
following rates:
Principal Interest Money Market
Amount** Period*** [Margin****][Absolute Rate*****]
$
$
- --------
*As specified in the related Invitation.
**Principal amount bid for each Interest Period may not exceed principal
amount requested. Specify aggregate limitation if the sum of the individual
offers exceeds the amount the Bank is willing to lend. Bids must be made for
$500,000 or a larger multiple of $100,000.
***Not less than 7 days in the case of LIBOR Auction, as specified in the
related Invitation. No more than five bids are permitted for each Interest
Period.
****Margin over or under the Interbank Offered Rate determined for the
applicable Interest Period. Specify percentage (to the nearest 1/10,000 of 1%)
and specify whether "PLUS" or "MINUS".
*****Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
1
<PAGE> 92
[Provided, that the
aggregate principal
amount of Money Market
Loans for which the
above offers may be
accepted shall not
exceed $____________.]**
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Credit Agreement
dated as of June 21, 1996 among The Timberland Company, the Banks listed on the
signature pages thereof and Morgan Guaranty Trust Company of New York, as Agent,
irrevocably obligates us to make the Money Market Loan(s) for which any offer(s)
are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:_____________________
Authorized Officer
2
<PAGE> 93
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 Credit Agreement dated as of June 21, 1996 (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.
1
<PAGE> 94
We have also examined such certificates, documents and records, and
have made such examination of law, as we have deemed necessary to enable us to
render the opinions expressed below. In addition, we have examined and relied
upon representations and warranties contained in the Credit Agreement and in
certificates delivered to you in connection therewith as to matters of fact
(other than facts constituting conclusions of law) and upon the covenants
contained in the Credit Agreement as to the application of the proceeds of the
loans made pursuant thereto.
The opinion expressed in clause (c) of paragraph 11 below assumes,
without investigation, that the transactions contemplated by the Credit
Agreement will not result in a violation of financial ratios which are contained
in covenants.
We call your attention to the fact that the Credit Agreement and the
Notes provide that they are to be governed by and construed in accordance with
the internal laws of the State of New York and we understand that you are
relying on the advice of your own counsel with respect to all matters of New
York law. We are of the opinion that a Massachusetts court or a federal court
sitting in Massachusetts would, under conflict of laws principles observed by
the courts of Massachusetts, give effect to such provision. For purposes of
rendering the opinions expressed in paragraphs 6 and 8 below, we have assumed
that the Credit Agreement and each Note provides that it is to be governed by
and construed in accordance with the internal laws of The Commonwealth of
Massachusetts.
The opinions expressed below are limited to matters governed by the
laws of The Commonwealth of Massachusetts, the General Corporation Law of the
State of Delaware and the federal laws of the United States. With respect to the
opinions expressed in paragraphs 2 and 4 below concerning (i) the qualification
and good standing of the Company as a foreign corporation under the laws of New
Hampshire and (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
<PAGE> 95
2. The Company is duly qualified to do business as a foreign
corporation under the laws of New Hampshire.
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.
3
<PAGE> 96
11. To the best of our knowledge after having made due inquiry of
officers of the Company, but without having investigated any governmental
records or court dockets, there is no governmental action or proceeding and no
litigation pending against the Company or any of its Subsidiaries which places
in question the validity or enforceability of the Credit Agreement or the Notes.
We call your attention to the fact that John E. Beard is the Secretary
of the Company. Our opinions expressed herein do not include matters which may
have come to the attention of John E. Beard in that capacity and which have not
been referred to us for substantive legal advice.
Our opinions that the Credit Agreement and the Notes being delivered to
the Banks today are legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms are subject to
(i) bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and (ii) general
principles of equity, regardless of whether applied in proceedings in equity or
at law. Such opinions are also subject to the following qualifications:
(a) the enforceability of the provisions of the Credit
Agreement providing for indemnification may be affected by public
policy considerations or court decisions which may limit the right
of the indemnified party to obtain indemnification;
(b) we express no opinion as to the enforceability of any
provision of the Credit Agreement which purports to grant the
right of setoff to a purchaser of a participation in the
obligations of the Company under the Credit Agreement and the
Notes from a bank party to the Credit Agreement; and
(c) we express no opinion as to the enforceability of any
provision of the Credit Agreement to the extent it requires the
Company to indemnify any of you or any other party against loss in
obtaining the currency due under the Credit Agreement from a court
judgment, order, award or decision in another currency.
In addition, we call your attention to the fact that certain waivers contained
in the Credit Agreement may be 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.
4
<PAGE> 97
The foregoing opinion is solely for your benefit and may not be relied
on by any other person.
Very truly yours,
5
<PAGE> 98
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
--------------------------------------
[Closing Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
We have participated in the preparation of the Credit Agreement (the
"Credit Agreement") dated as of June 21, 1996 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
1
<PAGE> 99
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,
2
<PAGE> 100
EXHIBIT G
FORM OF ELECTION TO PARTICIPATE
, 19
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
for the Banks named in the Credit Agreement dated
as of June 21, 1996 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]
1
<PAGE> 101
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:
2
<PAGE> 102
EXHIBIT H
FORM OF ELECTION TO TERMINATE
, 19
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
for the Banks named in the Credit Agreement dated
as of June 21, 1996 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.
1
<PAGE> 103
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:
3
<PAGE> 104
EXHIBIT I
OPINION OF
COUNSEL FOR THE BORROWER
(BORROWINGS BY ELIGIBLE SUBSIDIARIES)
[Dated as provided in
Section 3.03 of the
Credit Agreement]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
9 West 57th Street
New York, New York 10019
Ladies and Gentlemen:
I am counsel to [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation (the "Borrower"), and give this opinion pursuant to
Section 3.03(b) of the Credit Agreement (the "Credit Agreement") dated as of
June 21, 1996 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.
1
<PAGE> 105
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,
2
<PAGE> 106
EXHIBIT J
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), THE TIMBERLAND COMPANY (the "Company")
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Credit Agreement dated as of June 21, 1996 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
1
<PAGE> 107
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.
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.
- -------------------------
*Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
2
<PAGE> 108
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:
3
<PAGE> 109
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:
4
<PAGE> 1
Exhibit 10.14(d)
THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
THIRD AMENDMENT
Dated as of
June 21, 1996
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 and by the separate Second Amendments thereto, each
dated as of June 21, 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 Third 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 Credit Agreement dated as of
June 21, 1996 (the "Credit Agreement") 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.
The Company has requested that, subject to the satisfaction of the
conditions set forth herein, the Original Note Agreements be amended as of June
21, 1996 (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.
<PAGE> 2
The Timberland Company Third Amendment
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to you as follows:
(a) After giving effect to this Third Amendment and the Credit
Agreement 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 Third Amendment shall be subject to the
following conditions precedent:
Section 3.1. Execution of the Credit Agreement. The Company, the Agent
named therein and the banks listed on the signature pages thereof shall have
duly executed and delivered the Credit Agreement, 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. Proceedings Satisfactory. All proceedings taken in
connection with the transactions contemplated or provided for in this Third
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, except with respect to the amendment to
Section 5.19 of the Original Note Agreements which shall remain in full force
and effect until all amounts under the Original Note Agreements and the Notes
have been paid in full, shall terminate and be of no further force and effect on
June 21, 1998:
-2-
<PAGE> 3
The Timberland Company Third Amendment
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 be less
than the sum of (i) $90,000,000, (ii) 60% of Consolidated Net
Income for each fiscal quarter beginning with the third fiscal
quarter of 1996 which has ended at or before such time for
which Consolidated Net Income is positive and (iii) 75% of the
net cash proceeds of all issuances by the Company of shares of
its capital stock after the Third Amendment Effective Date and
at or before such time.
"The following terms shall have the following
meanings solely for purposes of this SECTION 5.7:
"'Consolidated Net Income' means, for any
fiscal period, the net 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 any write-ups or write-downs resulting from
foreign currency translations after December 31,
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, 1995 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,
-3-
<PAGE> 4
The Timberland Company Third Amendment
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."
Section 4.2. 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>
Third Amendment Effective Date 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 1.00 to 1
First day of the fourth fiscal quarter
of 1996 through the last day of such
quarter 1.10 to 1
First day of the first fiscal quarter
of 1997 through the last day of the
second fiscal quarter of 1997 1.25 to 1.00
First day of the third fiscal quarter
of 1997 through the last day of such
quarter 1.40 to 1.00
First day of the fourth fiscal quarter
of 1997 and thereafter 1.50 to 1.00
</TABLE>
-4-
<PAGE> 5
The Timberland Company Third 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 and
(C) consolidated taxes of the Company and its
Consolidated Subsidiaries for such period.
"'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 4.3. 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 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.
-5-
<PAGE> 6
The Timberland Company Third Amendment
"The following terms shall have the following
meanings solely for purposes of this Section 5.11:
"'Consolidated Net Income' is defined in
Section 5.7.
"'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
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."
Section 4.4. Amendment to Section 5.17(j). Section 5.17(j) of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"(j) Restricted Investments; provided that the
aggregate amount of Restricted Investments does not exceed
$10,000,000 at any one time outstanding."
Section 4.5. Amendment to Section 5.19. Section 5.19 of the Original
Note Agreements shall be, and the same is hereby amended as set forth below:
(a) Section 5.19(a) and (b) is hereby amended as
follows:
"(a) Quarterly Statements. As soon as available and
in any event within 45 days after the end of each quarterly
fiscal period (except the last) of each fiscal year, duplicate
copies of:
(1) consolidated and consolidating balance sheets of
the Company and its Restricted Subsidiaries and of the Company
and its consolidated Subsidiaries as of the close of such
quarter setting forth, in the case of such consolidated
statements, in comparative form the amount for the end of the
preceding fiscal year,
-6-
<PAGE> 7
The Timberland Company Third Amendment
(2) consolidated and consolidating statements of
income of the Company and its Restricted Subsidiaries and of
the Company and its consolidated Subsidiaries for such
quarterly period, setting forth, in the case of such
consolidated statements, in comparative form the amount for
the corresponding period of the preceding fiscal year, and
(3) consolidated statements of cash flows of the
Company and its Restricted Subsidiaries and of the Company and
its consolidated Subsidiaries for the portion of the fiscal
year ending with such quarter, setting forth in comparative
form the amount from the corresponding period of the preceding
fiscal year,
all in reasonable detail and certified as complete and
correct, by an authorized financial officer of the Company,
provided, that so long as the Unrestricted Subsidiaries of the
Company taken as a whole do not constitute a Significant
Subsidiary, the Company shall not be required to deliver to
you financial statements of the Company and its Restricted
Subsidiaries referred to in paragraphs (1), (2) and (3) of
this Section 5.19(A);
"(b) Annual Statements. As soon as available and in
any event within 90 days after the close of each fiscal year
of the Company, duplicate copies of:
(1) consolidated and consolidating balance sheets of
the Company and its Restricted Subsidiaries and of the Company
and its consolidated Subsidiaries as of the close of such
fiscal year, and
(2) consolidated and consolidating statements of
income and stockholders' equity and cash flows of the Company
and its Restricted Subsidiaries and of the Company and its
consolidated Subsidiaries for such fiscal year.
in each case setting forth in comparative form the
consolidated figures for the preceding fiscal year, all in
reasonable detail and accompanied by an opinion thereon of a
firm of independent public accountants of recognized national
standing selected by the Company to the effect that the
consolidated financial statements have been prepared in
accordance with generally accepted accounting principles
consistently applied (except for changes in application in
which such accountants concur) and present fairly the
financial condition of the companies reported on and that the
examination of such accountants in connection with such
financial statements has been made in accordance with
generally accepted auditing standards and accordingly,
includes such tests of the
-7-
<PAGE> 8
The Timberland Company Third Amendment
accounting records and such other auditing procedures as were
considered necessary in the circumstances, provided, that so
long as the Unrestricted Subsidiaries of the Company taken as
a whole do not constitute a Significant Subsidiary, the
Company shall not be required to deliver to you financial
statements of the Company and its Restricted Subsidiaries
referred to in paragraphs (1) and (2) of this Section
5.19(b)."
(b) Section 5.19(g) is hereby amended by deleting "and" where
it appears at the end thereof.
(c) Section 5.19(h) is hereby amended by deleting the period
at the end thereof and inserting "; and".
(d) Section 5.19 is hereby amended by inserting the following
at the end thereof:
"(i) ERISA Reports. 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
-8-
<PAGE> 9
The Timberland Company Third Amendment
applicable member of the ERISA Group is required or proposes
to take.
The following terms shall have the following meanings solely
for purposes of this Section 5.19(i):
"'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.
"'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.
"'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.
"'PBGC' means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of
its functions under ERISA.
"'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."
-9-
<PAGE> 10
The Timberland Company Third Amendment
Section 4.6. Amendment to Section 5.20. Section 5.20 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"Section 5.20. Debt. (a) In addition to 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:
"(i) Debt outstanding under the Credit
Agreement as in effect on the Third Amendment
Effective Date, provided that for a minimum of thirty
consecutive days in the period between November 1 and
March 1 (inclusive) of every 12 months there shall be
no Loans outstanding under the Credit Agreement and
no Permitted Short-Term Debt outstanding; and
"(ii) Other Debt permitted by Section 5.08
of the Credit Agreement as in effect on the Third
Amendment Effective Date.
"(b) The daily average outstanding Debt of the Company and its
Subsidiaries in respect of trade letters of credit (other than Letters
of Credit (as defined in the Credit Agreement as in effect on the Third
Amendment Effective Date)) during any fiscal quarter of the Company
shall not exceed the daily average outstanding Letter of Credit
Liabilities (as defined in the Credit Agreement as in effect on the
Third Amendment Effective Date) in respect of Trade Letters of Credit
(as defined in the Credit Agreement as in effect on the Third Amendment
Effective Date) during such fiscal quarter.
"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 5.20(b),
all contingent obligations) of such Person to
reimburse or prepay any bank or other Person in
respect of
-10-
<PAGE> 11
The Timberland Company Third Amendment
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.
"'Loan' means a Base Rate Loan, a
Euro-Dollar Loan or a Money Market Loan (each as
defined in the Credit Agreement as in effect on the
Third Amendment Effective Date) and "Loans" means
Base Rate Loans, Euro-Dollar Loans or Money Market
Loans or any combination of the foregoing.
"'Permitted Short-Term Debt' means Debt
(other than Loans or Debt permitted under Section
5.08(a)(vii) of the Credit Agreement) of the Company
or any of its Subsidiaries that is payable on demand
or that has a maturity, at the time such Debt is
incurred or at any time which such maturity is
extended, of not more than one year from the date
such Debt is incurred or such maturity is extended,
as the case may be."
Section 4.7. Amendment to Section 5.21. Section 5.21 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"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>
Third Amendment Effective Date
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 1.10 to 1.00
First day of the first fiscal
quarter of 1997 through the
last day of such quarter 1.40 to 1.00
First day of the second fiscal quarter
of 1997 through the next to last
day of the third fiscal quarter
of 1997 1.60 to 1.00
</TABLE>
-11-
<PAGE> 12
The Timberland Company Third Amendment
<TABLE>
<S> <C>
Last day of the third fiscal
quarter of 1997 through the next
to last day of the fourth fiscal
quarter of 1997 1.45 to 1.00
Last day of the fourth fiscal
quarter of 1997 1.00 to 1.00
First day of the first fiscal
quarter of 1998 through the
last day of such quarter 1.15 to 1.00
First day of the second fiscal
quarter of 1998 and thereafter 1.35 to 1.00
</TABLE>
"The following terms shall have the following
meanings solely for purposes of this Section 5.21:
"'Adjusted Consolidated Cash Holdings'
means, for any date the excess, if any, of (i) the
sum of cash and Temporary Cash Investments of the
Company and its Subsidiaries determined on a
consolidated basis on such date over (ii) $5,000,000.
"'Bank' means each bank listed on the
signature pages to the Credit Agreement, each
assignee which becomes a Bank pursuant to Section
11.06(c) of the Credit Agreement, and their
respective successors.
"'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 Subsidiary' is defined in
Section 5.7.
"'Debt' is defined in Section 5.20.
"'Investment' is defined in Section 5.7.
"'Leverage Ratio' means, for any date, the
ratio of (i) Consolidated Debt less Adjusted
Consolidated Cash Holdings on such date to (ii)
Consolidated Net Worth (as defined in Section 5.7) on
such date.
"'Loan' is defined in Section 5.20.
-12-
<PAGE> 13
The Timberland Company Third Amendment
"'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 Ratings Service 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 Ratings Service or Aa
or higher by Moody's Investors Service, Inc. or (B)
any Bank, (iv) money market funds which invest only
in securities described in clauses (i), (ii) and
(iii)(x) above or (v) repurchase agreements with
respect to securities described in clause (i) above
entered into with an office of a bank or trust
company meeting the criteria specified in clause
(iii) above; provided in each case that such
Investment matures within one year from the date of
acquisition thereof by the Company or a Subsidiary."
Section 4.8. Amendment to Section 5.23. Section 5.23 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"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)."
Section 4.9. Amendment to Section 5.24. Section 5.24 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"Section 5.24. Restrictive Agreements. (a) The
Company will not, and will not permit any Subsidiary to, enter
into any
-13-
<PAGE> 14
The Timberland Company Third Amendment
agreement after the Third 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 Third 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 Third 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 Third 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 4.10. Amendments to Section 8.1. (a) The following definitions
shall be added to Section 8.1 of the Original Note Agreements in alphabetical
order and shall read as follows:
"'Third Amendment' shall mean the Third
Amendment to this Agreement dated as of June 21, 1996
between the Company and you.
"'Third Amendment Effective Date' shall mean
the date on which the Third Amendment becomes
effective."
-14-
<PAGE> 15
The Timberland Company Third Amendment
(b) The definition of Credit Agreement contained in Section 8.1 of the
Original Note Agreements shall be, and the same is hereby amended in its
entirety as follows:
"'Credit Agreement' shall mean that certain Credit
Agreement dated as of June 21, 1996, 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."
SECTION 5. EFFECTIVENESS OF ORIGINAL NOTE AGREEMENTS; PAYMENT OF CREDIT FEE.
Section 5.1. Effectiveness of Original Note Agreements. The Company
hereby agrees that (i) the terms and provisions of the Original Note Agreements,
as amended by this Third Amendment, are hereby ratified and confirmed and (ii)
notwithstanding anything to the contrary contained in the Second Amendments
referred to in Section 1 hereof, the amendments contained in Sections 4.2, 4.4,
4.6, 4.7 (only with respect to the addition of Section 5.22 entitled "No
Unrestricted Subsidiaries"), 4.8 and 4.9 (only with respect to the definitions
of "Second Amendment" and "Second Amendment Effective Date") of the Second
Amendments referred to in Section 1 hereof shall remain in full force and effect
until June 21, 1998.
Section 5.2. Payment of Credit Fee. The Company hereby reaffirms its
obligation to pay the Credit Fee (as defined in the Second Amendments referred
to in Section 1 hereof) pursuant to and in accordance with the terms of Section
5 of the Second Amendments referred to in Section 1 hereof.
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 Third Amendment but which would not constitute such a Default or Event of
Default under the Original Note Agreements as amended by this Third 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 Third
Amendment may refer to the "Note Agreements dated as of December 15, 1994"
without making specific reference to this Third Amendment, but nevertheless all
such references shall be deemed to include this Third Amendment unless the
context shall otherwise require.
Section 6.3. Expenses. The Company will pay all expenses relating to
this Third Amendment in accordance with Section 9.4 of the Original Note
Agreements.
Section 6.4. Construction. This Third Amendment shall be construed in
connection with and as part of the Original Note Agreements, and all terms,
conditions and covenants
-15-
<PAGE> 16
The Timberland Company Third Amendment
contained in the Original Note Agreements, except as herein modified, shall be
and remain in full force and effect.
Section 6.5. Counterparts. This Third 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 Third Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
-16-
<PAGE> 17
The Timberland Company Third Amendment
Upon the acceptance of this Third 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 21, 1996.
THE TIMBERLAND COMPANY
By______________________________________
Its___________________________________
Accepted as of June 21, 1996
(HOLDER)
By______________________________________
Its___________________________________
By______________________________________
Its___________________________________
Holding $(Holder Amount) unpaid principal
amount of the Notes.
-17-
<PAGE> 18
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
HOLDERS NOTES HELD
<S> <C>
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY $15,000,000
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Department -- Securities Division
CENTURY LIFE OF AMERICA $3,000,000
c/o CUNA Mutual Insurance Group
Securities Management Department
5910 Mineral Point Road
Madison, Wisconsin 53705
Attention: Private Placements
CUNA MUTUAL INSURANCE SOCIETY $2,000,000
c/o CUNA Mutual Insurance Group
Securities Management Department
5910 Mineral Point Road
Madison, Wisconsin 53705
Attention: Private Placements
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA $31,000,000
c/o Structured Finance Group
One Gateway Center, 11th Floor
7-45 Raymond Boulevard West
Newark, New Jersey 07012-5311
Attention: Senior Managing Director
PRUCO LIFE INSURANCE COMPANY $4,000,000
c/o Structured Finance Group
One Gateway Center, 11th Floor
7-45 Raymond Boulevard West
Newark, New Jersey 07012-5311
Attention: Senior Managing Director
HARTFORD LIFE INSURANCE COMPANY $10,000,000
SEPARATE ACCOUNT CRC
c/o Hartford Life Insurance Company
c/o Life Investment Group A-4
Private Placements
P.O. Box 2999
Hartford, Connecticut 06104-2999
</TABLE>
SCHEDULE I
(to Third Amendment)
<PAGE> 19
<TABLE>
<S> <C>
HARTFORD FIRE INSURANCE COMPANY $10,000,000
c/o Hartford Life Insurance Company
c/o Life Investment Group A-4
Private Placements
P.O. Box 2999
Hartford, Connecticut 06104-2999
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY $5,000,000
c/o Hartford Life Insurance Company
c/o Life Investment Group A-4
Private Placements
P.O. Box 2999
Hartford, Connecticut 06104-2999
GREAT NORTHERN INSURED ANNUITY CORPORATION $10,000,000
Two Union Square, 601 Union Street
Seattle, Washington 98101
Attention: Investment Department, Dan Greenshields
JOHN ALDEN LIFE INSURANCE COMPANY $6,000,000
7300 Corporate Center Drive, 7A24
Miami, Florida 33126-1223
Attention: Investment Department Private Placements
THE OHIO CASUALTY INSURANCE COMPANY $5,000,000
136 North Third Street
Hamilton, Ohio 45025
Attention: Eric P. Scruggs, Portfolio Manager, Private
Placement Investments
PHYSICIANS LIFE INSURANCE COMPANY $1,000,000
c/o Asset Allocation & Management Companies
30 North LaSalle, Suite 3600
Chicago, Illinois 60602
Attention: Kathy Lange
FRONTIER INSURANCE COMPANY $750,000
c/o Asset Allocation & Management Companies
30 North LaSalle, Suite 3600
Chicago, Illinois 60602
Attention: Kathy Lange
GUARANTEE TRUST LIFE INSURANCE COMPANY $750,000
c/o Asset Allocation & Management Companies
30 North LaSalle, Suite 3600
Chicago, Illinois 60602
Attention: Kathy Lange
</TABLE>
I-2
<PAGE> 20
<TABLE>
<S> <C>
WORLD INSURANCE COMPANY $500,000
c/o Asset Allocation & Management Companies
30 North LaSalle, Suite 3600
Chicago, Illinois 60602
Attention: Kathy Lange
WASHINGTON NATIONAL INSURANCE COMPANY $2,000,000
300 Tower Parkway
Lincolnshire, Illinois 60069-3665
Attention: Investment Department-2
</TABLE>
I-3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 28, 1996 AND THE
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 28, 1996
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-31-1996
<PERIOD-END> JUN-28-1996
<CASH> 19,937
<SECURITIES> 0
<RECEIVABLES> 90,850
<ALLOWANCES> 3,599
<INVENTORY> 209,018
<CURRENT-ASSETS> 339,236
<PP&E> 99,523
<DEPRECIATION> (49,560)
<TOTAL-ASSETS> 418,073
<CURRENT-LIABILITIES> 74,268
<BONDS> 199,071
0
0
<COMMON> 111
<OTHER-SE> 134,604
<TOTAL-LIABILITY-AND-EQUITY> 418,073
<SALES> 241,332
<TOTAL-REVENUES> 241,332
<CGS> 155,226
<TOTAL-COSTS> 155,226
<OTHER-EXPENSES> 842
<LOSS-PROVISION> 968
<INTEREST-EXPENSE> 10,287
<INCOME-PRETAX> (12,468)
<INCOME-TAX> (4,613)
<INCOME-CONTINUING> (7,855)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,855)
<EPS-PRIMARY> (.70)
<EPS-DILUTED> 0
</TABLE>
