1
EXHIBIT 10.4
EXECUTION COPY
--------------
$125,000,000
CREDIT AGREEMENT
dated as of
May 4, 1994
among
The Timberland Company
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
2
TABLE OF CONTENTS*
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions . . . . . . . . . . . . . 1
1.02 Accounting Terms and Determinations . 20
1.03 Types of Borrowings . . . . . . . . . 20
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend . . . . . . . . . 21
2.02 Notice of Committed Borrowings . . . . 21
2.03 Money Market Borrowings . . . . . . . 22
2.04 Notice to Banks; Funding of Loans . . 25
2.05 Notes . . . . . . . . . . . . . . . . 26
2.06 Maturity of Loans . . . . . . . . . . 27
2.07 Method of Electing Interest Rates . . 27
2.08 Interest Rates . . . . . . . . . . . . 29
2.09 Facility Fees . . . . . . . . . . . . 33
2.10 Mandatory Termination or
Reduction of Commitments . . . . . . 33
2.11 Optional Termination or
Reduction of Commitments . . . . . . 34
2.12 Optional Prepayments . . . . . . . . . 34
2.13 Mandatory Prepayments . . . . . . . . 34
2.14 General Provisions as to Payments . . 35
2.15 Funding Losses . . . . . . . . . . . . 36
2.16 Computation of Interest and Fees . . . 36
2.17 Judgment Currency . . . . . . . . . . 37
2.18 Foreign Subsidiary Costs . . . . . . . 37
ARTICLE III
CONDITIONS
SECTION 3.01 Closing . . . . . . . . . . . . . . . 38
3.02 Borrowings . . . . . . . . . . . . . . 39
3.03 First Borrowing by Each
Eligible Subsidiary . . . . . . . . 39
<FN>
__________________________
*The Table of Contents is not a part of this Agreement.
3
Page
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
SECTION 4.01 Corporate Existence and Power . . . . 40
4.02 Corporate and Governmental
Authorization; No Contravention . . 40
4.03 Binding Effect . . . . . . . . . . . . 41
4.04 Financial Information . . . . . . . . 41
4.05 Litigation . . . . . . . . . . . . . . 41
4.06 Compliance with ERISA . . . . . . . . 41
4.07 Environmental Matters . . . . . . . . 42
4.08 Taxes . . . . . . . . . . . . . . . . 42
4.09 Subsidiaries . . . . . . . . . . . . . 42
4.10 Not an Investment Company . . . . . . 43
4.11 Full Disclosure . . . . . . . . . . . 43
ARTICLE V
COVENANTS
SECTION 5.01 Information . . . . . . . . . . . . . 43
5.02 Payment of Obligations . . . . . . . . 46
5.03 Maintenance of Property; Insurance . . 47
5.04 Conduct of Business and
Maintenance of Existence . . . . . . 47
5.05 Compliance with Laws . . . . . . . . . 47
5.06 Inspection of Property,
Books and Records . . . . . . . . . 48
5.07 Fixed Charge Coverage Ratio . . . . . 48
5.08 Debt . . . . . . . . . . . . . . . . . 48
5.09 Minimum Consolidated Tangible
Net Worth . . . . . . . . . . . . . 49
5.10 Restricted Payments . . . . . . . . . 50
5.11 Investments . . . . . . . . . . . . . 50
5.12 Maintenance of Ownership of
Subsidiaries . . . . . . . . . . . . 51
5.13 Negative Pledge . . . . . . . . . . . 51
5.14 Consolidations, Mergers and
Sales of Assets . . . . . . . . . . 52
5.15 Restrictions on Prepayments of and
Amendments to Certain Debt . . . . . 52
5.16 Transactions With Affiliates . . . . . 53
5.17 Use of Proceeds . . . . . . . . . . . 54
ii
4
Page
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default . . . . . . . . . . 54
6.02 Notice of Default . . . . . . . . . . 57
ARTICLE VII
THE Agent
SECTION 7.01 Appointment and Authorization . . . . 57
7.02 Agent and Affiliates. . . . . . . . . 57
7.03 Action by Agent . . . . . . . . . . . 58
7.04 Consultation with Experts . . . . . . 58
7.05 Liability of Agent . . . . . . . . . . 58
7.06 Indemnification . . . . . . . . . . . 58
7.07 Credit Decision . . . . . . . . . . . 59
7.08 Successor Agent . . . . . . . . . . . 59
7.09 Agent's Fee . . . . . . . . . . . . . 59
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01 Basis for Determining Interest
Rate Inadequate or Unfair . . . . . 60
8.02 Illegality . . . . . . . . . . . . . . 60
8.03 Increased Cost and Reduced Return . . 61
8.04 Taxes . . . . . . . . . . . . . . . . 63
8.05 Base Rate Loans Substituted for
Affected Fixed Rate Loans . . . . . 65
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF ELIGIBLE SUBSIDIARIES
SECTION 9.01 Corporate Existence and Power . . . . . 66
9.02 Corporate and Governmental
Authorization; Contravention . . . . 66
9.03 Binding Effect . . . . . . . . . . . . 66
9.04 Taxes . . . . . . . . . . . . . . . . . 66
iii
5
Page
ARTICLE X
GUARANTY
SECTION 10.01 The Guaranty . . . . . . . . . . . . . 67
10.02 Guaranty Unconditional . . . . . . . . 67
10.03 Discharge Only Upon Payment
In Full; Reinstatement in
Certain Circumstances . . . . . . . 68
10.04 Waiver by the Company . . . . . . . . 68
10.05 Waiver of Subrogation . . . . . . . . 68
10.06 Stay of Acceleration . . . . . . . . . 69
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Notices . . . . . . . . . . . . . . . 69
11.02 No Waivers . . . . . . . . . . . . . . 69
11.03 Expenses; Documentary Taxes;
Indemnification . . . . . . . . . . 70
11.04 Sharing of Set-Offs . . . . . . . . . 70
11.05 Amendments and Waivers . . . . . . . . 71
11.06 Successors and Assigns . . . . . . . . 71
11.07 Collateral . . . . . . . . . . . . . . 73
11.08 Confidentiality . . . . . . . . . . . 73
11.09 Governing Law; Submission to
Jurisdiction . . . . . . . . . . . . 74
11.10 Counterparts; Integration;
Effectiveness . . . . . . . . . . . 74
11.11 WAIVER OF JURY TRIAL . . . . . . . . . 74
iv
6
Schedule I - Existing Debt and Liens
Schedule II - Subsidiaries
Schedule III - Approved Foreign Distributors
Exhibit A - Note
Exhibit B - Notice of Committed Borrowing
Exhibit C - Money Market Quote Invitation
Exhibit D - Money Market Quote
Exhibit E - Opinion of Counsel for the Company
Exhibit F - Opinion of Special Counsel for the
Agent
Exhibit G - Form of Election to Participate
Exhibit H - Form of Election to Terminate
Exhibit I - Opinion of Counsel for the Borrower
Exhibit J - Form of Assignment and Assumption Agreement
v
7
CREDIT AGREEMENT
AGREEMENT dated as of May 4, 1994 among THE TIMBERLAND COMPANY, the
BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent.
WHEREAS, the Company wishes to be able to borrow or cause eligible
subsidiaries to borrow under its guaranty up to $125,000,000 on a revolving
credit basis; and
WHEREAS, the Banks are willing to make such loans on the terms and
conditions set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS . The following terms, as used herein,
have the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Additional Permitted Long-Term Debt" means Permitted Long-Term Debt
other than (i) the first $25,000,000 aggregate principal amount of Permitted
Long- Term Debt incurred by the Company and its Subsidiaries after the date
hereof and (ii) any refinancings, extensions or renewals thereof or of
Permitted Long-Term Debt outstanding on the date hereof.
"Adjusted CD Rate" has the meaning set forth in Section 2.08(b).
"Adjusted Interbank Offered Rate" has the meaning set forth in Section
2.08(c).
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in
8
the form prepared by the Agent and submitted to the Agent (with a copy to
the Company) duly completed by such Bank.
"Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Company (a "Controlling Person") or
(ii) any Person (other than the Company or a Subsidiary) which is controlled by
or is under common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agent" means Morgan Guaranty Trust Company of New York in its capacity
as agent for the Banks hereunder, and its successors in such capacity.
"Applicable Certificate" means, for any day, the certificate that, as
of the date two days prior to such day, was most recently required to be
delivered pursuant to Section 5.01(e).
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of
its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of
its Money Market Loans, its Money Market Lending Office.
"Applicable Percentage" means (i) for any day on or prior to July 1,
1994, 100%, (ii) for any day after July 1, 1994 and on or prior to December 31,
1994, 95%, (iii) for any day after December 31, 1994 and on or prior to
September 29, 1995, 85% and (iv) for any day after September 29, 1995, 75%.
"April 1994 Private Placement Debt" means Debt in respect of the
Company's 7.16% Senior Unsecured Notes due April 2000 issued in April 1994.
"Assessment Rate" has the meaning set forth in Section 2.08(b).
"Assignee" has the meaning set forth in Section 11.06(c).
"Available Amount" means, on any day, the lesser of (i) the aggregate
amount of the Commitments on such day and (ii) the Borrowing Base for such day.
2
9
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 11.06(c), and their
respective successors.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"Base Rate Loan" means (i) a Committed Loan which bears interest at a
rate determined on the basis of the Base Rate pursuant to the applicable Notice
of Committed Borrowing or Notice of Interest Rate Election or the provisions of
Article VIII or (ii) an overdue amount which was a Base Rate Loan immediately
before it became overdue.
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer
Plan and which is maintained or otherwise contributed to by any member of the
ERISA Group.
"Borrower" means the Company or any Eligible Subsidiary, as the context
may require, and their respective successors, and "Borrowers" means all of the
foregoing.
"Borrowing" has the meaning set forth in Section 1.03.
"Borrowing Base" means, for any day, an amount equal to (i) 85% of the
aggregate amount of Eligible Receivables set forth in the Applicable
Certificate for such day plus (ii) if such day is in the period, if any,
designated by the Company by not less than two days prior notice to the Agent,
of two consecutive Borrowing Base Periods in the period of six consecutive
Borrowing Base Periods beginning in March and ending in September of each year,
inclusive, 20% of the Footwear Inventory Component set forth in the Applicable
Certificate for such day less (iii) the sum of (A) the aggregate principal
amount of Permitted Long-Term Debt incurred on or after the Effective Date and
outstanding on such day, to the extent that such aggregate principal amount
exceeds $25,000,000 and (B) the aggregate principal amount of Permitted Short-
Term Debt outstanding on such day.
"Borrowing Base Period" means a period beginning on the second day
after the Company is required to deliver a certificate pursuant to Section
5.01(e) in any month and ending on the day after the Company is so required to
3
10
deliver such a certificate in the succeeding calendar month.
"Calculation Period" means, with respect to any day, the period of four
consecutive fiscal quarters of the Company ending on the last day of the most
recently ended fiscal quarter of the Company as to which the Company shall have
delivered a certificate pursuant to Section 5.01(c).
"CD Base Rate" has the meaning set forth in Section 2.08(b).
"CD Loan" means (i) a Committed Loan which bears interest at a CD Rate
pursuant to the applicable Notice of Committed Borrowing or Notice of Interest
Rate Election or (ii) an overdue amount which was a CD Loan immediately before
it became overdue.
"CD Margin" has the meaning set forth in Section 2.08(b).
"CD Rate" means a rate of interest determined pursuant to Section
2.08(b) on the basis of an Adjusted CD Rate.
"CD Reference Banks" means ABN AMRO Bank N.V., The First National Bank
of Boston and Morgan Guaranty Trust Company of New York.
"Chase Credit Agreement" means the Credit Agreement dated as of
November 15, 1993 among the Company, the banks listed on the signature pages
thereof and The Chase Manhattan Bank, N.A., as agent for such banks, as the
same may, subject to Section 5.15, be amended, modified or supplemented from
time to time.
"Closing Date" means the date on or after the Effective Date on which
the Agent shall have received the documents specified in or pursuant to Section
3.01.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature pages hereof, as such amount
may be reduced from time to time pursuant to Sections 2.10 and 2.11.
"Committed Loan" means a loan made by a Bank pursuant to Section 2.01;
PROVIDED that, if any such loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term "Committed
Loan" shall refer to the combined principal amount resulting from such
combination or to each of the
4
11
separate principal amounts resulting from each such subdivision, as the
case may be.
"Company" means The Timberland Company, a Delaware corporation, and its
successors.
"Company's 1993 Form 10-K" means the Company's annual report on Form
10-K for 1993 as filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934.
"Consolidated Debt" means at any date the Debt of the Company and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated EBITR" means, for any period, the sum of (i) consolidated
net income of the Company and its Consolidated Subsidiaries for such period
plus (ii) to the extent deducted in determining such consolidated net income,
the sum of (A) Consolidated Interest Expense, (B) Consolidated Rental Expense
and (C) consolidated taxes of the Company and its Consolidated Subsidiaries for
such period.
"Consolidated Interest Expense" means, for any period, the interest
expense of the Company and its Consolidated Subsidiaries determined on a
consolidated basis for such period.
"Consolidated Net Worth" means at any date the consolidated
stockholders' equity of the Company and its Consolidated Subsidiaries (without
giving effect to any write-ups or write-downs resulting from foreign currency
translations after December 31, 1993) as of such date.
"Consolidated Rental Expense" means, for any period, the rental expense
of the Company and its Consolidated Subsidiaries (other than with respect to
capital leases) determined on a consolidated basis for such period.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Company in
its consolidated financial statements if such statements were prepared as of
such date.
"Consolidated Tangible Net Worth" means at any date Consolidated Net
Worth less the consolidated Intangible Assets of the Company and its
Consolidated Subsidiaries, all determined as of such date. For purposes of
this definition "Intangible Assets" means the amount (to the extent reflected
in determining such
5
12
Consolidated Net Worth) of (i) all write-ups (other than write-ups of assets of
a going concern business made within twelve months after the acquisition of
such business) subsequent to December 31, 1993 in the book value of any asset
owned by the Company or a Consolidated Subsidiary, (ii) all Investments in
unconsolidated Subsidiaries and all equity investments in Persons which are not
Subsidiaries and (iii) all unamortized debt discount and expense, unamortized
deferred charges, goodwill, patents, trademarks, service marks, trade names,
anticipated future benefit of tax loss carry-forwards, copyrights, organization
or developmental expenses and other intangible assets.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v)
all non-contingent obligations (and, for purposes of Section 5.13 and the
definitions of Material Debt and Material Financial Obligations, all contingent
obligations) of such Person to reimburse or prepay any bank or other Person in
respect of amounts paid under a letter of credit, banker's acceptance or
similar instrument, whether drawn or undrawn, (vi) all Debt of others secured
by a Lien on any asset of such Person, whether or not such Debt is assumed by
such Person, and (vii) all Debt of others Guaranteed by such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to
any of the foregoing transactions) or any combination of the foregoing
transactions.
6
13
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City or Boston are authorized
by law to close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Company and the Agent; PROVIDED that any Bank may so designate
separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references herein to the
Domestic Lending Office of such Bank shall be deemed to refer to either or both
of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in Section
2.08(b).
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 11.10.
"Election to Participate" means an Election to Participate
substantially in the form of Exhibit G hereto.
"Election to Terminate" means an Election to Terminate substantially in
the form of Exhibit H hereto.
"Eligible Receivables" means, at any date, the aggregate of the unpaid
portions at such date of assets ("Receivables") which were or would have been
included as accounts receivable on the consolidated balance sheet referred to
in Section 4.04(a), net of any credits, rebates, offsets or other adjustments
to such Receivables owed to any of the account debtors from which such
Receivables are due and also net of any commissions payable to third parties
which are adjustments to such Receivables, and excluding the following
(determined without duplication):
(a) any Receivable as to which there is any unresolved
dispute with the account debtor (including any offset or counterclaim
by the account debtor), but only to the extent of such dispute,
(b) (i) any Receivable which, at the date of the original
issuance of the invoice
7
14
therefor, was payable more than 90 days (or, in the case of a
Receivable that represents the purchase price of boots sold by the
Company or any of its Subsidiaries, 270 days) from such date or (ii)
any Receivable which remains unpaid more than 60 days after the due
date for payment specified at the time of the original issuance of the
invoice therefor, and
(c) unless in any of the following cases the relevant account
debtor has previously been approved by the Required Banks (through the
Agent) as an eligible account debtor for purposes of this Agreement,
all Receivables due from any account debtor (i) which is a distributor
organized outside the United States of America or whose principal
place of business is located outside the United States of America,
unless (A) such Receivable is insured under policies of insurance
issued by insurance companies with an A.M. Best policyholders ratings
of not less than B+, but only to the extent of such insurance and less
any deductible or similar amount, (B) to the extent, but only to the
extent, such Receivable is fully backed by a letter of credit, in form
and substance satisfactory to the Required Banks and issued by (1) a
Bank, (2) a bank or other Person the long-term senior unsecured debt
of which is rated A or higher by Standard & Poor's Corporation or A or
higher by Moody's Investor Service, Inc. and is not rated lower than A
by Standard & Poor's Corporation or A by Moody's Investor Service,
Inc., or (3) a bank or other Person that is reasonably satisfactory to
the Required Banks or (C) such distributor is listed on Schedule III
hereto, (ii) which is a Subsidiary or Affiliate, (iii) which is the
subject of bankruptcy, insolvency or similar proceedings, (iv) which
the Required Banks (through the Agent) have notified the Company does
not have a satisfactory credit standing (as reasonably determined in
good faith by the Required Banks), or (v) that, at the time such
Receivable arose, was not in compliance with the credit guidelines,
standards and procedures of the Company as in effect on the date
hereof.
"Eligible Subsidiary" means any Wholly-Owned Consolidated Subsidiary of
the Company as to which an Election to Participate shall have been delivered to
the Agent and as to which an Election to Terminate shall not have been
delivered to the Agent. Each such Election to
8
15
Participate and Election to Terminate shall be duly executed on behalf of such
Wholly-Owned Consolidated Subsidiary and the Company in such number of copies
as the Agent may request. The delivery of an Election to Terminate shall
not affect any obligation of an Eligible Subsidiary theretofore incurred. The
Agent shall promptly give notice to the Banks of the receipt of any Election to
Participate or Election to Terminate.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment, including, without limitation,
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Company, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Company and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of
9
16
Interest Rate Election or (ii) an overdue amount which was a Euro-Dollar
Loan immediately before it became overdue.
"Euro-Dollar Margin" has the meaning set forth in Section 2.08(c).
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.08(c) on the basis of an Adjusted Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal London offices of ABN
AMRO Bank N.V., The First National Bank of Boston and Morgan Guaranty Trust
Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.08(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Credit Agreement" means the Credit Agreement dated as of May
13, 1993 among the Company, the banks listed on the signature pages thereof and
Morgan Guaranty Trust Company of New York, as Administrative Agent, as the same
shall have been amended, modified or supplemented as of the date hereof.
"Factorable Receivables" means Receivables of the Company and its
Subsidiaries (i) that are produced in the ordinary course of business, (ii)
that are not contingent upon any further performance, or any product guarantee,
by the Company or any of its Subsidiaries, (iii) arising from sales of
inventory outside the United States and (iv) the account debtors with respect
to which have their principal places of business outside the United States of
America.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day; provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty Trust Company
10
17
of New York on such day on such transactions as determined by the Agent.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (i)
Consolidated EBITR for such period to (ii) the sum of (A) Consolidated Interest
Expense for such period, (B) Consolidated Rental Expense for such period and
(C) dividends on preferred stock of the Company and its Consolidated
Subsidiaries for such period (other than any such dividends paid to the Company
or its Consolidated Subsidiaries).
"Fixed Rate Loans" means CD Loans, Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01(a)) or any combination of the foregoing.
"Footwear Inventory Component" means, at any date, the aggregate amount
of footwear inventories at such date that (i) are current or next season
inventories (determined on a basis consistent with the Company's existing
inventory accounting system) and (ii) were or would have been identified as
finished goods in the notes to the consolidated financial statements referred
to in Section 4.04(a).
"Group of Loans" means at any time a group of Committed Loans to the
same Borrower consisting of (i) all such Committed Loans which are Base Rate
Loans at such time or (ii) all such Committed Loans which are Fixed Rate Loans
having the same Interest Period at such time; PROVIDED that, if a Committed
Loan of any particular Bank is converted to or made as a Base Rate Loan
pursuant to Section 8.02 or 8.05, such Loan shall be included in the same Group
or Groups of Loans from time to time as it would have been in if it had not
been so converted or made.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in
any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect
11
18
thereof (in whole or in part); PROVIDED that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydro-carbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 11.03.
"Interbank Offered Rate" has the meaning set forth in Section 2.08(c).
"Interest Period" means: (1) with respect to each Euro-Dollar Loan, a
period commencing on the date of borrowing specified in the applicable Notice
of Committed Borrowing or on the date specified in the applicable Notice of
Interest Rate Election and ending one, two, three or six months thereafter, as
the Borrower may elect in the applicable notice; PROVIDED that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
(2) with respect to each CD Loan, a period commencing on the date of borrowing
specified in the applicable Notice of Committed Borrowing or on the date
specified in the applicable Notice of Interest Rate Election and ending 30,
12
19
60 or 90 days thereafter, as the Borrower may elect in the applicable
notice; PROVIDED that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on
a day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would other- wise end after the
Termination Date shall end on the Termination Date;
(3) with respect to each Money Market LIBOR Loan, the period commencing on the
date of borrowing specified in the applicable Notice of Money Market Borrowing
and ending such whole number of months thereafter (or periods of not less than
seven days, if available) as the Borrower may elect in accordance with Section
2.03; PROVIDED that:
(a) any Interest Period which would other- wise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Euro- Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would other- wise end after the
Termination Date shall end on the Termination Date; and
(4) with respect to each Money Market Absolute Rate Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Money Market Borrowing and ending such number of days thereafter (but not less
than seven days) as the Borrower may elect in accordance with Section 2.03;
PROVIDED that:
(a) any Interest Period which would other- wise end on a day
which is not a Euro-Dollar
13
20
Business Day shall be extended to the next succeeding Euro-Dollar
Business Day; and
(b) any Interest Period which would other- wise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise.
"LIBOR Auction" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the Interbank Offered Rate pursuant to
Section 2.03.
"Level I Status" exists on any date if (i) the Fixed Charge Coverage
Ratio for the Calculation Period with respect to such date is greater than 3.5
to 1.0 and (ii) the Leverage Ratio as of the last day of each fiscal quarter
included in the Calculation Period with respect to such date is less than 0.75
to 1.0.
"Level II Status" exists on any date if (i) Level I Status does not
exist, (ii) the Fixed Charge Coverage Ratio for the Calculation Period with
respect to such date is greater than 3.2 to 1.0 and (iii) the Leverage Ratio as
of the last day of each fiscal quarter included in the Calculation Period with
respect to such date is less than 0.85 to 1.0.
"Level III Status" exists on any date if neither Level I Status nor
Level II Status exists.
"Leverage Ratio" means, for any date, the ratio of (i) Consolidated
Debt on such date to (ii) Consolidated Net Worth on such date.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, the
Company or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
14
21
"Loan" means a Domestic Loan, a Euro-Dollar Loan or a Money Market Loan
and "Loans" means Domestic Loans, Euro-Dollar Loans or Money Market Loans or
any combination of the foregoing.
"Material Debt" means Debt (other than the Loans) of the Company and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal amount exceeding $1,000,000.
"Material Financial Obligations" means a principal or face amount of
Debt and/or payment obligations in respect of Derivatives Obligations of the
Company and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, exceeding in the aggregate $2,500,000 (or, in the
case of foreign exchange transactions, $5,000,000).
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $500,000.
"Money Market Absolute Rate" has the meaning set forth in Section
2.03(c).
"Money Market Absolute Rate Loan" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the Company
and the Agent; PROVIDED that any Bank may from time to time by notice to the
Company and the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate
Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of such Bank shall be deemed to refer to either or both
of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank pursuant to
a LIBOR Auction (including such a loan bearing interest at the Base Rate
pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section 2.03(c).
15
22
"Money Market Quote" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"Note Agreement" has the meaning set forth in Section 5.15.
"Notes" means promissory notes of a Borrower, substantially in the form
of Exhibit A hereto, evidencing the obligation of such Borrower to repay the
Loans made by it, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as defined
in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section
2.03(d)).
"Notice of Interest Rate Election" has the meaning set forth in Section
2.07(a).
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 11.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Factoring Transaction" means any sale or other transfer by
the Company or any of its Subsidiaries of Factorable Receivables, which sale or
transfer does not involve the creation of any recourse obligation in respect
thereof on the part of the Company or any of its Subsidiaries (other than with
respect to matters of title to, and the character (other than the
collectability) of, the Factorable Receivables so sold or transferred);
PROVIDED that the aggregate principal amount of Factorable Receivables that
may be sold or transferred pursuant to such sales or transfers during any
fiscal year of the Company may not exceed $15,000,000.
16
23
"Permitted Long-Term Debt" means (i) Debt outstanding under the Chase
Credit Agreement and (ii) Debt (other than Debt permitted under Section
5.08(b)) of the Company or any of its Subsidiaries that (A) does not mature or
have any required sinking fund or other required payments of principal (other
than (1) principal and interest on a standard mortgage basis for mortgages with
terms, at the time such mortgages are entered into, of greater than 15 years
and (2) the principal component of rental payments with respect to not more
than $5,000,000 of capitalized leases, the terms of which are not, at the time
such leases are entered into, less than five years), any mandatory redemptions
or redemptions at the option of the holder thereof or any required increases in
the rate of interest payable with respect thereto, in any such case prior to
the first anniversary of the Termination Date or (B) consists of conventional
construction loans incurred to finance the construction of real property
improvements of the Company and its Subsidiaries.
"Permitted Short-Term Debt" means Debt (other than Loans or Debt
permitted under Section 5.08(h)) of the Company or any of its Subsidiaries
having a maturity, at the time such Debt is incurred, of not more than one year
from the date such Debt is incurred.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for employees of any Person
which was at such time a member of the ERISA Group.
"Prime Rate" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Quarterly Date" means the last Euro-Dollar Business Day of each March,
June, September and December.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may
17
24
require, and "Reference Bank" means any one of such Reference Banks.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having more than 50% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing more than 50% of the aggregate unpaid
principal amount of the Loans.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Company's capital stock (except dividends payable solely in
shares of its capital stock) or (ii) any payment (other than payments for the
repurchase of shares of the Company's common stock from employees or former
employees of the Company or any of its Subsidiaries pursuant to the 1987
Employee Stock Purchase Plan, the 1991 Employee Stock Purchase Plan or the 1987
Employee Stock Option Plan, in each case as in effect on the date hereof (or
any successor plans with substantially similar provisions), in an aggregate
amount not to exceed the proceeds received by the Company after the date hereof
of sales of shares of the Company's common stock to employees of the Company
and its Subsidiaries) on account of the purchase, redemption, retirement or
acquisition of (a) any shares of the Company's capital stock or (b) any option,
warrant or other right to acquire shares of the Company's capital stock.
"Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person;
unless otherwise specified, "Subsidiary" means a Subsidiary of the Company.
"Swartz Family" means Sidney W. Swartz, his estate, his spouse, his
lineal descendants, trusts established for his, her or their benefit, the
Swartz Family Charitable Trust and The Sidney W. Swartz 1982 Family Trust.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors
Service, Inc. and not rated lower than A-1 by Standard & Poor's Corporation or
P-1 by Moody's
18
25
Investors Service, Inc., (iii) time deposits with, including certificates of
deposit issued by, (x) any office located in the United States of (A) any bank
or trust company which is organized under the laws of the United States or any
state thereof and has capital, surplus and undivided profits aggregating at
least $100,000,000 or (B) any Bank or (y) in the case of Investments made by
a Subsidiary of the Company whose principal place of business is located
outside the United States, any office located outside the United States of (A)
any bank or trust company the long-term unsecured senior debt of which is rated
AA or higher by Standard & Poor's Corporation or Aa or higher by Moody's
Investors Service, Inc. and is not rated lower than AA by Standard & Poor's
Corporation or Aa by Moody's Investors Service, Inc. or (B) any Bank, (iv)
money market funds which invest only in securities described in clauses (i),
(ii) and (iii)(x) above or (v) repurchase agreements with respect to securities
described in clause (i) above entered into with an office of a bank or trust
company meeting the criteria specified in clause (iii) above; PROVIDED in
each case that such Investment matures within one year from the date of
acquisition thereof by the Company or a Subsidiary.
"Termination Date" means May 30, 1996 or, if such day is not a
Euro-Dollar Business Day, the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in which case
the Termination Date shall be the next preceding Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed
by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), but only to the extent that
such excess represents a potential liability of a member of the ERISA Group to
the PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"Wholly-Owned Subsidiary" means any Consolidated Subsidiary all of the
shares of capital stock or other ownership interests of which (except
directors' qualifying shares and, in the case of The Outdoor Footwear Company,
shares of non-voting common stock of The Outdoor Footwear
19
26
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).
20
27
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS TO LEND. Each Bank severally agrees, on
the terms and conditions set forth in this Agreement, to make loans to the
Company or any Eligible Subsidiary pursuant to this Section from time to time
before the Termination Date in amounts such that the aggregate principal amount
of Committed Loans by such Bank outstanding shall not exceed the amount of its
Commitment. Each Borrowing under this Section shall be in an aggregate
principal amount of (i) $500,000 or any larger multiple of $100,000, in the
case of a Base Rate Borrowing, and (ii) $1,000,000 or any larger multiple of
$100,000, in the case of a Fixed Rate Borrowing (except that any such Borrowing
may be in the aggregate amount available in accordance with Section 3.02(c))
and shall be made from the several Banks ratably in proportion to their
respective Commitments. Within the foregoing limits, a Borrower may borrow
under this Section, prepay Loans to the extent permitted by Section 2.12, and
reborrow at any time before the Termination Date under this Section. The
Commitments shall terminate on the Termination Date.
SECTION 2.02. NOTICE OF COMMITTED BORROWINGS. The applicable Borrower
shall give the Agent notice, substantially in the form of Exhibit B hereto (a
"Notice of Committed Borrowing"), not later than 11:30 A.M. (New York City
time) on (x) the date of each Base Rate Borrowing, (y) the second Domestic
Business Day before each CD Borrowing and (z) the third Euro-Dollar Business
Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to bear
interest initially at the Base Rate, at a CD Rate or at a Euro-Dollar
Rate, and
(iv) in the case of a Fixed Rate Borrowing, the duration of
the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
21
28
SECTION 2.03. MONEY MARKET BORROWINGS.
(a) THE MONEY MARKET OPTION. In addition to Committed Borrowings
pursuant to Section 2.01, any Borrower may, as set forth in this Section,
request the Banks prior to the Termination Date to make offers to make Money
Market Loans to the Borrower. The Banks may, but shall have no obligation to,
make such offers and the Borrower may, but shall have no obligation to, accept
any such offers in the manner set forth in this Section.
(b) INVITATION FOR MONEY MARKET QUOTES. When a Borrower wishes to
request offers to make Money Market Loans under this Section, it shall transmit
to the Banks by telex or facsimile transmission an Invitation for Money Market
Quotes substantially in the form of Exhibit C hereto so as to be received no
later than 11:00 A.M. (New York City time) on (x) the fourth Euro-Dollar
Business Day prior to the date of Borrowing proposed therein, in the case of a
LIBOR Auction or (y) the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Company and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Invitation for Money Market Quotes for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$1,000,000 or a larger multiple of $100,000, PROVIDED that the sum of
(A) the aggregate principal amount of all Money Market Loans
outstanding and (B) the aggregate principal amount of all Permitted
Short-Term Debt outstanding shall at no time exceed $35,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth
a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than
one Interest Period in a single Invitation
22
29
for Money Market Quotes. No Invitation for Money Market Quotes shall be given
within five Euro-Dollar Business Days (or such other number of days as
the Company and the Agent may agree) of any other Invitation for Money Market
Quotes.
(c) SUBMISSION AND CONTENTS OF MONEY MARKET QUOTES. (i) Each Bank
may submit a Money Market Quote containing an offer or offers to make Money
Market Loans in response to any Invitation for Money Market Quotes. Each Money
Market Quote must comply with the requirements of this subsection (c) and must
be submitted to the Borrower by telex or facsimile transmission at its offices
specified in or pursuant to Section 11.01 not later than (x) 2:00 P.M. (New York
City time) on the third Euro- Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) 9:15 A.M. (New York City time)
on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or,
in either case, such other time or date as the Company and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Invitation for Money Market Quotes for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective). Subject to Articles III
and VI, any Money Market Quote so made shall be irrevocable except with the
written consent of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing, which shall be the proposed
date of Borrowing set forth in the corresponding Invitation for Money
Market Quotes,
(B) the principal amount of the Money Market Loan for which
each such offer is being made, which principal amount (w) may be
greater than or less than the Commitment of the quoting Bank, (x) must
be $500,000 or a larger multiple of $100,000, (y) may not exceed the
principal amount of Money Market Loans for which offers were requested
and (z) may be subject to an aggregate limitation as to the principal
amount of Money Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or below
the applicable Interbank Offered Rate (the "Money Market Margin")
offered for each such Money Market Loan, expressed as a
23
30
percentage (specified to the nearest 1/10,000 of 1%) to be added to
or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000 of 1%) (the
"Money Market Absolute Rate") offered for each such Money Market Loan,
and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related
Invitation for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D hereto or
does not specify all of the information required by subsection (c)(ii),
(B) contains qualifying, conditional or similar language,
(C) proposes terms other than or in addition to those set forth
in the applicable Invitation for Money Market Quotes, or
(D) arrives after the time set forth in subsection (c)(i).
(d) ACCEPTANCE AND NOTICE BY BORROWER. Not later than 11:00 A.M. (New
York City time) on (x) the third Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction, or (y) the proposed date of
Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Company and the Agent shall have mutually agreed and
shall have notified the Banks not later than the date of the Invitation for
Money Market Quotes for the first LIBOR Auction or Absolute Rate Auction for
which such change is to be effective), the Borrower shall notify each Bank from
which it has received a Money Market Quote of its acceptance or non-acceptance
of the offers contained in such Money Market Quote; PROVIDED that if the
Borrower shall have failed to give such notice to any such Bank with respect to
any Money Market Quote at or prior to such time, the offers contained in such
Money Market Quote shall be deemed to have been rejected by such Borrower. In
the case of acceptance, such notice (a "Notice of Money
24
31
Market Borrowing"), a copy of which shall be sent by telex or telecopy to
the Agent, shall specify the aggregate principal amount of offers for each
Interest Period that are accepted from each Bank. The Borrower may accept any
Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Invitation for Money Market Quotes,
(ii) the principal amount of each Money Market Borrowing must
be $1,000,000 or a larger multiple of $100,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the
case may be,
(iv) immediately after the making of the Money Market Loans to
be made pursuant to all accepted Money Market Quotes, the sum of (A)
the aggregate principal amount of all Money Market Loans outstanding
and (B) the aggregate principal amount of all Permitted Short-Term Debt
outstanding shall not exceed $35,000,000, and
(v) the Borrower may not accept any offer that is described in
subsection (c)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(e) ALLOCATION BY BORROWER. If offers are made by two or more Banks
with the same Money Market Margins or Money Market Absolute Rates, as the case
may be, for a greater aggregate principal amount than the amount in respect of
which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted shall
be allocated by the Borrower among such Banks as nearly as possible (in
multiples of $100,000, as the Borrower may deem appropriate) in proportion to
the aggregate principal amounts of such offers.
SECTION 2.04. NOTICE TO BANKS; FUNDING OF LOANS.
(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's share, if any, of
such
25
32
Borrowing and such Notice of Borrowing shall not thereafter be revocable
by the Borrower.
(b) Not later than 1:30 P.M. (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address specified in or pursuant to Section 11.01.
Unless the Agent determines that any applicable condition specified in Article
III has not been satisfied, the Agent will make the funds so received from the
Banks available to the Borrower at the Agent's aforesaid address.
(c) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsection (b) of this Section 2.04 and the Agent may, in
reliance upon such assumption, make available to the applicable Borrower on such
date a corresponding amount. If and to the extent that such Bank shall not have
so made such share available to the Agent, such Bank and the applicable Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the applicable Borrower until the date such amount is repaid
to the Agent, at (i) in the case of the applicable Borrower, a rate per annum
equal to the higher of the Federal Funds Rate and the interest rate applicable
thereto pursuant to Section 2.08 and (ii) in the case of such Bank, the Federal
Funds Rate. If such Bank shall repay to the Agent such corresponding amount,
such amount so repaid shall constitute such Bank's Loan included in such
Borrowing for purposes of this Agreement.
SECTION 2.05. NOTES. (a) The Loans of each Bank to each Borrower
shall be evidenced by a single Note of such Borrower payable to the order of
such Bank for the account of its Applicable Lending Office in an amount equal to
the aggregate unpaid principal amount of such Bank's Loans to such Borrower.
(b) Each Bank may, by notice to a Borrower and the Agent, request that
its Loans of a particular type to such Borrower be evidenced by a separate Note
of such Borrower in an amount equal to the aggregate unpaid principal amount of
such Loans. Each such Note shall be in substantially the form of Exhibit A
hereto with appropriate modifications to reflect the fact that it evidences
solely Loans of the relevant type. Each
26
33
reference in this Agreement to a "Note" or the "Notes" of such Bank shall be
deemed to refer to and include any or all of such Notes, as the context may
require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(a) or
3.03(a), the Agent shall forward such Note to such Bank. Each Bank shall record
the date, amount and type of each Loan made by it to each Borrower and the date
and amount of each payment of principal made with respect thereto, and may, if
such Bank so elects in connection with any transfer or enforcement of its Note
of any Borrower, endorse on the schedule forming a part thereof appropriate
notations to evidence the foregoing information with respect to each such Loan
to such Borrower then outstanding; PROVIDED that the failure of any Bank to
make any such recordation or endorsement shall not affect the obligations of any
Borrower hereunder or under the Notes. Each Bank is hereby irrevocably
authorized by each Borrower so to endorse its Notes and to attach to and make a
part of any Note a continuation of any such schedule as and when required.
SECTION 2.06. MATURITY OF LOANS. (a) Each Committed Loan shall
mature, and the principal amount thereof shall be due and payable, on the
Termination Date.
(b) Each Money Market Loan included in any Money Market Borrowing shall
mature, and the principal amount thereof shall be due and payable, on the last
day of the Interest Period applicable to such Borrowing.
SECTION 2.07. METHOD OF ELECTING INTEREST RATES. (a) The Loans
included in each Committed Borrowing shall bear interest initially at the type
of rate specified by the applicable Borrower in the applicable Notice of
Borrowing. Thereafter, the applicable Borrower may from time to time elect to
change or continue the type of interest rate borne by each Group of Loans
(subject in each case to the provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the applicable Borrower
may elect to convert such Loans to CD Loans as of any Domestic Business
Day or to Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the applicable Borrower may
elect to convert such Loans to Base Rate Loans or Euro-Dollar Loans or
elect to continue such Loans as CD Loans for an additional Interest
Period, in each case effective on the last day of the then current
Interest Period applicable to such Loans; and
27
34
(iii) if such Loans are Euro-Dollar Loans, the applicable
Borrower may elect to convert such Loans to Base Rate Loans or CD Loans
or elect to continue such Loans as Euro-Dollar Loans for an additional
Interest Period, in each case effective on the last day of the then
current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent at least three Euro-Dollar Business Days before the
conversion or continuation selected in such Notice is to be effective (unless
all of the relevant Loans are to be converted to or continued as Domestic Loans,
in which case such Notice shall be delivered to the Agent at least two Domestic
Business Days before such conversion or continuation is to be effective). A
Notice of Interest Rate Election may, if it so specifies, apply to only a
portion of the aggregate principal amount of the relevant Group of Loans;
PROVIDED that (i) such portion is allocated ratably among the Loans comprising
such Group, (ii) the portion to which such Notice applies, and the remaining
portion to which it does not apply, are (x) in the case of any portion that is
to be converted to or continued as Fixed Rate Loans, at least $1,000,000 and (y)
in the case of any portion that is to be converted to or continued as Base Rate
Loans, at least $500,000 and (iii) no more than one of such portions is other
than a multiple of $100,000.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
Notice applies;
(ii) the date on which the conversion or continuation selected
in such Notice is to be effective, which shall comply with the
applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and if, after such conversion, such Loans are to
be Fixed Rate Loans, the duration of the initial Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or
Euro-Dollar Loans for an additional Interest Period, the duration of
such additional Interest Period.
28
35
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
applicable Borrower pursuant to subsection (a) above, the Agent shall promptly
notify each Bank of the contents thereof and such Notice shall not thereafter be
revocable by the Company or the applicable Borrower. If the applicable Borrower
fails to deliver a timely Notice of Interest Rate Election to the Agent for any
Group of Fixed Rate Loans, such Loans shall be converted into Base Rate Loans on
the last day of the then current Interest Period applicable thereto.
SECTION 2.08. INTEREST RATES. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable quarterly in arrears on each
Quarterly Date and, with respect to the principal amount of any Base Rate Loan
converted to a Fixed Rate Loan, on each date a Base Rate Loan is so converted.
Any overdue principal of or interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 2% plus the Base Rate for such day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the CD Margin for such day plus the
Adjusted CD Rate applicable to such Interest Period; PROVIDED that if any CD
Loan shall, as a result of clause (2)(b) of the definition of Interest Period,
have an Interest Period of less than 30 days, such CD Loan shall bear interest
during such Interest Period at the rate applicable to Base Rate Loans during
such period. Such interest shall be payable for each Interest Period on the
last day thereof. Any overdue principal of or interest on any CD Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the sum of 2% plus the higher of (i) the sum of the CD Margin for such
day plus the Adjusted CD Rate applicable to such Loan at the date such payment
was due and (ii) the rate applicable to Base Rate Loans for such day.
"CD Margin" means, for any day, (i) if Level I Status exists on such
day, 5/8 of 1%, (ii) if Level II Status exists on such day, 3/4 of 1% and (iii)
if Level III Status exists on such day, 7/8 of 1%.
29
36
The "Adjusted CD Rate" applicable to any Interest Period means a rate
per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the rate of
interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation, any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate in effect
on such day which is payable by a member of the Bank Insurance Fund classified
as adequately capitalized and within supervisory subgroup "A" (or a comparable
successor assessment risk classification) within the meaning of 12 C.F.R. #
327.3(d) (or any successor provision) to the Federal Deposit Insurance
30
37
Corporation (or any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the United States. The
Adjusted CD Rate shall be adjusted automatically on and as of the effective
date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for
such day plus the Adjusted Interbank Offered Rate applicable to such Interest
Period. Such interest shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof.
"Euro-Dollar Margin" means, for any day, (i) if Level I Status exists on
such day, 1/2 of 1%, (ii) if Level II Status exists on such day, 5/8 of 1% and
(iii) if Level III Status exists on such day, 3/4 of 1%.
The "Adjusted Interbank Offered Rate" applicable to any Interest Period
means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "Interbank Offered Rate" applicable to any Interest Period means the
average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which deposits in dollars are offered to each of
the Euro-Dollar Reference Banks in the London or, in the case of any Reference
Bank that does not accept interbank deposits in London, New York interbank
market at approximately 11:00 A.M. (London or New York time, as the case may be)
two Euro-Dollar Business Days before the first day of such Interest Period in an
amount approximately equal to the principal amount of the Euro-Dollar Loan of
such Euro-Dollar Reference Bank to which such Interest Period is to apply and
for a period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by
31
38
reference to which the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents). The Adjusted
Interbank Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve Percentage.
(d) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the higher of (i) the Euro-Dollar Margin
for such day plus the quotient obtained (rounded upward, if necessary, to the
next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates per annum at
which one day (or, if such amount due remains unpaid more than three Euro-Dollar
Business Days, then for such other period of time not longer than six months as
the Agent may select) deposits in dollars in an amount approximately equal to
such overdue payment due to each of the Euro-Dollar Reference Banks are offered
to such Euro-Dollar Reference Bank in the London or, in the case of any
Reference Bank that does not accept interbank deposits in London, New York
interbank market for the applicable period determined as provided above by (y)
1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances
described in clause (a) or (b) of Section 8.01 shall exist, the rate applicable
to Base Rate Loans for such day) and (ii) the sum of the Euro-Dollar Margin for
such day plus the Adjusted Interbank Offered Rate applicable to such Loan at the
date such payment was due.
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the Interbank
Offered Rate for such Interest Period (determined in accordance with Section
2.08(c) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof. Any overdue
32
39
principal of or interest on any Money Market Loan shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the sum of 2%
plus the Base Rate for such day.
(f) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks by facsimile transmission, telex or cable of each rate of
interest so determined, and its determination thereof shall be conclusive in the
absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.01 shall apply.
SECTION 2.09. FACILITY FEES. The Company shall pay to the Agent for
the account of the Banks ratably in proportion to their Commitments (or, for any
day on or after the date upon which the Commitments shall have terminated in
their entirety, in proportion to the daily average of the aggregate outstanding
principal amount of their Loans) a facility fee at the rate of 3/8 of 1% per
annum. Such facility fee shall accrue (i) from and including the Effective Date
to but excluding the Termination Date (or earlier date of termination of the
Commitments in their entirety), on the daily average aggregate amount of the
Commitments (whether used or unused) and (ii) from and including such
Termination Date or earlier date of termination to but excluding the date the
Loans shall be repaid in their entirety, on the daily average of the aggregate
outstanding principal amount of the Loans. Accrued fees under this Section
shall be payable quarterly on each Quarterly Date and upon the date of
termination of the Commitments in their entirety and, if later, the date the
Loans shall be repaid in their entirety.
SECTION 2.10. MANDATORY TERMINATION OR REDUCTION OF COMMITMENTS. (a)
The Commitments shall terminate in their entirety on the Termination Date.
(b) Upon the incurrence by the Company or any of its Subsidiaries of any
Additional Permitted Long-Term Debt, the Commitments of the several Banks shall
be reduced ratably by an aggregate amount equal to the
33
40
aggregate principal amount of the Additional Permitted Long-Term Debt so
incurred.
SECTION 2.11. OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS. The
Company may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at such
time, or (ii) ratably reduce the Commitments from time to time by an aggregate
amount of at least $5,000,000 so long as, immediately after any such reduction
the aggregate principal amount of Loans outstanding shall not exceed the
Available Amount.
SECTION 2.12. OPTIONAL PREPAYMENTS. (a) Subject in the case of any
Fixed Rate Borrowing to Section 2.15, any Borrower may, upon notice to the Agent
(i) not later than 11:30 A.M. (New York City time) on the date of prepayment, in
the case of a Group of Base Rate Loans of such Borrower (or any Money Market
Borrowing of such Borrower bearing interest at the Base Rate pursuant to Section
8.01(a)), (ii) at least two Domestic Business Days prior to the date of
prepayment, in the case of a Group of CD Loans of such Borrower and (iii) at
least three Euro- Dollar Business Days prior to the date of prepayment, in the
case of a Group of Euro-Dollar Loans of such Borrower, prepay a Group of Loans
of such Borrower in whole at any time, or from time to time in part in amounts
aggregating (x) $500,000 or any larger multiple of $100,000, in the case of a
Group of Base Rate Loans or such a Money Market Borrowing or (y) $1,000,000 or a
larger multiple of $100,000, in the case of a Group of CD Loans or Euro- Dollar
Loans, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several Banks included in such
Group or Borrowing.
(b) Except as provided in subsection (a) above, Section 2.13 or Article
VI or VIII, no Borrower may prepay all or any portion of the principal amount of
any Money Market Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share, if any, of such prepayment and such notice shall not
thereafter be revocable by the applicable Borrower.
SECTION 2.13. MANDATORY PREPAYMENTS. (a) If the aggregate principal
amount of Loans outstanding on any day shall exceed the Available Amount for
such day, the Borrowers shall prepay Committed Loans (and, if, but only
34
41
if, after all Committed Loans shall have been prepaid, the aggregate principal
amount of Loans outstanding shall continue to exceed such Available Amount,
Money Market Loans), together with accrued interest thereon, to the extent
necessary to cause the aggregate principal amount of Loans outstanding
immediately after such prepayment to be less than or equal to such Available
Amount.
(b) Each prepayment of Loans required by this Section 2.13 shall be
made with respect to such Group or Groups of Loans and (subject to the
limitations set forth in subsection (a) above) such Money Market Borrowing or
Borrowings as the Borrowers may specify by notice to the Agent at or before the
time of such prepayment and shall be applied to prepay Loans comprising each
such Group of Loans or Loans comprising each such Money Market Borrowing pro
rata; PROVIDED that (i) subject to the limitations set forth in subsection (a)
above, the Borrowers shall specify Groups of Loans and Money Market Borrowings
for prepayment so as to minimize the amounts payable by the Borrowers pursuant
to Section 2.15 with respect to such prepayment and (ii) if no such timely
specification is given by the Borrowers, such prepayment shall be allocated
first to Base Rate Loans, if any, second to such Group or Groups of Fixed Rate
Loans as the Agent may determine, until all such Groups of Fixed Rate Loans
shall have been repaid in full, and third to such Money Market Borrowing or
Borrowings as the Agent may determine.
SECTION 2.14. GENERAL PROVISIONS AS TO PAYMENTS. (a) The Borrowers
shall make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 12:00 Noon (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the Agent
at its address referred to in Section 11.01. The Agent will promptly distribute
to each Bank its ratable share of each such payment received by the Agent for
the account of the Banks. Whenever any payment of principal of, or interest on,
the Domestic Loans or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next
35
42
succeeding Euro-Dollar Business Day. If the date for any payment of principal
is extended by operation of law or otherwise, interest thereon shall be payable
for such extended time.
(b) Unless the Agent shall have received notice from a Borrower prior
to the date on which any payment is due from such Borrower to the Banks
hereunder that such Borrower will not make such payment in full, the Agent may
assume that such Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent that such Borrower shall not have so made such
payment, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Agent, at the Federal Funds Rate.
SECTION 2.15. FUNDING LOSSES. If a Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a Base Rate Loan (pursuant to Article II, VI or VIII or otherwise)
on any day other than the last day of an Interest Period applicable thereto, or
the last day of an applicable period fixed pursuant to Section 2.08(d), or if a
Borrower fails to borrow or prepay any Fixed Rate Loans after notice has been
given to any Bank in accordance with Section 2.04(a) or 2.12(b), the Company
shall reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any such loss incurred in
obtaining, liquidating or employing deposits from third parties, but excluding
loss of margin for the period after any such payment or conversion or failure to
borrow or prepay, PROVIDED that such Bank shall have delivered to the Company a
certificate as to the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
SECTION 2.16. COMPUTATION OF INTEREST AND FEES. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
36
43
SECTION 2.17. JUDGMENT CURRENCY. If for the purpose of obtaining
judgment in any court it is necessary to convert a sum due from any Borrower
hereunder or under any of the Notes in United States dollars ("dollars") into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Agent could purchase dollars with
such other currency at the Agent's New York office on the Domestic Business Day
preceding that on which final judgment is given. The obligations of each
Borrower in respect of any sum due to any Bank or the Agent hereunder or under
any Note shall, notwithstanding any judgment in a currency other than dollars,
be discharged only to the extent that on the Domestic Business Day following
receipt by such Bank or the Agent (as the case may be) of any sum adjudged to be
so due in such other currency such Bank or the Agent (as the case may be) may in
accordance with normal banking procedures purchase dollars with such other
currency; if the amount of dollars so purchased is less than the sum originally
due to such Bank or the Agent, as the case may be, in dollars, each Borrower
agrees, to the fullest extent that it may effectively do so, as a separate
obligation and notwithstanding any such judgment, to indemnify such Bank or the
Agent, as the case may be, against such deficiency, and if the amount of dollars
so purchased exceeds (a) the sum originally due to any Bank or the Agent, as the
case may be, and (b) any amounts shared with other Banks as a result of
allocations of such excess as a disproportionate payment to such Bank under
Section 11.04, such Bank or the Agent, as the case may be, agrees to remit such
excess to the appropriate Borrower.
SECTION 2.18. FOREIGN SUBSIDIARY COSTS. (a) If the cost to any Bank
of making or maintaining any Loan to an Eligible Subsidiary is increased, or the
amount of any sum received or receivable by any Bank (or its Applicable Lending
Office) is reduced by an amount deemed by such Bank to be material, by reason of
the fact that such Eligible Subsidiary is incorporated in, or conducts business
in, a jurisdiction outside the United States of America, the Company shall
indemnify such Bank for such increased cost or reduction within 15 days after
demand by such Bank (with a copy to the Agent). A certificate of such Bank
claiming compensation under this subsection (a) and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error.
(b) Each Bank will promptly notify the Company and the Agent of any
event of which it has knowledge that will entitle such Bank to additional
interest or payments pursuant to subsection (a) and will designate a different
37
44
Applicable Lending Office, if, in the judgment of such Bank, such designation
will avoid the need for, or reduce the amount of, such compensation and will not
be otherwise disadvantageous to such Bank.
ARTICLE III
CONDITIONS
SECTION 3.01. CLOSING. The closing hereunder shall occur upon receipt
by the Agent of the following, each dated the Closing Date unless otherwise
indicated:
(a) a duly executed Note of the Company for the account of each Bank
dated on or before the Closing Date complying with the provisions of Section
2.05;
(b) an opinion of Ropes & Gray, counsel for the Company, substantially
in the form of Exhibit E hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required Banks may reasonably
request;
(c) an opinion of Davis Polk & Wardwell, special counsel for the Agent,
substantially in the form of Exhibit F hereto and covering such additional
matters relating to the transactions contemplated hereby as the Required Banks
may reasonably request;
(d) evidence satisfactory to the Agent that all "Loans" and
"Acceptances" (in each case as defined in the Existing Credit Agreement)
outstanding under the Existing Credit Agreement and all other amounts payable by
the Company or any "Borrower" (as so defined) thereunder shall have been paid in
full and that the Commitments (as so defined) thereunder shall have been
terminated in their entirety;
(e) evidence satisfactory to the Required Banks that the Chase Credit
Agreement shall have been amended, in a manner satisfactory in form and
substance to the Agent and the Required Banks, so as to permit the Company and
the Eligible Subsidiaries to enter into this Agreement and to borrow hereunder,
and to modify the covenants, events of default and other terms and conditions of
the Chase Credit Agreement in a manner satisfactory to the Required Banks; and
(f) all documents the Agent may reasonably request relating to the
existence of the Company, the corporate authority for and the validity of this
Agreement
38
45
and the Notes, and any other matters relevant hereto, all in form and
substance satisfactory to the Agent.
The Agent shall promptly notify the Company and the Banks of the Closing
Date, and such notice shall be conclusive and binding on all parties hereto.
SECTION 3.02. BORROWINGS. The obligation of any Bank to make a Loan
on the occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) the fact that the Closing Date shall have occurred on or
prior to June 30, 1994;
(b) receipt by the Agent of a Notice of Borrowing as required
by Section 2.02 or 2.03, as the case may be;
(c) the fact that, immediately before and after such Borrowing,
the aggregate outstanding principal amount of the Loans shall not
exceed the Available Amount;
(d) the fact that, immediately before and after such Borrowing,
no Default shall have occurred and be continuing; and
(e) the fact that the representations and warranties of the
Borrowers contained in this Agreement shall be true on and as of the
date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrowers on the date of such Borrowing as to the facts
specified in clauses (c), (d) and (e) of this Section.
SECTION 3.03. FIRST BORROWING BY EACH ELIGIBLE SUBSIDIARY. The
obligation of each Bank to make a Loan on the occasion of the first Borrowing by
each Eligible Subsidiary is subject to the satisfaction of the following further
conditions:
(a) receipt by the Agent for the account of each Bank of a duly
executed Note of such Eligible Subsidiary dated on or before the date
of such Borrowing complying with the provisions of Section 2.05;
(b) receipt by the Agent of an opinion of counsel for such
Eligible Subsidiary acceptable to the Agent, substantially in the form
of
39
46
Exhibit I hereto and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may
reasonably request; and
(c) receipt by the Agent of all documents which it may
reasonably request relating to the existence of such Eligible
Subsidiary, the corporate authority for and the validity of the
Election to Participate of such Eligible Subsidiary, this Agreement and
the Notes of such Eligible Subsidiary, and any other matters relevant
thereto, all in form and substance satisfactory to the Agent.
The opinion referred to in clause (b) above shall be dated no more than
five Euro-Dollar Business Days before the date of the first Borrowing by such
Eligible Subsidiary hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants that:
SECTION 4.01. CORPORATE EXISTENCE AND POWER. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the Company of this
Agreement and its Notes are within the Company's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official (other
than disclosure, if any, thereof, and filing, if any, of a copy hereof with the
Securities and Exchange Commission, required by the Securities Act of 1933 or
the Securities Exchange Act of 1934, in each case as amended) and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Company or
of any agreement, judgment, injunction, order, decree or other instrument
binding upon the Company or result in the
40
47
creation or imposition of any Lien on any asset of the Company or any of its
Subsidiaries.
SECTION 4.03. BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of the Company and its Notes, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
the Company.
SECTION 4.04. FINANCIAL INFORMATION.
(a) The consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of December 31, 1993 and the related consolidated statements of
operations, changes in stockholders' equity and cash flow for the fiscal year
then ended, reported on by Deloitte & Touche and set forth in the Company's 1993
Form 10-K, a copy of which has been delivered to each of the Banks, fairly
presented, in conformity with generally accepted accounting principles, the
consolidated financial position of the Company and its Consolidated Subsidiaries
as of such date and their consolidated results of operations and cash flows for
such fiscal year.
(b) Since December 31, 1993 there has been no material adverse change
in the business, financial position or results of operations of the Company and
its Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. LITIGATION. There is no action, suit or proceeding
pending against, or to the knowledge of the Company threatened against or
affecting, the Company or any of its Subsidiaries before any court or arbitrator
or any governmental body, agency or official in which there is a reasonable
possibility of an adverse decision which could materially adversely affect the
business, consolidated financial position or consolidated results of operations
of the Company and its Consolidated Subsidiaries, considered as a whole, or
which in any manner draws into question the validity of this Agreement or the
Notes.
SECTION 4.06. COMPLIANCE WITH ERISA. Each member of the ERISA Group
has fulfilled its obligations under the minimum funding standards of ERISA and
the Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the currently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect
41
48
of any Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security under ERISA or the Internal Revenue Code
or (iii) incurred any liability under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. ENVIRONMENTAL MATTERS . In the ordinary course of its
business, the Company conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Company and its
Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, the Company has reasonably concluded that such associated
liabilities and costs, including the costs of compliance with Environmental
Laws, are unlikely to have a material adverse effect on the business, financial
condition, results of operations or prospects of the Company and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.08. TAXES. United States Federal income tax returns of the
Company and its Subsidiaries have been closed through the fiscal year ended
December 31, 1989. The Company and its Subsidiaries have filed all United
States Federal income tax returns and all other material tax returns which are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Company or any Subsidiary,
except for any such taxes being diligently contested in good faith by
appropriate proceedings. The charges, accruals and reserves on the books of the
Company and its Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Company, adequate.
SECTION 4.09. SUBSIDIARIES. Each of the Company's Subsidiaries is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of
42
49
organization, and has all corporate or other powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.10. NOT AN INVESTMENT COMPANY. The Company is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.11. FULL DISCLOSURE. All information heretofore furnished
by the Company to the Agent or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Company to the Agent or any Bank will be,
true and accurate in all material respects on the date as of which such
information is stated or certified. The Company has disclosed to the Banks in
writing any and all facts, other than general economic conditions, which
materially and adversely affect or may affect (to the extent the Company can now
reasonably foresee) the business, operations or financial condition of the
Company and its Consolidated Subsidiaries, considered as a whole, or the ability
of the Company to perform its obligations under this Agreement and the Notes.
ARTICLE V
COVENANTS
The Company agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. INFORMATION. The Company will deliver to each of the
Banks:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Company, consolidated and
consolidating balance sheets of the Company and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
consolidated and consolidating statements of operations and
consolidated statements of changes in stockholders' equity and cash
flows for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, (x) in the case of the
consolidated statements, all reported on in a manner acceptable to the
Securities and Exchange
43
50
Commission by Deloitte & Touche or other independent public
accountants of nationally recognized standing, and (y) in the case of
the consolidating statements, all certified as to fairness of
presentation, generally accepted accounting principles and
consistency by the chief financial officer or the chief accounting
officer of the Company;
(b) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Company, consolidated and consolidating balance sheets of the Company
and its Consolidated Subsidiaries as of the end of such quarter and the
related consolidated and consolidating statements of operations and
consolidated statements of changes in stockholders' equity and cash
flows for such quarter and for the portion of the Company's fiscal year
ended at the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding quarter and the
corresponding portion of the Company's previous fiscal year, all
certified (subject to normal year-end adjustments and the non-inclusion
of notes permitted by the applicable regulations of the Securities and
Exchange Commission to be excluded from quarterly reports filed on Form
10-Q) as to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the chief
accounting officer of the Company;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the chief financial officer, treasurer or the chief accounting officer
of the Company (i) setting forth in reasonable detail the calculations
required to establish whether the Company was in compliance with the
requirements of Sections 5.07 through 5.11, inclusive, and Sections
5.13 and 5.15 on the date of such financial statements, (ii) setting
forth in reasonable detail the calculations of the Borrowing Base and
the Available Amount as of the date of such financial statements and
whether the Company is thereby required to take or cause to be taken
any action to comply with Section 2.13 and (iii) stating whether any
Default exists on the date of such certificate and, if any Default then
exists, setting forth the details thereof and
44
51
the action which the Company is taking or proposes to take with
respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a certificate of the firm
of independent public accountants which reported on such statements (i)
whether anything has come to their attention to cause them to believe
that any Default existed on the date of such statements and (ii)
confirming the calculations set forth in the officer's certificate
delivered simultaneously therewith pursuant to clause (c) above;
(e) within 21 days after the end of each monthly accounting
period of the Company, a certificate of the chief financial officer,
treasurer or the chief accounting officer of the Company setting forth
calculations in reasonable detail of the Company's best estimate of the
Borrowing Base and the Available Amount as of the end of such month and
whether the Company is required to take or cause to be taken any action
to comply with Section 2.13;
(f) within five days after any officer of the Company obtains
knowledge of any Default, if such Default is then continuing, a
certificate of the chief financial officer or the chief accounting
officer of the Company setting forth the details thereof and the action
which the Company is taking or proposes to take with respect thereto;
(g) promptly upon the mailing thereof to the shareholders of
the Company generally, copies of all financial statements, reports and
proxy statements so mailed;
(h) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which the Company shall
have filed with the Securities and Exchange Commission;
(i) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a
45
52
termination of such Plan under Title IV of ERISA, or knows that the
plan administrator of any Plan has given or is required to give notice
of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii)
receives notice of complete or partial withdrawal liability under Title
IV of ERISA or notice that any Multiemployer Plan is in reorganization,
is insolvent or has been terminated, a copy of such notice; (iii)
receives notice from the PBGC under Title IV of ERISA of an intent to
terminate, impose liability (other than for premiums under Section 4007
of ERISA) in respect of, or appoint a trustee to administer any Plan, a
copy of such notice; (iv) applies for a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code, a copy of such
application; (v) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and other information
filed with the PBGC; (vi) gives notice of withdrawal from any Plan
pursuant to Section 4063 of ERISA, a copy of such notice; or (vii)
fails to make any payment or contribution to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement or makes any amendment to
any Plan or Benefit Arrangement which has resulted or could result in
the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting
officer of the Company setting forth details as to such occurrence and
action, if any, which the Company or applicable member of the ERISA
Group is required or proposes to take; and
(j) from time to time such additional information regarding the
financial position or business of the Company and its Subsidiaries as
the Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. PAYMENT OF OBLIGATIONS. The Company will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity or in accordance with customary trade practices, all their respective
material obligations and liabilities, including, without limitation, tax
liabilities, except where the same may be contested in good faith by appropriate
proceedings, and will maintain, and will cause each Subsidiary to maintain, in
accordance with generally
46
53
accepted accounting principles, appropriate reserves for the accrual of any of
the same.
SECTION 5.03. MAINTENANCE OF PROPERTY; INSURANCE. (a) The Company
will maintain, and will cause each Subsidiary to maintain, all property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted.
(b) The Company will, and will cause each of its Subsidiaries to,
maintain (either in the name of the Company or in such Subsidiary's own name)
with financially sound and responsible insurance companies, insurance on all
their respective properties in at least such amounts and against at least such
risks (and with such risk retention) as are (i) insured against under the
policies of insurance of the Company and its Subsidiaries set forth on the
schedule previously provided by the Company to the Banks or (ii) usually insured
against in the same general area by companies of established repute engaged in
the same or a similar business; and will furnish to the Banks, upon request from
the Agent, information presented in reasonable detail as to the insurance so
carried.
SECTION 5.04. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The
Company will continue, and will cause each Subsidiary to continue, to engage in
business of the same general type as now conducted by the Company and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and
will cause each Subsidiary to preserve, renew and keep in full force and effect
their respective corporate existence and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business; PROVIDED
that nothing in this Section 5.04 shall prohibit (i) the merger or consolidation
of a Subsidiary with or into another Person if the corporation surviving such
consolidation or merger is a Wholly-Owned Subsidiary or the merger of a
Subsidiary into the Company if, in each case, after giving effect thereto, no
Default shall have occurred and be continuing, (ii) the termination of the
corporate existence of any Subsidiary if such termination is not materially
disadvantageous to the Banks and the Company in good faith determines that such
termination is in the best interest of the Company or (iii) a sale of capital
stock of a Subsidiary permitted under Section 5.12(ii).
SECTION 5.05. COMPLIANCE WITH LAWS. The Company will comply, and
cause each Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations and requirements of governmental
authorities (including, without limitation, Environmental Laws and ERISA and the
rules and regulations
47
54
thereunder) except where the necessity of compliance therewith is contested in
good faith by appropriate proceedings.
SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS. The Company
will keep, and will cause each Subsidiary to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities; and will permit,
and will cause each Subsidiary to permit, representatives of any Bank at such
Bank's expense to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, all at such reasonable
times, upon reasonable notice and as often as may reasonably be desired.
SECTION 5.07. FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage
Ratio for any period of four consecutive fiscal quarters will not be less than
(a) 2.0 to 1.0 for any such period ending on or prior to September 30, 1994 and
(ii) 2.25 to 1.0 for any such period ending thereafter.
SECTION 5.08. DEBT. The Company will not, and will not permit any of
its Subsidiaries to, incur or at any time be liable with respect to any Debt
except:
(a) Debt outstanding under this Agreement and the Notes,
PROVIDED
that the aggregate outstanding principal amount of all Loans
to Eligible Subsidiaries shall at no time exceed $20,000,000;
(b) Debt of the Company outstanding on May 13, 1993 and
identified on Schedule I and extensions, renewals and refinancings
thereof, PROVIDED that no such extension, renewal or refinancing shall
increase the principal amount of such Debt, shorten the maturity
thereof or accelerate the amortization thereof;
(c) Debt of any of the Company's Subsidiaries owing to the
Company or any of its Wholly-Owned Subsidiaries permitted by Section
5.11;
(d) Debt of the Company owing to Wholly-Owned Subsidiaries of
the Company;
48
55
(e) Guarantees by the Company or any of its Subsidiaries of
Debt of employees of the Company or any of its Wholly-Owned
Subsidiaries, in an aggregate principal amount at any time outstanding
not to exceed $1,000,000;
(f) Debt of the Company or any of its Wholly- Owned
Subsidiaries owing to a Subsidiary of the Company incurred as a result
of the transfer of funds from an account under the control of such
Subsidiary to an account under the control of the Company or such
Wholly-Owned Subsidiary in connection with the Company's cash
management program;
(g) Permitted Short-Term Debt of the Company in an aggregate
principal amount at any time outstanding not to exceed $20,000,000;
(h) Debt denominated in currencies other than United States
dollars and having a maturity, at the time such Debt is incurred, of
not more than one year from the date such Debt is incurred in an
aggregate principal amount at the time of incurrence of any such Debt
(the dollar equivalent of all Debt outstanding at the time of any such
incurrence being recalculated as of the time of such incurrence on the
basis of exchange rates then in effect) not to exceed the equivalent of
$18,000,000;
(i) Permitted Long-Term Debt of the Company in an aggregate
principal amount at any time outstanding not to exceed the Applicable
Percentage of Consolidated Net Worth; and
(j) Debt not otherwise permitted under the foregoing clauses of
this Section in an aggregate principal amount not to exceed $5,000,000
at any time outstanding.
SECTION 5.09. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Consolidated
Tangible Net Worth will at no time be less than the sum of (i) $88,000,000 and
(ii) 80% of the sum of (A) Aggregate Positive Consolidated Net Income and (B)
the net cash proceeds of all issuances by the Company of shares of its common
stock after the date hereof. For purposes of this Section, "Aggregate Positive
Consolidated Net Income" means the aggregate amount of consolidated net income
for each fiscal quarter commencing on or after December 31, 1993 and ending on
or prior to the date as of which compliance with this Section 5.09 is determined
(with no deduction for consolidated net losses for any such fiscal quarter).
49
56
SECTION 5.10. RESTRICTED PAYMENTS. Neither the Company nor any
Subsidiary will declare or make any Restricted Payment unless, after giving
effect thereto, the aggregate of all Restricted Payments declared or made
subsequent to December 31, 1990 does not exceed 25% of consolidated net income
(less consolidated net loss, if any) of the Company and its Consolidated
Subsidiaries for the period from January 1, 1991 through the end of the
Company's then most recent fiscal quarter (treated for this purpose as a single
accounting period). Nothing in this Section 5.10 shall prohibit the payment of
any dividend or distribution within 60 days after the declaration thereof if
such declaration was not prohibited by this Section 5.10.
SECTION 5.11. INVESTMENTS. Neither the Company nor any Subsidiary
will make or acquire any Investment in any Person other than:
(a) Investments in Persons which immediately before and after
giving effect to such Investment are Subsidiaries of the Company, if,
immediately thereafter, the aggregate amount of all such Investments
made after the date hereof does not exceed $25,000,000 at any one time
outstanding;
(b) Temporary Cash Investments;
(c) loans or advances to current employees of the Company or
such Consolidated Subsidiary having a maturity of less than one year in
an aggregate principal amount at any time outstanding not to exceed
$1,000,000;
(d) Investments the sole consideration for which is newly
issued common stock of the Company or newly issued preferred stock of
the Company that is not subject to mandatory redemption or redemption
at the option of the holder before the fourth anniversary of the date
of issuance thereof;
(e) Investments consisting of Debt permitted under Section
5.08(d) or 5.08(f); and
(f) any Investment not otherwise permitted by the foregoing
clauses of this Section if, immediately after such Investment is made
or acquired, the aggregate amount of all Investments permitted by this
clause (f) does not exceed $10,000,000 at any one time outstanding.
50
57
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;
51
58
(f) any Lien arising out of the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section 5.13, PROVIDED that such Debt is not
increased and is not secured by any additional assets;
(g) Liens arising in the ordinary course of its business which
(i) do not secure Debt or Derivative Obligations, (ii) do not secure
any obligation in an amount exceeding $10,000,000 and (iii) do not in
the aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business;
(h) Liens on assets of Subsidiaries securing Debt owing to the
Company or to Wholly- Owned Subsidiaries permitted by Section 5.08;
(i) Liens on cash and cash equivalents securing Derivative
Obligations, PROVIDED that the aggregate amount of cash and cash
equivalents subject to such Liens may at no time exceed $5,000,000;
(j) Liens on Factorable Receivables arising in connection with
and as part of the sale or transfer of such Factorable Receivables
pursuant to Permitted Factoring Transactions; and
(k) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt in an aggregate principal or face amount at
any time outstanding not to exceed $5,000,000.
SECTION 5.14. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. The
Company will not (i) consolidate or merge with or into any other Person or (ii)
sell, lease or otherwise transfer, directly or indirectly in one transaction or
a series of related transactions, all or any substantial part of the assets of
the Company and its Subsidiaries, taken as a whole, to any other Person;
PROVIDED that a Subsidiary of the Company may merge with or liquidate into the
Company or a Wholly-Owned Subsidiary of the Company if (A) the Company or such
Wholly-Owned Subsidiary, as the case may be, is the corporation surviving such
merger or liquidation and (B) immediately after giving effect to such merger, no
Default shall have occurred and be continuing.
SECTION 5.15. RESTRICTIONS ON PREPAYMENTS OF AND AMENDMENTS TO CERTAIN
DEBT. (a) Except with the
52
59
proceeds of the issuance by the Company of (i) Permitted Long-Term Debt the
average-life-to maturity of which is greater than that of the Debt being repaid
or prepaid, (ii) shares of its common stock or (iii) in the case of Debt
outstanding under any of the Note Agreements, each dated as of September 30,
1989 and between the Company and the Purchaser named in Schedule I thereto (each
a "Note Agreement"), refinancing thereof permitted under Section 5.08(b), the
Company will not, and will not permit any of its Subsidiaries to, voluntarily
repay or prepay (A) any Debt outstanding under any Note Agreement, (B) any April
1994 Private Placement Debt or (C) any Debt outstanding under the Chase Credit
Agreement, PROVIDED that the Company may voluntarily repay or prepay Debt
outstanding under the Chase Credit Agreement in a cumulative aggregate amount
not in excess of $5,000,000 without regard to the source of funds used for such
repayment or prepayment so long as, immediately before and after any such
repayment or prepayment, there shall be no Loans outstanding hereunder.
(b) The Company will not consent to (i) any amendment of the amount or
date of any required repayment or prepayment of any Debt outstanding under any
Note Agreement or the Chase Credit Agreement or of any April 1994 Private
Placement Debt, except for an amendment of any such date to a date on or after
the earlier of (A) the date of such required repayment or prepayment as in
effect prior to such amendment and (B) the first anniversary of the Termination
Date or (ii) any amendment, modification, supplement or waiver of the covenants
or events of default contained in the Chase Credit Agreement in any manner that
(A) causes such covenants or events of default to include greater or more
stringent restrictions on the Company and (B) could adversely affect the Banks.
SECTION 5.16. TRANSACTIONS WITH AFFILIATES. The Company will not, and
will not permit any Subsidiary to, directly or indirectly, pay any funds to or
for the account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate; PROVIDED, HOWEVER, that the foregoing provisions of this Section
5.16 shall not prohibit (a) the Company from declaring or paying any lawful
dividend so long as, after giving effect thereto, no Default shall have occurred
and be continuing, (b) the Company or any Subsidiary from making sales to or
purchases from any Affiliate and, in
53
60
connection therewith, extending credit or making payments, or from making
payments for services rendered by any Affiliate, if such sales or purchases are
made or such services are rendered in the ordinary course of business and on
terms and conditions at least as favorable to the Company or such Subsidiary as
the terms and conditions which would apply in a similar transaction with a
Person not an Affiliate, (c) the Company or any Subsidiary from making payments
of principal, interest and premium on any Debt of the Company or such Subsidiary
held by an Affiliate if the terms of such Debt are substantially as favorable to
the Company or such Subsidiary as the terms which could have been obtained at
the time of the creation of such Debt from a lender which was not an Affiliate
and (d) the Company or any Subsidiary from participating in, or effecting any
transaction in connection with, any joint enterprise or other joint arrangement
with any Affiliate if the Company or such Subsidiary participates in the
ordinary course of its business and on a basis no less advantageous than the
basis on which such Affiliate participates.
SECTION 5.17. USE OF PROCEEDS. The proceeds of the Loans made under
this Agreement will be used by the Borrowers for general corporate purposes,
including working capital. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U.
ARTICLE VI
DEFAULTS
SECTION 6.01. EVENTS OF DEFAULT. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) any principal of any Loan shall not be paid when due, or
any interest, any fees or any other amount payable hereunder shall not
be paid within two Domestic Business Days of the due date thereof;
(b) the Company shall fail to observe or perform any covenant
contained in Sections 5.07 to 5.15, inclusive, and 5.17;
(c) any Borrower shall fail to observe or perform any covenant
or agreement contained in this Agreement (other than those covered by
54
61
clause (a) or (b) above) for 30 days after written notice thereof
has been given to the Company by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement
made by any Borrower in this Agreement or in any certificate, financial
statement or other document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect when made (or
deemed made);
(e) the Company or any Subsidiary shall fail to make any
payment in respect of any Material Financial Obligation when due or
within any applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or, with
the giving of notice or lapse of time or both, would enable) the holder
of such Debt or any Person acting on such holder's behalf to accelerate
the maturity thereof;
(g) the Company or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to authorize any of
the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Company or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other
55
62
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Company or
any Subsidiary under the federal bankruptcy laws as now or hereafter
in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $500,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV
of ERISA to terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $500,000;
(j) a judgment or order for the payment of money in excess of
$1,000,000 shall be rendered against the Company or any Subsidiary and
such judgment or order shall continue unsatisfied and unstayed for a
period of (i) in the case of a judgment or order rendered by a court,
arbitrator or governmental authority located in the United States, 10
days or (ii) in the case of a judgment or order rendered by a court,
arbitrator or governmental authority located outside the United States,
30 days; or
(k) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
(other than the Swartz Family) shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) of 50% or more of the outstanding
shares of common stock of the Company or 20% or more of the voting
power to elect a majority of the
56
63
board of directors of the Company; or the Swartz Family shall cease to
have beneficial ownership of 50% of the outstanding shares of common
stock of the Company and 51% of the ordinary voting power to elect a
majority of the board of directors of the Company; or during any period
of twelve consecutive calendar months, individuals who were directors
of the Company on the first day of such period shall cease to
constitute a majority of the board of the directors of the Company;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Company
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate principal
amount of the Loans, by notice to the Company declare the Notes (together with
accrued interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by each Borrower; PROVIDED that in
the case of any of the Events of Default specified in clause (g) or (h) above
with respect to any Borrower, without any notice to any Borrower or any other
act by the Agent or the Banks, the Commitments shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by each Borrower.
SECTION 6.02. NOTICE OF DEFAULT. The Agent shall give notice to the
Company under Section 6.01(c) promptly upon being requested to do so by any Bank
and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. APPOINTMENT AND AUTHORIZATION. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the Notes as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.02. AGENT AND AFFILIATES. Morgan Guaranty Trust Company of
New York shall have the same
57
64
rights and powers under this Agreement as any other Bank and may exercise or
refrain from exercising the same as though it were not the Agent, and Morgan
Guaranty Trust Company of New York and its affiliates may accept deposits
from, lend money to, and generally engage in any kind of business with any
Borrower or any Subsidiary or affiliate of any Borrower as if it were not the
Agent hereunder.
SECTION 7.03. ACTION BY AGENT. The obligations of the Agent hereunder
are only those expressly set forth herein. Without limiting the generality of
the foregoing, the Agent shall not be required to take any action with respect
to any Default, except as expressly provided in Article VI.
SECTION 7.04. CONSULTATION WITH EXPERTS. The Agent may consult with
legal counsel (who may be counsel for any Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. LIABILITY OF AGENT. Neither the Agent nor any of its
affiliates or any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent
nor any of its affiliates or any of their respective directors, officers, agents
or employees shall be responsible for or have any duty to ascertain, inquire
into or verify (i) any statement, warranty or representation made in connection
with this Agreement or any Borrowing hereunder; (ii) the performance or
observance of any of the covenants or agreements of any Borrower; (iii) the
satisfaction of any condition specified in Article III, except receipt of items
required to be delivered to the Agent; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Notes or any other instrument or writing
furnished in connection herewith. The Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement or other
writing (which may be a bank wire, facsimile transmission, telex or similar
writing) believed by it to be genuine or to be signed by the proper party or
parties.
SECTION 7.06. INDEMNIFICATION. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent, its affiliates and their respective
directors, officers, agents and employees (to the extent
58
65
not reimbursed by the Borrowers) against any cost, expense (including counsel
fees and disbursements), claim, demand, action, loss or liability (except such
as result from such indemnitees' gross negligence or willful misconduct) that
such indemnitees may suffer or incur in connection with this Agreement or any
action taken or omitted by such indemnitees hereunder.
SECTION 7.07. CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Banks and the Company. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent with the consent of the Borrower, which consent shall not be unreasonably
withheld. If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Banks and without the consent of the Borrower, appoint a successor
Agent, which shall be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $100,000,000. Upon the acceptance of its
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
SECTION 7.09. AGENT'S FEE. The Company shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon between
the Company and the Agent.
59
66
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR
UNFAIR. If on or prior to the first day of any Interest Period for any Fixed
Rate Borrowing:
(a) the Agent is advised by the Reference Banks that deposits
in dollars (in the applicable amounts) are not being offered to the
Reference Banks in the relevant market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks having 50% or
more of the aggregate amount of the Commitments advise the Agent that
the Adjusted CD Rate or the Adjusted Interbank Offered Rate, as the
case may be, as determined by the Agent, will not adequately and fairly
reflect the cost to such Banks of funding their CD Loans or Euro-Dollar
Loans, as the case may be, for such Interest Period,
the Agent shall forthwith give notice thereof to the Company and the Banks,
whereupon until the Agent notifies the Company that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be, shall be suspended, and
(ii) each outstanding CD Loan or Euro-Dollar Loan, as the case may be,
shall be converted into a Base Rate Loan on the last day of the then current
Interest Period applicable thereto. If the applicable Borrower shall have
received such a notice from the Agent, unless the applicable Borrower notifies
the Agent at least two Domestic Business Days before the date of any Fixed Rate
Borrowing for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a
Committed Borrowing, such Borrowing shall instead be made as a Base Rate
Borrowing, and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR
Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear
interest for each day from and including the first day to but excluding the last
day of the Interest Period applicable thereto at the Base Rate for such day.
SECTION 8.02. ILLEGALITY. If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any
60
67
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for any Bank (or such Applicable
Lending Office) to make, maintain or fund its Euro-Dollar Loans or Money Market
LIBOR Loans to any Borrower pursuant to this Agreement and such Bank shall so
notify the Agent, the Agent shall forthwith give notice thereof to the other
Banks and the Company, whereupon until such Bank notifies the Company and the
Agent that the circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans or to convert outstanding
Loans into Euro-Dollar Loans, as the case may be, shall be suspended. Before
giving any notice with respect to Euro-Dollar Loans or Money Market LIBOR Loans
to the Agent pursuant to this Section, such Bank shall designate a different
Euro-Dollar Lending Office or Money Market Lending Office if such designation
will avoid the need for giving such notice and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. If such notice is given with
respect to Euro-Dollar Loans or Money Market LIBOR Loans, each Euro-Dollar Loan
or, in the circumstances described in clause (b) below, Money Market LIBOR Loan
of such Bank then outstanding shall be converted to a Base Rate Loan either (a)
in the case of Euro-Dollar Loans only, on the last day of the then current
Interest Period applicable to such Euro-Dollar Loan, if such Bank may lawfully
continue to maintain and fund such Loan to such day, or (b) immediately, if such
Bank shall determine that it may not lawfully continue to maintain and fund such
Euro-Dollar Loan or Money Market LIBOR Loan to such day.
SECTION 8.03. INCREASED COST AND REDUCED RETURN. (a) If on or
after (x) the date hereof, in the case of any Committed Loan or any obligation
to make Committed Loans or (y) the date of the related Money Market Quote, in
the case of a Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency, shall impose, modify
or deem applicable any reserve (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System, but
excluding (i)
61
68
with respect to any CD Loan any such requirement included in an applicable
Domestic Reserve Percentage and (ii) with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve Percentage),
special deposit, insurance assessment (excluding, with respect to any CD Loan,
any such requirement reflected in an applicable Assessment Rate) or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Bank (or its Applicable Lending Office) or shall impose
on any Bank (or its Applicable Lending Office) or on the United States market
for certificates of deposit or the London interbank market any other condition
affecting its Fixed Rate Loans, its Notes or its obligation to make Fixed Rate
Loans and the result of any of the foregoing is to increase the cost to such
Bank (or its Applicable Lending Office) of making or maintaining any Fixed Rate
Loan, or to reduce the amount of any sum received or receivable by such Bank (or
its Applicable Lending Office) under this Agreement or under its Notes with
respect thereto, by an amount deemed by such Bank to be material, then within 15
days after demand by such Bank (with a copy to the Agent), the Company shall pay
to such Bank such additional amount or amounts as will compensate such Bank for
such increased cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Agent), the Company shall pay to such Bank such
additional amount or amounts as will compensate such Bank (or its Parent) for
such reduction.
(c) Each Bank will promptly notify the Company and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount
62
69
of, such compensation and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. A certificate of any Bank claiming compensation
under this Section 8.03 and setting forth the additional amount or amounts to be
paid to it hereunder shall be conclusive in the absence of manifest error.
In determining such amount, such Bank may use any reasonable averaging and
attribution methods.
SECTION 8.04. TAXES. (a) Any and all payments by any Borrower to or
for the account of any Bank or the Agent hereunder or under any Note shall be
made free and clear of and without deduction for any and all present or future
taxes, duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, EXCLUDING, in the case of each Bank and the
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Bank or the Agent (as the case may be)
is organized or any political subdivision thereof and, in the case of each Bank,
taxes imposed on its income, and franchise or similar taxes imposed on it, by
the jurisdiction of such Bank's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If any Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to any Bank or the
Agent, (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 8.04) such Bank or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions, (iii) such
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) such Borrower
shall furnish to the Agent, at its address referred to in Section 11.01, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Company agrees to pay any present or future stamp
or documentary taxes and any other excise taxes, or charges or similar levies,
or any future property taxes, which arise from any payment made hereunder or
under any Note or from the execution or delivery of, or otherwise with respect
to, this Agreement, any Election to Participate or Election to Terminate or any
Note (hereinafter referred to as "Other Taxes").
(c) The Company agrees to indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes
63
70
(including, without limitation, any Taxes or Other Taxes imposed or asserted by
any jurisdiction on amounts payable under this Section 8.04) paid by such
Bank or the Agent (as the case may be) and any liability (including penalties,
interest and expenses, other than penalties, interest or expenses arising solely
from such Bank's gross negligence or willful misconduct) arising therefrom or
with respect thereto. This indemnification shall be made within 15 days from
the date such Bank or the Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Company (but
only so long as such Bank remains lawfully able to do so), shall provide the
Company and the Agent with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to benefits under an income tax treaty to
which the United States is a party which reduces the rate of withholding tax on
payments of interest or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States. If the form provided by a Bank at the time such Bank first
becomes a party to this Agreement indicates a United States interest withholding
tax rate in excess of zero, withholding tax at such rate shall be considered
excluded from "Taxes" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to provide
the Company with the appropriate form pursuant to Section 8.04(d) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.04(a) with respect to
Taxes imposed by the United States; PROVIDED that should a Bank, which is
otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
each Borrower shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If any Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.04, then such Bank will change
the jurisdiction of its Applicable Lending Office so as to
64
71
eliminate or reduce any such additional payment which may thereafter accrue if
such change, in the judgment of such Bank, is not otherwise disadvantageous
to such Bank.
SECTION 8.05. BASE RATE LOANS SUBSTITUTED FOR AFFECTED FIXED RATE
LOANS. If (i) the obligation of any Bank to make Euro-Dollar Loans to any
Borrower pursuant to this Agreement has been suspended pursuant to Section 8.02
or (ii) any Bank has demanded compensation under Section 8.03 or 8.04 with
respect to its CD Loans or Euro-Dollar Loans to any Borrower and the Company
shall, by at least five Euro-Dollar Business Days' prior notice to such Bank
through the Agent, have elected that the provisions of this Section 8.05 shall
apply to such Bank, then, unless and until such Bank notifies the Company that
the circumstances giving rise to such suspension or demand for compensation no
longer exist:
(a) all Loans to such Borrower which would otherwise be made by
such Bank as (or continued as or converted into) CD Loans or
Euro-Dollar Loans, as the case may be, shall instead be Base Rate Loans
(on which interest and principal shall be payable contemporaneously
with the related Fixed Rate Loans of the other Banks), and
(b) if Base Rate Loans are substituted for Fixed Rate Loans,
after each of its CD Loans or Euro-Dollar Loans, as the case may be, to
such Borrower has been repaid (or converted to a Base Rate Loan), all
payments of principal which would otherwise be applied to repay such
Fixed Rate Loans shall be applied to repay its Base Rate Loans instead.
If such Bank notifies the Company that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan which
was substituted for a Fixed Rate Loan shall be converted into a CD Loan or
Euro-Dollar Loan, as the case may be, on the first day of the next succeeding
Interest Period applicable to the related CD Loans or Euro-Dollar Loans of the
other Banks.
65
72
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF ELIGIBLE SUBSIDIARIES
Each Eligible Subsidiary shall be deemed by the execution and delivery
of its Election to Participate to have represented and warranted as of the date
thereof that:
SECTION 9.01. CORPORATE EXISTENCE AND POWER. It is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is a Wholly-Owned Consolidated Subsidiary of
the Company.
SECTION 9.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION;
CONTRAVENTION. The execution and delivery by it of its Election to Participate
and its the performance by it of this Agreement and its Notes, are within its
corporate powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any governmental body,
agency or official and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of its certificate of
incorporation or by-laws or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Company or such Eligible Subsidiary
or result in the creation or imposition of any Lien on any asset of the Company
or any of its Subsidiaries.
SECTION 9.03. BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of such Eligible Subsidiary and its Notes, when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of such Eligible Subsidiary.
SECTION 9.04. TAXES. Except as disclosed in such Election to
Participate, there is no income, stamp or other tax of any country, or any
taxing authority thereof or therein, imposed by or in the nature of withholding
or otherwise, which is imposed on any payment to be made by such Eligible
Subsidiary pursuant hereto or on its Notes, or is imposed on or by virtue of the
execution, delivery or enforcement of its Election to Participate or its Notes.
66
73
ARTICLE X
GUARANTY
SECTION 10.01. THE GUARANTY . The Company hereby unconditionally
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on each Note issued
by any Eligible Subsidiary pursuant to this Agreement and the full and punctual
payment of all other amounts payable by any Eligible Subsidiary under this
Agreement. Upon failure by any Eligible Subsidiary to pay punctually any such
amount, the Company shall forthwith on demand pay the amount not so paid at the
place and in the manner specified in this Agreement.
SECTION 10.02. GUARANTY UNCONDITIONAL. The obligations of the Company
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any Eligible Subsidiary under
this Agreement or any Note, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement or any Note;
(iii) any release, non-perfection or invalidity of any direct
or indirect security for any obligation of any Eligible Subsidiary
under this Agreement or any Note;
(iv) any change in the corporate existence, structure or
ownership of any Eligible Subsidiary, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Eligible
Subsidiary or its assets or any resulting release or discharge of any
obligation of any Eligible Subsidiary contained in this Agreement or
any Note;
(v) the existence of any claim, set-off or other rights which
the Company may have at any time against any Eligible Subsidiary, the
Agent, any Bank or any other Person, whether in connection herewith or
with any unrelated transactions, PROVIDED that nothing herein shall
67
74
prevent the assertion of any such claim by separate suit or
compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against
any Eligible Subsidiary for any reason of this Agreement or any Note,
or any provision of applicable law or regulation purporting to prohibit
the payment by any Eligible Subsidiary of the principal of or interest
on any Note or any other amount payable by it under this Agreement; or
(vii) any other act or omission to act or delay of any kind by
any Eligible Subsidiary, the Agent, any Bank or any other Person or any
other circumstance whatsoever which might, but for the provisions of
this paragraph, constitute a legal or equitable discharge of the
Company's obligations hereunder.
SECTION 10.03. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN
CERTAIN CIRCUMSTANCES. The Company's obligations hereunder shall remain in full
force and effect until the Commitments shall have terminated and the principal
of and interest on the Notes and all other amounts payable by the Company and
each Eligible Subsidiary under this Agreement shall have been paid in full. If
at any time any payment of the principal of or interest on any Note or any other
amount payable by any Eligible Subsidiary under this Agreement is rescinded or
must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of any Eligible Subsidiary or otherwise, the Company's
obligations hereunder with respect to such payment shall be reinstated at such
time as though such payment had been due but not made at such time.
SECTION 10.04. WAIVER BY THE COMPANY. The Company irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against any Eligible Subsidiary or any other Person.
SECTION 10.05. WAIVER OF SUBROGATION. The Company irrevocably waives
any and all rights to which it may be entitled, by operation of law or
otherwise, upon making any payment hereunder to be subrogated to the rights of
the payee against an Eligible Subsidiary with respect to such payment or
otherwise to be reimbursed, indemnified or exonerated by an Eligible Subsidiary
in respect thereof.
68
75
SECTION 10.06. STAY OF ACCELERATION. In the event that acceleration
of the time for payment of any amount payable by any Eligible Subsidiary under
this Agreement or its Notes is stayed upon insolvency, bankruptcy or
reorganization of such Eligible Subsidiary, all such amounts otherwise subject
to acceleration under the terms of this Agreement shall nonetheless be payable
by the Company hereunder forthwith on demand by the Agent made at the request of
the Required Banks.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. NOTICES . All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of any Borrower or the Agent, at its address or telex or
facsimile transmission number set forth on the signature pages hereof (or, in
the case of an Eligible Subsidiary, its Election to Participate), (y) in the
case of any Bank, at its address or telex or facsimile transmission number set
forth in its Administrative Questionnaire or (z) in the case of any party, at
such other address or telex or facsimile transmission number as such party may
hereafter specify for the purpose by notice to the Agent and the Company. Each
such notice, request or other communication shall be effective (i) if given by
telex, when such telex is transmitted to the number specified in or pursuant to
this Section and the appropriate answerback is received, (ii) if given by
certified mail, return receipt requested, three Domestic Business Days after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in or pursuant to this Section; PROVIDED that notices to
the Agent under Article II or Article VIII shall not be effective until
received.
SECTION 11.02. NO WAIVERS . No failure or delay by the Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
69
76
SECTION 11.03. EXPENSES; DOCUMENTARY TAXES; INDEMNIFICATION. (a) The
Company shall pay (i) all direct out-of-pocket expenses (not to include in any
event any indirect or overhead charges) of the Agent, including reasonable fees
and disbursements of special counsel for the Agent, in connection with the
preparation and administration of this Agreement and the Notes, any waiver or
consent hereunder or any amendment hereof or any Default or alleged Default
hereunder and (ii) if an Event of Default occurs, all direct out-of-pocket
expenses (not to include in any event any indirect or overhead charges) incurred
by the Agent and each Bank, including fees and disbursements of counsel, in
connection with such Event of Default and collection, bankruptcy, insolvency and
other enforcement proceedings resulting therefrom.
(b) The Company agrees to indemnify the Agent and each Bank, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in connection
with any investigative, administrative or judicial proceeding (whether or not
such Indemnitee shall be designated a party thereto) brought or threatened
relating to or arising out of this Agreement or any actual or proposed use of
proceeds of Loans hereunder; PROVIDED that no Indemnitee shall have the right to
be indemnified hereunder for such Indemnitee's own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
SECTION 11.04. SHARING OF SET-OFFS. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to any Note held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks shall be shared by the
Banks pro rata; PROVIDED that nothing in this Section shall impair the right of
any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness of a
Borrower other than its indebtedness hereunder. Each Borrower agrees, to the
70
77
fullest extent it may effectively do so under applicable law, that any holder of
a participation in a Note, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of such Borrower in the amount of such participation.
SECTION 11.05. AMENDMENTS AND WAIVERS. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Company and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
PROVIDED that no such amendment or waiver shall, unless signed by all the Banks,
(i) increase or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for any reduction or termination
of any Commitment, (iv) release the Company from all or substantially all of its
obligations under Article X, or (v) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Loans, or the number of Banks,
which shall be required for the Banks or any of them to take any action under
this Section 11.05 or any other provision of this Agreement; and PROVIDED ,
FURTHER, that no such amendment, waiver or modification shall, unless signed
by an Eligible Subsidiary, (w) subject such Eligible Subsidiary to any
additional obligation, (x) increase the principal of or rate of interest on any
outstanding Loan of such Eligible Subsidiary, (y) accelerate the stated maturity
of any outstanding Loan of such Eligible Subsidiary or (z) change this proviso.
SECTION 11.06. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that no Borrower may assign
or otherwise transfer any of its rights under this Agreement without the prior
written consent of all Banks.
(b) Any Bank may at any time, upon (except in the case of grants of
participating interests in Money Market Loans only) notice to the Company and
the Agent, grant to one or more banks or other institutions (each a
"Participant") participating interests in its Commitment or any or all of its
Loans. In the event of any such grant by a Bank of a participating interest to
a
71
78
Participant, whether or not upon notice to the Borrowers and the Agent, such
Bank shall remain responsible for the performance of its obligations hereunder,
and the Borrowers and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under
this Agreement. Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain the sole right
and responsibility to enforce the obligations of the Borrowers hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; PROVIDED that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in clause (i), (ii) or (iii) of
Section 11.05 without the consent of the Participant. The Borrowers agree that
each Participant shall, to the extent provided in its participation agreement,
be entitled to the benefits of Section 2.18 and Article VIII with respect to its
participating interest. An assignment or other transfer which is not permitted
by subsection (c) or (d) below shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in accordance
with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit J hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Company and the Agent; PROVIDED that (i) any such assignment must
be in an amount of at least $5,000,000, (ii) if an Assignee is an affiliate of
such transferor Bank, no such consent shall be required and (iii) such
assignment may, but need not, include rights of the transferor Bank in respect
of outstanding Money Market Loans. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the
Borrowers shall make appropriate
72
79
arrangements so that, if required, new Notes are issued to the Assignee. In
connection with any such assignment, the transferor Bank shall pay to the Agent
an administrative fee for processing such assignment in the amount of $2,500.
If the Assignee is not incorporated under the laws of the United States of
America or a state thereof, it shall, prior to the first date on which interest
or fees are payable hereunder for its account, deliver to the Company and the
Agent certification as to exemption from deduction or withholding of any United
States federal income taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Company's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 11.07. COLLATERAL . Each of the Banks represents to the Agent
and each of the other Banks that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 11.08. CONFIDENTIALITY. The Agent and each Bank shall keep
confidential any information provided by any Borrower and clearly identified as
confidential; PROVIDED that nothing herein shall prevent the Agent or any Bank
from disclosing such information (i) to its officers, directors, employees,
agents, attorneys and accountants in connection with the entry into and
administration of this Agreement and the extensions of credit hereunder, (ii)
upon the order of a court or administrative agency, (iii) upon the request or
demand of any regulatory agency or authority having jurisdiction over such
party, (iv) which has become publicly available without breach of any agreement
among the parties hereto, (v) as necessary for the exercise of any remedy
hereunder or under any Note or (vi) subject to provisions similar to
73
80
those contained in this Section, to any prospective Participant or Assignee.
SECTION 11.09. GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. Each Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 11.10. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective upon receipt by the Agent of
counterparts hereof signed by each of the parties hereto (or, in the case of any
party as to which an executed counterpart shall not have been received, receipt
by the Agent in form satisfactory to it of telegraphic, telex, facsimile or
other written confirmation from such party of execution of a counterpart hereof
by such party).
SECTION 11.11. WAIVER OF JURY TRIAL . EACH OF THE BORROWERS, THE
AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
74
81
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
THE TIMBERLAND COMPANY
By /s/ ?????????????
-----------------------
Title: Treasurer
11 Merrill Industrial Drive
P.O. Box 5050
Hampton, N.H. 03842-5050
Attention: Nancy A. Wels
Facsimile transmission
number: 603-929-1788
75
82
Commitments
- - -----------
$25,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ ????????????
-------------------------
Title:
$25,000,000 ABN AMRO BANK N.V.
By /s/ ????????????
-------------------------
Title:
By /s/ ????????????
-------------------------
Title:
$25,000,000 THE FIRST NATIONAL BANK OF
BOSTON
By /s/ ????????????
-------------------------
Title:
$15,000,000 BARCLAYS BANK PLC
By /s/ ????????????
-------------------------
Title:
$15,000,000 CHEMICAL BANK
By /s/ ????????????
-------------------------
Title:
76
83
$15,000,000 THE NORTHERN TRUST COMPANY
By /s/ ?????????????
--------------------------
Title: Vice President
$ 5,000,000 BANK HAPOALIM B.M.
By /s/ ?????????????
--------------------------
Title: Vice President
By /s/ ?????????????
--------------------------
Title: Vice President
_________________
Total Commitments
$ 125,000,000
=================
77
84
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent
By /s/ ?????????????
----------------------
Title:
60 Wall Street
New York, New York 10260-0060
Attention: Charles Pardue
Telex number: 177615
Facsimile transmission
number: (212) 648-5018
78
85
Schedule I
DESCRIPTION OF EXISTING DEBT AND LIENS
May 13, 1993
Original
Effective Maturity Face Outstanding
Date Date Amount Liability
Money Market Lines
LIBOR 4/14/93 5/14/93 $ 5,000,000 $ 5,000,000
LIBOR 4/27/93 5/27/93 5,000,000 5,000,000
------------ ------------
$ 10,000,000 $ 10,000,000
============ ============
Revolving Credit Agreement
BASE -- -- $ 16,700,000 $ 16,700,000
============ ============
Foreign Currency Credit Facilities
First National Bank of Boston, London [POUNDS] 2,000,000 [POUNDS] --
First National Bank of Boston, Paris [FRANCS] 10,000,000 [FRANCS] 1,157,619
============ ============
Private Placement Senior Note
Principal Mutual Life Insurance
Company and other insurance
companies 12/06/89 12/1/99 $ 35,000,000 $ 35,000,000
============ ============
Capital Equipment Leases*
Banc New England Leasing Group 10/88 12/93 $ 1,700,000 $ 216,975
Pitney Bowes Credit Corp. 7/88 5/93 1,244,630 77,384
JCM Sales & Leasing, Inc. 5/90 7/93 96,000 1,000
BayBanks Financing & Leasing Co. Inc. 6/90 6/95 2,096,332 1,034,687
BayBanks Financing & Leasing Co. Inc. 10/90 11/95 456,507 255,673
BayBanks Financing & Leasing Co. Inc. 12/90 12/95 459,431 272,191
------------ ------------
$ 6,052,900 $ 1,857,910
============ ============
Industrial Revenue Bond*
Shawmut Bank N.A. 12/27/84 12/2014 $ 6,680,000 $ 5,345,000
Miscellaneous Other Liens* Maximum
Copy Machines, Computers --- --- $ 3,000,000 $ ---
Equipment, and other miscellaneous ============ ============
*Secured by lien
INTERCOMPANY DEBT BETWEEN COMPANY AND SUBSIDIARIES
Intercompany Debt:
Timberland World Trading GMBH DM 3,686,000
Intercompany Payables $ 39,713,554
The Outdoor Footwear Company 1,703,226
-------------
Timberland International Sales Corporation $ 41,416,780
=============
86
SUBSIDIARIES OF THE TIMBERLAND COMPANY ("TIMBERLAND")
JURISDICTION OF OWNERSHIP
NAME OF SUBSIDIARY ORGANIZATION SUBSIDIARIES
Component Footwear Dominicana, S.A. Dominican Republic 99.4% owned by Timberland; .1% owned by each of:
(formerly Timberland Dominicana, S.A.) Timberland S.A.R.L.
Timberland (UK) Limited
Timberland Europe, Inc.
The Timberland World Trading Company
The Outdoor Footwear Company
Timberland Espana, S.A. (formerly
The Timberland World Trading Company, S.A.)
Outdoor Footwear Company, The Delaware 100% of voting stock owned by Timberland
Recreational Footwear Company, The Cayman Islands 100% owned by Timberland
Recreational Footwear Company Dominican Republic 99.4% owned by Timberland; .1% owned by each of:
(Dominicana), S.A., The Timberland S.A.R.L.
Timberland (UK) Limited
Timberland Europe, Inc.
The Timberland World Trading Company
The Outdoor Footwear Company
Timberland Espana, S.A. (formerly The Timberland World
Trading Company, S.A.)
Timberland (UK) Limited England 99.9% owned by Timberland;
S. Swartz beneficially holding .1%
Timberland Aviation, Inc. Delaware 100% owned by Timberland
Timberland Company of Australia Pty. Australia 66-2/3% owned by Timberland;
Ltd., The S. Swartz beneficially holding 33-1/3%
Timberland Direct Sales, Inc. Delaware 100% owned by Timberland
Timberland Espana, S.A. Spain 99.98% owned by Timberland ; .01% owned by each
S. Swartz and J. Swartz
Timberland Europe, Inc. Delaware 100% owned by Timberland
(formerly Precision Instruments, Inc.)
Timberland Finance Company, The Delaware 100% owned by The Outdoor Footwear Company
Timberland Footwear & Clothing Inc. Canada 100% owned by Timberland
(Les Vetements & Chaussures Timberland
Inc.)
87
JURISDICTION OF OWNERSHIP
NAME OF SUBSIDIARY ORGANIZATION SUBSIDIARIES
Timberland Footwear & Clothing New Zealand 99% owned by Timberland;S. Swartz beneficially holding 1%
New Zealand Limited
Timberland GmbH Austria 100% owned by Timberland
Timberland International, Inc. Delaware 100% owned by Timberland
Timberland International Sales U.S. Virgin Islands 100% owned by Timberland
Corporation
Timberland Manufacturing Company Delaware 100% owned by Timberland
Timberland Retail, Inc. (formerly Delaware 100% owned by Timberland
Timberland Overseas Company)
Timberland S.A.R.L. France .01% owned by The Outdoor Footwear Company and
99.9% owned by Timberland
Timberland Scandinavia, Inc. Delaware 100% owned by Timberland
Timberland World Trading Company, The Delaware 100% owned by Timberland
Timberland World Trading GmbH, The Federal Republic of 100% owned by The Timberland World Trading Company
Germany
88
DISTRIBUTORS
- Nozaki America, Inc. and Subsidiaries
- Inchcape PLC and Subsidiaries
- Ridenco S.A. and Subsidiaries
89
EXHIBIT A
FORM OF NOTE
New York, New York
________ __, 199_
For value received, [NAME OF BORROWER], a [jurisdiction of
incorporation] corporation (the "Borrower"), promises to pay to the order of
[NAME OF BANK] (the "Bank"), for the account of its Applicable Lending Office,
the unpaid principal amount of each Loan made by the Bank to the Borrower
pursuant to the Credit Agreement referred to below on the Termination Date
provided for in the Credit Agreement. The Borrower promises to pay interest on
the unpaid principal amount of each such Loan on the dates and at the rate or
rates provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty Trust Company of
New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; PROVIDED that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated
as of May 4, 1994 among The Timberland Company, the banks listed on the
signature pages thereof and Morgan Guaranty Trust Company of New York, as Agent
(as the same may be amended from time to time, the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein with the same meanings.
Reference is made
1
90
to the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
[The Timberland Company has, pursuant to the provisions of the Credit
Agreement, unconditionally guaranteed the payment in full of the principal of
and interest on this note.]*
[NAME OF BORROWER]
By ____________________
Title:
_________________
* To be deleted in case of Notes executed and delivered by the Company.
2
91
LOANS AND PAYMENTS OF PRINCIPAL
________________________________________________________________________________
Type Amount Amount of
of of Principal Notation
Date Loan Loan Repaid Made By
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
3
92
EXHIBIT B
FORM OF NOTICE OF COMMITTED BORROWING
-------------------------------------
Morgan Guaranty Trust Company
of New York, as Agent
under the Credit Agreement referred
to below
60 Wall Street
New York, New York 10260-0060
Attention: Credit Administration
Re: $125,000,000 Credit Agreement dated as of
May 4, 1994 among The Timberland Company,
the Banks listed on the signature pages thereof
and Morgan Guaranty Trust Company of New York,
as Agent (the "Credit Agreement")
-----------------------------------------------
Ladies and Gentlemen:
We, [name of Borrower] (the "Borrower"), refer to
the Credit Agreement and hereby give notice pursuant to
Section 2.02 of the Credit Agreement that we wish to make a
Committed Borrowing as set forth below:
Date of Borrowing: __________*
Aggregate Principal Amount of Borrowing: __________**
Type of Borrowing (choose one):
[Base Rate]/[CD]/[Euro-Dollar]
Initial Interest Period: __________***
____________________
*Not earlier than the third Euro-Dollar Business Day
after the date of the Notice of Committed Borrowing, in the
case of a Euro-Dollar Borrowing; not earlier than the second
Domestic Business Day after the date of the Notice of
Committed Borrowing, in the case of a CD Borrowing; may be
the same day as the Notice of Committed Borrowing, in the
case of a Base Rate Borrowing.
**Must be a multiple of $100,000 and, for a Base Rate
Borrowing, at least $500,000 and, for a CD Borrowing or
Euro-Dollar Borrowing, at least $1,000,000.
***One, two, three or six months, for a Euro-Dollar
Borrowing; 30, 60 or 90 days, for a CD Borrowing; does not
apply for a Base Rate Borrowing.
1
93
Dated: __________ __, 199_
Very truly yours,
[BORROWER]
By: ________________________
Title:****
______________________________
****For the Company, the President, the Executive Vice
President, the Senior Vice President - Finance and
Administration, the Vice President - Finance or the
Treasurer only.
2
94
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
To: [Name of Bank]
From: [Name of Borrower] (the "Borrower")
Re: $125,000,000 Credit Agreement dated as of May 4,
1994 among The Timberland Company, the Banks
listed on the signature pages thereof and Morgan
Guaranty Trust Company of New York, as Agent (the
"Credit Agreement")
Pursuant to Section 2.03 of the Credit Agreement
we are pleased to invite you to submit Money Market Quotes
to us for the following proposed Money Market Borrowing(s):
Date of Borrowing: __________________*
Principal Amount ** Interest Period ***
$
__________________
*Must be at least four Euro-Dollar Business Days after
the date of the Invitation, for a LIBOR Auction, or one
Domestic Business Day after the date of the Invitation, for
an Absolute Rate Auction.
**Amount must be $1,000,000 or a larger multiple of
$100,000.
***Not less than one month (or not less than 7 days, if
available) (LIBOR Auction) or 7 days (Absolute Rate
Auction), subject to the provisions of the definition of
Interest Period.
1
95
Such Money Market Quotes should offer a Money
Market [Margin]**** [Absolute Rate].***** [The
applicable base rate is the Interbank Offered Rate.]****
Please respond to this invitation by no later than
[2:00 P.M.]**** [9:15 A.M.]***** (New York City time) on
[date].******
[NAME OF BORROWER]
By______________________
Authorized Officer*******
___________________
****To be included for LIBOR Auctions only.
*****To be included for Absolute Rate Auctions only.
******The fourth Euro-Dollar Business Day prior to the
Date of Borrowing, for a LIBOR Auction, or the Date of
Borrowing, for an Absolute Rate Auction.
*******For the Company, the President, the Executive Vice
President, the Senior Vice President - Finance and
Administration, the Vice President - Finance or the
Treasurer only.
2
96
EXHIBIT D
FORM OF MONEY MARKET QUOTE
To: [Name of Borrower] (the "Borrower")
Re: Money Market Quote to the Borrower
In response to your invitation dated
_____________, 19__, we hereby make the following Money
Market Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
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 one month (LIBOR Auction) or not less
than 30 days (Absolute Rate Auction), as specified in the
related Invitation. No more than five bids are permitted
for each Interest Period.
****Margin over or under the Interbank Offered Rate
determined for the applicable Interest Period. Specify
percentage (to the nearest 1/10,000 of 1%) and specify
whether "PLUS" or "MINUS".
*****Specify rate of interest per annum (to the nearest
1/10,000th of 1%).
1
97
[Provided, that the aggregate principal amount of Money
Market Loans for which the above offers may be accepted
shall not exceed $____________.]**
We understand and agree that the offer(s) set
forth above, subject to the satisfaction of the applicable
conditions set forth in the Credit Agreement dated as of May
4, 1994 among The Timberland Company, the Banks listed on
the signature pages thereof and Morgan Guaranty Trust
Company of New York, as Agent, irrevocably obligates us to
make the Money Market Loan(s) for which any offer(s) are
accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
2
98
EXHIBIT E
OPINION OF
COUNSEL FOR THE COMPANY
-----------------------
[Closing Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
This opinion is being furnished to you pursuant to Section 3.01(b) of
the Credit Agreement dated as of May 4, 1994 (the "Credit Agreement") among The
Timberland Company, a Delaware corporation (the "Company"), the banks listed on
the signature pages thereof and Morgan Guaranty Trust Company of New York, as
Agent, in connection with the closing held this day under the Credit Agreement.
Terms defined in the Credit Agreement and not otherwise defined herein are used
herein with the meanings so defined.
We have acted as counsel to the Company in connection with the Credit
Agreement and the transactions contemplated thereby and as such are familiar
with the proceedings taken by the Company in connection therewith. Please be
advised, however, that, although we represent the Company on a regular basis,
the scope of our representation does not include, and, except as specified
herein, we have not undertaken, any special factual investigation into the
business, properties, agreements or affairs of the Company and its Subsidiaries
for purposes of rendering the opinions expressed in paragraphs 9, 10 and 11
below.
We have participated in the preparation of the Credit Agreement and have
examined copies, executed by the Company, of the Credit Agreement and each of
the Notes delivered to the Banks on the date hereof.
1
99
We have also examined such certificates, documents and records, and have
made such examination of law, as we have deemed necessary to enable us to render
the opinions expressed below. In addition, we have examined and relied upon
representations and warranties contained in the Credit Agreement and in
certificates delivered to you in connection therewith as to matters of fact
(other than facts constituting conclusions of law) and upon the covenants
contained in the Credit Agreement as to the application of the proceeds of the
loans made pursuant thereto.
The opinion expressed in clause (c) of paragraph 11 below assumes,
without investigation, that the transactions contemplated by the Credit
Agreement will not result in a violation of financial ratios which are contained
in covenants.
We call your attention to the fact that the Credit Agreement and the
Notes provide that they are to be governed by and construed in accordance with
the internal laws of the State of New York and we understand that you are
relying on the advice of your own counsel with respect to all matters of New
York law. We are of the opinion that a Massachusetts court or a federal court
sitting in Massachusetts would, under conflict of laws principles observed by
the courts of Massachusetts, give effect to such provision. For purposes of
rendering the opinions expressed in paragraphs 6 and 8 below, we have assumed
that the Credit Agreement and each Note provides that it is to be governed by
and construed in accordance with the internal laws of The Commonwealth of
Massachusetts.
The opinions expressed below are limited to matters governed by the laws
of The Commonwealth of Massachusetts, the General Corporation Law of the State
of Delaware and the federal laws of the United States. With respect to the
opinions expressed in paragraphs 2 and 4 below concerning (i) the qualification
and good standing of the Company as a foreign corporation under the laws of New
Hampshire and Tennessee and (ii) the qualification and good standing of The
Outdoor Footwear Company, a Delaware corporation ("TOFC"), as a foreign
corporation under the laws of Puerto Rico, such opinions are based solely upon
certificates from officials of such jurisdictions, copies of which have been
furnished to you.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware with corporate powers
adequate for the execution, delivery and performance of the
2
100
Credit Agreement and the Notes and for carrying on the business now conducted
by it.
2. The Company is duly qualified to do business as a foreign
corporation under the laws of New Hampshire and Tennessee.
3. TOFC is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware with corporate powers
adequate for carrying on the business now conducted by it.
4. TOFC is duly qualified to do business as a foreign corporation under
the laws of Puerto Rico.
5. The Credit Agreement has been duly authorized, executed and
delivered by the Company.
6. Subject to the qualifications stated in the penultimate paragraph
hereof, the Credit Agreement constitutes the legal, valid and binding obligation
of the Company and is enforceable against the Company in accordance with its
terms.
7. The Notes being delivered to the Banks today have been duly
authorized, executed and delivered by the Company.
8. Subject to the qualifications stated in the penultimate paragraph
hereof, the Notes being delivered to the Banks today constitute the legal, valid
and binding obligations of the Company and are enforceable against the Company
in accordance with the terms thereof.
9. The execution and delivery of the Credit Agreement do not, and the
performance by the Company of the terms thereof applicable to it will not,
result in any violation of, or be in conflict with, constitute a default under
or result in the creation of a lien under, any term or provision of: (a) its
charter or bylaws, (b) any presently existing federal or Massachusetts law,
statute or governmental regulation or the General Corporation Law of the State
of Delaware, or (c) any agreement, indenture or other instrument listed in
paragraph (4) of Exhibit A hereto.
10. Under existing provisions of law, no approval of, or authorization
or other action by, or filing with, any federal or Massachusetts governmental
authority, and no approval, authorization or other action or filing under the
General Corporation Law of the State of Delaware, is required to be obtained or
made by the Company in connection with the execution, delivery or performance of
the Credit
3
101
Agreement or the Notes, except for such filings as do not affect the validity or
enforceability of the Credit Agreement and the Notes.
11. To the best of our knowledge after having made due inquiry of
officers of the Company, but without having investigated any governmental
records or court dockets, there is no governmental action or proceeding and no
litigation pending against the Company or any of its Subsidiaries which places
in question the validity or enforceability of the Credit Agreement or the Notes.
[We call your attention to the fact that John E. Beard is the Secretary
of the Company. Our opinions expressed herein do not include matters which may
have come to the attention of John E. Beard in that capacity and which have not
been referred to us for substantive legal advice.]
Our opinions that the Credit Agreement and the Notes being delivered to
the Banks today are legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms are subject to
(i) bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and (ii) general
principles of equity, regardless of whether applied in proceedings in equity or
at law. Such opinions are also subject to the following qualifications:
(a) the enforceability of the provisions of the Credit
Agreement providing for indemnification may be affected by public
policy considerations or court decisions which may limit the right of
the indemnified party to obtain indemnification;
(b) we express no opinion as to the enforceability of any
provision of the Credit Agreement which purports to grant the right of
setoff to a purchaser of a participation in the obligations of the
Company under the Credit Agreement and the Notes from a bank party to
the Credit Agreement; and
(c) we express no opinion as to the enforceability of any
provision of the Credit Agreement to the extent it requires the Company
to indemnify any of you or any other party against loss in obtaining
the currency due under the Credit Agreement from a court judgment,
order, award or decision in another currency.
In addition, we call your attention to the fact that certain waivers
contained in the Credit Agreement may be
4
102
unenforceable in whole or in part by reason of certain laws or judicial
decisions; however, the inclusion of such waivers in the Credit Agreement
does not affect the validity of any of the other provisions of the Credit
Agreement.
The foregoing opinion is solely for your benefit and may not be relied
on by any other person.
Very truly yours,
5
103
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
--------------------------------------
[Closing Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
We have participated in the preparation of the Credit Agreement (the
"Credit Agreement") dated as of May 4, 1994, among The Timberland Company, a
Delaware corporation (the "Company"), the banks listed on the signature pages
thereof (the "Banks") and Morgan Guaranty Trust Company of New York, as Agent
(the "Agent"), and have acted as special counsel for the Agent for the purpose
of rendering this opinion pursuant to Section 3.01(c) of the Credit Agreement.
Terms defined in the Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Company of the Credit
Agreement and its Notes are within the Company's corporate powers and have been
duly authorized by all necessary corporate action.
1
104
2. The Credit Agreement constitutes a valid and binding agreement of
the Company and its Notes constitute valid and binding obligations of the
Company.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United States of America and the General Corporation Law of the State of
Delaware. In giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State of New York) in
which any Bank is located which limits the rate of interest that such Bank may
charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent.
Very truly yours,
2
105
EXHIBIT G
FORM OF ELECTION TO PARTICIPATE
-------------------------------
, 19
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
for the Banks named in the Credit
Agreement dated as of May 4, 1994
among The Timberland Company, such
Banks and such Agent
(the "Credit Agreement")
Ladies and Gentlemen:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation, hereby elects to be an Eligible Subsidiary for
purposes of the Credit Agreement, effective from the date hereof until an
Election to Terminate shall have been delivered on behalf of the undersigned in
accordance with the Credit Agreement. The undersigned confirms that the
representations and warranties set forth in Article IX of the Credit Agreement
are true and correct as to the undersigned as of the date hereof, and the
undersigned hereby agrees to perform all the obligations of an Eligible
Subsidiary under, and to be bound in all respects by the terms of, the Credit
Agreement, including without limitation Section 11.09 thereof, as if the
undersigned were a signatory party thereto.
[Tax disclosure pursuant to Section 9.04]
1
106
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
107
EXHIBIT H
FORM OF ELECTION TO TERMINATE
-----------------------------
, 19
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
for the Banks named in the Credit
Agreement dated as of May 4, 1994
among The Timberland Company, such
Banks and such Agent
(the "Credit Agreement")
Ladies and Gentlemen:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation, hereby elects to terminate its status as an Eligible
Subsidiary for purposes of the Credit Agreement, effective as of the date
hereof. The undersigned hereby represents and warrants that all principal and
interest on all Notes of the undersigned and all other amounts payable by the
undersigned pursuant to the Credit Agreement have been paid in full on or prior
to the date hereof. Notwithstanding the foregoing, this Election to Terminate
shall not affect any obligation of the undersigned under the Credit Agreement or
under any Note heretofore incurred.
1
108
This instrument shall be construed in accordance with and governed by
the laws of the State of New York.
Very truly yours,
[NAME OF ELIGIBLE SUBSIDIARY]
By____________________________
Title:
The undersigned hereby confirms that the status of [name of Eligible
Subsidiary] as an Eligible Subsidiary for purposes of the Credit Agreement
described above is termi- nated as of the date hereof.
THE TIMBERLAND COMPANY
By____________________________
Title:
Receipt of the above Election to Terminate is hereby acknowledged on and
as of the date set forth above.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By__________________________
Title:
2
109
EXHIBIT I
OPINION OF
COUNSEL FOR THE BORROWER
(BORROWINGS BY ELIGIBLE SUBSIDIARIES)
-------------------------------------
[Dated as provided in
Section 3.03 of the
Credit Agreement]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
9 West 57th Street
New York, New York 10019
Ladies and Gentlemen:
I am counsel to [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation (the "Borrower"), and give this opinion pursuant to
Section 3.03(b) of the Credit Agreement (the "Credit Agreement") dated as of May
4, 1994 among The Timberland Company (the "Company"), the banks listed on the
signature pages thereof and Morgan Guaranty Trust Company of New York, as Agent.
Terms defined in the Credit Agreement are used herein as therein defined.
I have examined originals or copies, certified or otherwise identified
to my satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of [jurisdiction of incorporation], and is a
Wholly-Owned Consolidated Subsidiary of the Company.
1
110
2. The execution and delivery by the Borrower of its Election to
Participate and its Notes and the performance by the Borrower of the Credit
Agreement and its Notes are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Borrower or
of any agreement, judgment, injunction, order, decree or other instrument
binding upon the Company or the Borrower or result in the creation or imposition
of any Lien on any asset of the Company or any of its Subsidiaries.
3. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and its Notes constitute valid and binding obligations of the
Borrower.
4. Except as disclosed in the Borrower's Election to Participate, there
is no income, stamp or other tax of [jurisdiction of incorporation and, if
different, principal place of business], or any taxing authority thereof or
therein, imposed by or in the nature of withholding or otherwise, which is
imposed on any payment to be made by the Borrower pursuant to the Credit
Agreement or its Notes, or is imposed on or by virtue of the execution, delivery
or enforcement of its Election to Participate or of its Notes.
Very truly yours,
2
111
EXHIBIT J
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
-------------------------------------------
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the "Assignor"),
[ASSIGNEE] (the "Assignee"), THE TIMBERLAND COMPANY (the "Company") and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Credit Agreement dated as of May 4, 1994 among the Company, the
Assignor and the other Banks party thereto, as Banks, and the Agent (the "Credit
Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans in an aggregate amount at any time outstanding not to
exceed $__________;
WHEREAS, Committed Loans made by the Assignor under the Credit Agreement
in the aggregate principal amount of $__________ are outstanding at the date
hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Committed Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. ASSIGNMENT. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the
1
112
obligations of the Assignor under the Credit Agreement to the extent of the
Assigned Amount, including the purchase from the Assignor of the corresponding
portion of the principal amount of the Committed Loans made by the Assignor
outstanding at the date hereof. Upon the execution and delivery hereof by the
Assignor, the Assignee, the Company and the Agent and the payment of the amounts
specified in Section 3 required to be paid on the date hereof (i) the Assignee
shall, as of the date hereof, succeed to the rights and be obligated to perform
the obligations of a Bank under the Credit Agreement with a Commitment in an
amount equal to the Assigned Amount, and (ii) the Commitment of the Assignor
shall, as of the date hereof, be reduced by a like amount and the Assignor
released from its obligations under the Credit Agreement to the extent such
obligations have been assumed by the Assignee. The assignment provided for
herein shall be without recourse to the Assignor.
SECTION 3. PAYMENTS. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds an amount heretofore agreed between them.* It is
understood that facility fees with respect to the Assigned Amount accrued to the
date hereof are for the account of the Assignor and such fees accruing from and
including the date hereof are for the account of the Assignee. Each of the
Assignor and the Assignee hereby agrees that if it receives any amount under the
Credit Agreement which is for the account of the other party hereto, it shall
receive the same for the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such other party.
SECTION 4. CONSENT OF THE COMPANY AND THE AGENT. This Agreement is
conditioned upon the consent of the Company and the Agent pursuant to Section
11.06(c) of the Credit Agreement. The execution of this Agreement by the
Company and the Agent is evidence of this consent. Pursuant to Section 11.06(c)
the Company agrees to execute and deliver a Note, and to cause each Eligible
Subsidiary, if any, to execute and deliver a Note, payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.
_____________________
*Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be
preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
2
113
SECTION 5. NON-RELIANCE ON ASSIGNOR. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of any
Borrower, or the validity and enforceability of the obligations of any Borrower
in respect of the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrowers.
SECTION 6. GOVERNING LAW. This Agreement shall
be governed by and construed in accordance with the laws of
the State of New York.
SECTION 7. COUNTERPARTS. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By____________________________
Title:
[ASSIGNEE]
By____________________________
Title:
THE TIMBERLAND COMPANY
By____________________________
Title:
3
114
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By____________________________
Title:
4