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Exhibit 10.14
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The Timberland Company
Note Agreement
Dated as of December 15, 1994
Re: $106,000,000 8.94% Senior Notes
due December 15, 2001
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TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.......... 1
Section 1.1. Description of Notes..................... 1
Section 1.2. Commitment, Closing Date................. 1
Section 1.3. Other Agreements......................... 2
SECTION 2. PREPAYMENT OF NOTES.......................... 2
Section 2.1. No Required Prepayments.................. 2
Section 2.2. Optional Prepayments With Premium........ 2
Section 2.3. Prepayment on Failure of Holders to
Give Certain Consents.................... 2
Section 2.4. Notice of Prepayments.................... 3
Section 2.5. Allocation of Prepayments................ 3
Section 2.6. Direct Payment........................... 3
SECTION 3. REPRESENTATIONS.............................. 4
Section 3.1. Representations of the Company........... 4
Section 3.2. Representations of the Purchaser......... 4
SECTION 4. CLOSING CONDITIONS........................... 5
Section 4.1. Conditions............................... 5
Section 4.2. Waiver of Conditions..................... 5
SECTION 5. COMPANY COVENANTS............................ 6
Section 5.1. Corporate Existence, Etc. ............... 6
Section 5.2. Insurance................................ 6
Section 5.3. Taxes, Claims for Labor and Materials,
Compliance with Laws..................... 6
Section 5.4. Maintenance, Etc. ....................... 7
Section 5.5. Nature of Business....................... 7
Section 5.6. Current Ratio............................ 7
Section 5.7. Consolidated Tangible Net Worth.......... 7
Section 5.8. Limitations on Indebtedness.............. 7
Section 5.9. Fixed Charges Coverage................... 8
Section 5.10. Limitation on Liens...................... 8
Section 5.11. Restricted Payments...................... 10
Section 5.12. Sale and Leasebacks...................... 11
Section 5.13. Mergers, Consolidations and
Sales of Assets.......................... 11
Section 5.14. Guaranties............................... 14
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Section 5.15. Repurchase of Notes..................... 14
Section 5.16. Transactions with Affiliates............ 14
Section 5.17. Investments............................. 15
Section 5.18. Termination of Pension Plans............ 16
Section 5.19. Reports and Rights of Inspection........ 16
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR..... 20
Section 6.1. Events of Default....................... 20
Section 6.2. Notice to Holders....................... 21
Section 6.3. Acceleration of Maturities.............. 21
Section 6.4. Rescission of Acceleration.............. 22
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS............ 22
Section 7.1. Consent Required........................ 22
Section 7.2. Effect of Amendment or Waiver........... 23
SECTION 8. INTERPRETATION OF AGREEMENT................. 23
Section 8.1. Definitions............................. 23
Section 8.2. Accounting Principles................... 32
Section 8.3. Directly or Indirectly.................. 32
SECTION 9. MISCELLANEOUS............................... 32
Section 9.1. Registered Notes........................ 32
Section 9.2. Exchange of Notes....................... 32
Section 9.3. Loss, Theft, Etc. of Notes.............. 33
Section 9.4. Expenses, Stamp Tax Indemnity........... 33
Section 9.5. Powers and Rights Not Waived;
Remedies Cumulative..................... 33
Section 9.6. Notices................................. 33
Section 9.7. Successors and Assigns.................. 34
Section 9.8. Survival of Covenants and
Representations......................... 34
Section 9.9. Severability............................ 34
Section 9.10. Governing Law........................... 34
Section 9.11. Captions................................ 34
Signatures ................................................. 35
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ATTACHMENTS TO NOTE AGREEMENT:
Schedule I - Name and Address of Purchasers
Exhibit A - Form of 8.94% Senior Note due December 15, 2001
Exhibit B - Closing Certificate of the Company
Exhibit C - Description of Special Counsel's Closing Opinion
Exhibit D - Description of Closing Opinion of Counsel to the Company
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THE TIMBERLAND COMPANY
11 MERRILL INDUSTRIAL DRIVE
HAMPTON, NEW HAMPSHIRE 03842-5050
NOTE AGREEMENT
Re: $106,000,000 8.94% Senior Notes
Due December 15, 2001
Dated as of
December 15, 1994
To the Purchaser named In Schedule I
hereto which is a signatory of this
Agreement
Ladies and Gentlemen:
The undersigned, The Timberland Company, a Delaware corporation (the
"Company"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1. Description of Notes. The Company will authorize the
issue and sale of $106,000,000 aggregate principal amount of its 8.94% Senior
Notes (the "Notes") to be dated the date of issue, to bear interest from such
date at the rate of 8.94% per annum, payable semiannually in arrears on the
fifteenth day of each June and December in each year (commencing June 15,
1995) and at maturity and to bear interest on overdue principal (including any
overdue optional prepayment of principal) and premium, if any, and (to the
extent legally enforceable) on any overdue installment of interest at the rate
of 10.94% per annum after maturity, whether by acceleration or otherwise, until
paid, to be expressed to mature on December 15, 2001, and to be substantially in
the form attached hereto as Exhibit A. Interest on the Notes shall be computed
on the basis of a 360-day year of twelve 30-day months. The term "Notes" as
used herein shall include each Note delivered pursuant to this Agreement and
the separate agreements with the other purchasers named in Schedule I. You and
the other purchasers named in Schedule I are hereinafter sometimes referred to
as the "Purchasers".
Section 1.2. Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you, and you
agree to purchase from the Company, the aggregate principal amount of the Notes
set forth opposite your name in Schedule I hereto, at a price of 100% of the
principal amount thereof on the Closing Date hereinafter mentioned.
Delivery of the Notes will be made at the offices of Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603, against payment
therefor in Federal Reserve or
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The Timberland Company Note Agreement
other funds current and immediately available at the principal office of The
Northern Trust Company, Chicago, Illinois in the amount of the purchase price
at 10:00 A.M., Chicago, Illinois time, on December 15, 1994 or such earlier date
as the Company shall specify by not less than five business days' prior written
notice to you (the "Closing Date"). The Notes delivered to you on the Closing
Date will be delivered to you in the form of registered Notes for the full
amount of your purchase (unless different denominations are specified by you),
registered in your name or in the name of such nominee as you may specify and
in substantially the form attached hereto as Exhibit A, all as you may specify
at any time prior to the date fixed for delivery.
Section 1.3. Other Agreements. Simultaneously with the execution
and delivery of this Agreement, the Company is entering into similar agreements
with the other Purchasers under which such other Purchasers agree to purchase
from the Company the principal amount of Notes set opposite such Purchasers'
names in Schedule I, and your obligation and the obligations of the Company
hereunder are subject to the execution and delivery of the similar agreements
by the other Purchasers. This Agreement and said similar agreements with the
other Purchasers are herein collectively referred to as the "Agreements". The
obligations of each Purchaser shall be several and not joint and no Purchaser
shall be liable or responsible for the acts of any other Purchaser.
SECTION 2. PREPAYMENT OF NOTES.
Section 2.1. No Required Prepayments. No mandatory prepayments of
principal of the Notes are scheduled to be made prior to their expressed
maturity date, and the Notes are not subject to prepayment or redemption at the
option of the Company prior to their expressed maturity date except on the
terms and conditions and in the amounts and with the premium, if any, set forth
below in this [Section] 2.
Section 2.2. Optional Prepayments With Premium. Upon compliance
with [Section] 2.4, the Company shall have the privilege at any time and from
time to time of prepaying the outstanding Notes, either in whole or in part
(but if in part then in a minimum principal amount of $100,000) by payment of
the principal amount of the Notes, or portion thereof to be prepaid, and
accrued interest thereon to the date of such prepayment, together with a
premium equal to the Make-Whole Amount with respect to such principal amount
then to be prepaid.
Section 2.3. Prepayment on Failure of Holders to Give Certain
Consents. In the event that (i) the Company shall have determined in good
faith to enter into a transaction which will result in a violation of any the
provisions of [Section] 5.13, (ii) the Company shall have requested the holders
of the Notes in writing (accompanied by a reasonably detailed description of
the proposed transaction) to consent to such transaction, and (iii) the Company
shall not have received such consent from the holders of at least 51% of the
aggregate unpaid principal amount of the Notes then outstanding within 30 days
from the date of such request, then and in such event the Company may enter
into such transaction; provided that within 90 days after the expiration of
such 30-day period, the Company shall prepay all (but not less than all) of the
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The Timberland Company Note Agreement
Notes held by such holders who have failed to consent to such transaction. Any
such prepayment shall be made by payment of the principal amount of the Notes
being prepaid, and accrued interest thereon to the date of such prepayment,
together with a premium equal to the Make-Whole Amount with respect to such
principal amount then to be prepaid.
Section 2.4. Notice of Prepayments. The Company will give notice of
any prepayment of the Notes to each holder thereof not less than 30 days nor
more than 60 days before the date fixed for such optional prepayment specifying
(i) such date, (ii) the section of this Agreement under which the prepayment is
to be made, (iii) the principal amount of the holder's Notes to be prepaid on
such date, (iv) that a premium may be payable, (v) the date when such premium
will be calculated, and (vi) the accrued interest applicable to the prepayment.
Such notice of prepayment shall also certify all facts which are conditions
precedent to any such prepayment. Notice of prepayment having been so given,
the aggregate principal amount of the Notes specified in such notice, together
with the premium, if any, and accrued interest thereon shall become due and
payable on the date of consummation of the related transaction (in the case of
any prepayment pursuant to [Section] 2.3) or on the date specified in the
notice given pursuant to the first sentence of this [Section] 2.4 (in the case
of any other prepayment). Not later than the prepayment date the Company shall
provide each holder of a Note written notice of the amount of the premium
payable in connection with such prepayment, whether or not any premium is
payable, together with a reasonably detailed computation thereof.
Section 2.5. Allocation of Prepayments. All partial prepayments,
other than prepayments pursuant to [Section] 2.3, shall be applied on all
outstanding Notes ratably in accordance with the unpaid principal amounts
thereof.
Section 2.6. Direct Payment. Notwithstanding anything to the
contrary in this Agreement or the Notes, in the case of any Note owned by the
Purchaser or its nominee or owned by any other institutional holder who has
given written notice to the Company requesting that the provisions of this
Section shall apply, the Company will promptly and punctually pay when due the
principal thereof and premium, if any, and interest thereon, without any
presentment thereof directly to the Purchaser or such subsequent holder at the
address of the Purchaser set forth in Schedule I or at such other address as
the Purchaser or such subsequent holder may from time to time designate in
writing to the Company or, if a bank account is designated for the Purchaser on
Schedule I hereto or in any written notice to the Company from the Purchaser or
any such subsequent holder, the Company will make such payments in immediately
available funds to such bank account, marked for attention as indicated, or in
such other manner or to such other account of the Purchaser or such holder in
any bank in the United States as the Purchaser or any such subsequent holder
may from time to time direct in writing. No such notice shall be effective
with respect to any payment if such notice is given to the Company less than 14
days before the date of such payment. The holder of any Notes to which this
Section applies agrees that in the event it shall sell or transfer any such
Notes (i) it will, prior to the delivery of such Notes (unless it has already
done so), make a notation thereon of all principal, if any, prepaid on such
Notes and will also note thereon the date to which interest has been paid on
such Notes, and (ii) it will promptly notify the Company of the name and
address of the transferee of any Notes so
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The Timberland Company Note Agreement
transferred. With respect to Notes to which this Section applies, the Company
shall be entitled to presume conclusively that the original or such subsequent
institutional holder as shall have requested the provisions hereof to apply to
its Notes remains the holder of such Notes until (y) the Company shall have
received notice from the transferor of the transfer of such Notes, and of the
name and address of the transferee, or (z) such Notes shall have been presented
to the Company as evidence of the transfer.
SECTION 3. REPRESENTATIONS.
Section 3.1. Representations of the Company. The Company represents
and warrants that all representations set forth in the form of certificate
attached hereto as Exhibit B are true and correct as of the date hereof and are
incorporated herein by reference with the same force and effect as though
herein set forth in full.
Section 3.2. Representations of the Purchaser.
(a) Purchase for Investment. You represent, and in entering into
this Agreement the Company understands, that you are acquiring the Notes for
the purpose of investment and not with a view to the resale or distribution
thereof, and that you have no present intention of selling, negotiating or
otherwise disposing of the Notes; provided that the disposition of your
property shall at all times be and remain within your control.
(b) You represent and warrant that either:
(i) you are acquiring the Notes for your own account and
with your general corporate assets and not with the assets of any
separate account in which any employee benefit plan has any interest; or
(ii) (A) you are an insurance company, and
(1) a portion of the funds to be used to make
your investment hereunder constitutes plan assets
allocated to a separate account maintained by you, and
(2) the names of each employee benefit plan
whose assets in such account exceed ten percent of the
total assets or are expected to exceed ten percent of
the total assets of such account as of the date of such
investment (for the purposes of this [Section] 3.2(b)
(ii)(A)(2), all employee benefit plans maintained by
the same employer or employee organization are deemed
to be a single plan) have been disclosed in writing to
the Company; and
(B) the remaining portion of the funds used to
purchase the Notes does not constitute assets allocated to any
separate account maintained by you such that the application of
such funds constitutes a "prohibited transaction" under
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The Timberland Company Note Agreement
Section 406 of the Employee Retirement Income Security Act of
1974, as amended.
(c) You acknowledge that the Notes have not been registered under
the Securities Act of 1933, as amended, and you understand that the Notes must
be held indefinitely unless they are subsequently registered under said
Securities Act or an exemption from such registration is available. You have
been advised that the Company does not contemplate registering, and is not
legally required to register, the Notes under said Securities Act.
SECTION 4. CLOSING CONDITIONS.
Section 4.1. Conditions. Your obligation to purchase the Notes on
the Closing Date shall be subject to the performance by the Company of its
agreements hereunder which by the terms hereof are to be performed at or prior
to the time of delivery of the Notes and to the following further conditions
precedent:
(a) Closing Certificate. You shall have received a
certificate dated the Closing Date, signed by the President or a Vice
President of the Company substantially in the form attached hereto as
Exhibit B, the truth and accuracy of which shall be a condition to your
obligation to purchase the Notes proposed to be sold to you.
(b) Legal Opinions. You shall have received from Chapman
and Cutler, who are acting as your special counsel in this transaction,
and from Ropes & Gray, counsel for the Company, their respective
opinions dated the Closing Date, in form and substance satisfactory to
you, and covering the matters set forth in Exhibits C and D,
respectively, hereto.
(c) Related Transactions. The Company shall have
consummated the sale of the entire principal amount of the Notes
scheduled to be sold on the Closing Date pursuant to this Agreement
and the other agreements referred to in [Section] 1.3.
(d) Satisfactory Proceedings. All proceedings taken in
connection with the transactions contemplated by this Agreement, and
all documents necessary to the consummation thereof, shall be
satisfactory in form and substance to you and your special counsel, and
you shall have received a copy (executed or certified as may be
appropriate) of all legal documents or proceedings taken in connection
with the consummation of said transactions.
Section 4.2. Waiver of Conditions. If on the Closing Date the
Company fails to tender to you the Notes to be issued to you on such date or if
the conditions specified in [Section] 4.1 have not been fulfilled, you may
thereupon elect to be relieved of all further obligations under this Agreement.
Without limiting the foregoing, if the conditions specified in [Section] 4.1
have not been fulfilled, you may waive compliance by the Company with any such
condition to such extent as you may in your sole discretion determine. Nothing
in
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The Timberland Company Note Agreement
this [Section] 4.2 shall operate to relieve the Company of any of its
obligations hereunder or to waive any of your rights against the Company.
SECTION 5. COMPANY COVENANTS.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
Section 5.1. Corporate Existence, Etc. The Company will preserve
and keep in force and effect, and will cause each Restricted Subsidiary to
preserve and keep in force and effect, its corporate existence and all licenses
and permits reasonably necessary to the proper conduct of its business the
absence of which might materially and adversely affect the properties, business
or condition of the Company or of the Company and its Restricted Subsidiaries
taken as a whole, provided that the foregoing shall not prevent any transaction
permitted by [Section] 5.13.
Section 5.2. Insurance. The Company will maintain, and will cause
each Restricted Subsidiary to maintain, insurance coverage by financially sound
and reputable insurers accorded a rating by A.M. Best Company, Inc. of A:XII or
better at the time of the issuance of any such policy and in such forms and
amounts and against such risks as are customary for corporations of established
reputation engaged in the same or a similar business and owning and operating
similar properties; provided, however, that if, during the term of any such
insurance policy, the rating accorded the insurer shall be less than A:XII, the
Company will, on the date of renewal of any such policy (or, if such change in
rating shall occur within 90 days prior to such renewal date, within 90 days of
the date of such change in rating), obtain such insurance policy from an
insurer so rated.
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with
Laws. The Company will promptly pay and discharge, and will cause each
Restricted Subsidiary promptly to pay and discharge, all lawful taxes,
assessments and governmental charges or levies imposed upon the Company or such
Restricted Subsidiary, respectively, or upon or in respect of all or any part
of the property or business of the Company or such Restricted Subsidiary, all
trade accounts payable in accordance with usual and customary business terms,
and all claims for work, labor or materials, which if unpaid might become a
Lien upon any property of the Company or such Restricted Subsidiary not
permitted by [Section] 5.10; provided the Company or such Restricted Subsidiary
shall not be required to pay any such tax, assessment, charge, levy, account
payable or claim if (i) the validity, applicability or amount thereof is being
contested in good faith by appropriate actions or proceedings which will
prevent the forfeiture or sale of any property of the Company or such
Restricted Subsidiary or any material interference with the use thereof by the
Company or such Restricted Subsidiary if such forfeiture, sale or interference
might have a material adverse effect on the properties, business or condition
of the Company or of the Company and its Restricted Subsidiaries taken as a
whole, and (ii) the Company or such Restricted Subsidiary shall set aside on
its books, reserves deemed by it to be adequate with respect thereto. The
Company will promptly comply and will cause each Restricted Subsidiary to
comply with all laws, ordinances or governmental rules and regulations to which
it is subject, including
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The Timberland Company Note Agreement
without limitation, the Occupational Safety and Health Act of 1970, the
Employee Retirement Income Security Act of 1974 and all laws, ordinances,
governmental rules and regulations relating to environmental protection in all
applicable jurisdictions, the violation of which would materially and adversely
affect the properties, business, prospects, profits or condition of the Company
and its Restricted Subsidiaries or would result in any Lien upon any material
property of the Company or any Restricted Subsidiary.
Section 5.4. Maintenance, Etc. The Company will maintain, preserve
and keep, and will cause each Restricted Subsidiary to maintain, preserve and
keep, its properties which are used or useful in the conduct of its business
(whether owned in fee or a leasehold interest) in good repair and working order
and from time to time will make all necessary and reasonable repairs,
replacements, renewals and additions so that at all times the efficiency
thereof shall be maintained, unless the failure to do so would not have a
material adverse effect on the properties, business or condition of the Company
or of the Company and its Restricted Subsidiaries taken as a whole.
Section 5.5. Nature of Business. Neither the Company nor any
Restricted Subsidiary will engage in any business if, as a result, the general
nature of the business, taken on a consolidated basis, which would then be
engaged in by the Company and its Restricted Subsidiaries would be
substantially changed from the general nature of the business engaged in by the
Company and its Restricted Subsidiaries on the date of this Agreement.
Section 5.6. Current Ratio. The Company will at all times keep and
maintain Consolidated Current Assets at an amount not less than 125% of
Consolidated Current Liabilities.
Section 5.7. Consolidated Tangible Net Worth. The Company will at
all times keep and maintain Consolidated Tangible Net Worth at an amount not
less than (i) for the fiscal quarter of the Company ending December 31, 1994,
the sum of $56,759,000 plus 25% of Consolidated Net Income for the nine-month
period ended September 30, 1994 (but without deduction in the case of a
deficit in Consolidated Net Income) and (ii) for each fiscal quarter
thereafter, the sum of (x) the amount required to be maintained during the
immediately preceding fiscal quarter of the Company, and (y) an amount equal
to 25% of Consolidated Net Income for such preceding fiscal quarter (but
without deduction in the case of a deficit in Consolidated Net Income).
Section 5.8. Limitations on Indebtedness. (a) The Company will not
and will not permit any Restricted Subsidiary to create, assume or incur or in
any manner be or become liable in respect of any Current Debt or Funded Debt,
except:
(1) the Notes;
(2) Current Debt and Funded Debt of the Company and its
Restricted Subsidiaries outstanding as of the date of this Agreement
and reflected in Annex B to Exhibit B attached hereto (including any
amendment, modification, or other change
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The Timberland Company Note Agreement
to the Current Debt and Funded Debt described in such Annex B and which
does not increase the principal amount thereof);
(3) Current Debt or Funded Debt of the Company, provided
that at the time of incurrence thereof and after giving effect thereto
and to the application of the proceeds thereof:
(i) Total Debt will not exceed 175% of Total
Equity, and
(ii) Net Income Available for Interest Charges for
the four immediately preceding fiscal quarters shall have been
at least 200% of Pro Forma Interest Charges for such period;
(4) Current Debt or Funded Debt of a Restricted Subsidiary
to the Company or to a Wholly-owned Restricted Subsidiary; and
(5) Current Debt or Funded Debt of a Restricted Subsidiary,
other than that permitted by [Section] 5.8(a)(4), provided that at the
time of incurrence thereof and after giving effect thereto and to the
application of the proceeds thereof, (i) Specified Debt does not
exceed 20% of Consolidated Tangible Net Worth, (ii) Total Debt does not
exceed 175% of Total Equity and (iii) Net Income Available for Interest
Charges for the four immediately preceding fiscal quarters shall have
been at least 200% of Pro Forma Interest Charges for such period.
(b) Any corporation which becomes a Restricted Subsidiary after the
date hereof shall for all purposes of this [Section] 5.8 be deemed to have
created, assumed or incurred at the time it becomes a Restricted Subsidiary all
Funded Debt and Current Debt of such corporation existing immediately after it
becomes a Restricted Subsidiary.
Section 5.9. Fixed Charges Coverage. The Company will keep and
maintain Net Income Available for Fixed Charges for each period of four
consecutive fiscal quarters at an amount which is not less than 150% of Fixed
Charges for such period.
Section 5.10. Limitation on Liens. The Company will not, and will
not permit any Restricted Subsidiary to, create or incur, or suffer to be
incurred or to exist, any Lien on its or their property or assets, whether now
owned or hereafter acquired, or upon any income or profits therefrom, to secure
any Indebtedness or transfer any property for the purpose of subjecting the
same to the payment of obligations in priority to the payment of its or their
general creditors, or acquire or agree to acquire, or permit any Restricted
Subsidiary to acquire, any property or assets upon conditional sales agreements
or other title retention devices, except:
(a) Liens for property taxes and assessments or
governmental charges or Liens securing claims or demands of mechanics
and material men, provided that such claims or demands are being
contested in a manner permitted by [Section] 5.3;
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The Timberland Company Note Agreement
(b) Liens of or resulting from any judgment or award, the
time for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Company or a Restricted Subsidiary
shall at any time in good faith be prosecuting an appeal or proceeding
for a review and in respect of which a stay of execution pending such
appeal or proceeding for review shall have been secured;
(c) Liens incidental to the conduct of business or the
ownership of properties and assets (including warehousemen's and
attorneys' Liens and statutory landlords' Liens) and Liens to secure
the performance of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds or other Liens of like
general nature incurred in the ordinary course of business and not in
connection with the borrowing of money, provided in each case, the
obligation secured is not overdue or, if overdue, is being contested
in good faith by appropriate actions or proceedings;
(d) Liens securing Indebtedness of a Restricted Subsidiary
to the Company or to another Restricted Subsidiary;
(e) Liens on property of a Restricted Subsidiary which
secure Specified Debt of such Restricted Subsidiary, provided that all
such Specified Debt shall have been incurred within the applicable
limitations provided in [Section] 5.8;
(f) Liens (including Capitalized Leases) (i) existing as of
the date of this Agreement and reflected in Annex B to Exhibit B
attached hereto, securing Indebtedness of the Company or any Restricted
Subsidiary outstanding on such date and (ii) securing refundings,
refinancings, restructurings or replacements of Indebtedness secured by
Liens (including Capitalized Leases) permitted by clause (i) of this
[Section] 5.10(f), provided that each such refunding, refinancing,
restructuring and replacement shall not exceed the total principal
amount of Indebtedness being refunded, refinanced, restructured or
replaced and such Indebtedness may not be secured by any additional
property of the Company and its Subsidiaries;
(g) Liens incurred after the date hereof (1) given to
secure the payment of the purchase price incurred in connection with
the acquisition of fixed assets useful and intended to be used in
carrying on the business of the Company or a Restricted Subsidiary,
including Liens existing on such fixed assets at the time of
acquisition thereof or at the time of acquisition by the Company or a
Restricted Subsidiary of any business entity then owning such fixed
assets, whether or not such existing Liens were given to secure the
payment of the purchase price of the fixed assets to which they attach
so long as they were not incurred, extended or renewed in contemplation
of such acquisition, provided that (i) the Lien shall attach solely to
the property acquired or purchased, (ii) at the time of acquisition of
such fixed assets, the aggregate amount remaining unpaid on all
Indebtedness secured by Liens on such fixed assets whether or not
assumed by the Company or a Restricted Subsidiary shall not exceed an
amount equal to 100% of the lesser of the total purchase price or fair
market value at the time of acquisition of such fixed assets (as
determined in good faith by the Board of Directors of the Company), and
(iii) all such Indebtedness shall have been incurred
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The Timberland Company Note Agreement
within the applicable limitations provided in [Section] 5.8 and (2)
given to secure refundings, refinancings, restructurings or
replacements of Indebtedness secured by Liens permitted by clause (1)
of this [Section] 5.10(g), provided that each such refunding,
refinancing, restructuring and replacement shall not exceed the total
principal amount of Indebtedness being refunded, refinanced,
restructured or replaced and such Indebtedness may not be secured by any
additional property of the Company and its Subsidiaries;
(h) Liens on documents and the underlying goods securing
obligations in respect of documentary letters of credit and bankers'
acceptances;
(i) Liens that may arise from the sale or transfer of
receivables pursuant to a Securitized Asset Transaction (as defined in
[Section] 5.13(d)(3));
(j) provided that no Default or Event of Default exists at
the time of creation thereof, other Liens on fixed assets (in addition
to those permitted by the foregoing provisions of this [Section] 5.10)
if, after giving effect thereto (and to the application of the proceeds
thereof), the aggregate amount of Specified Debt would not exceed 20%
of Consolidated Tangible Net Worth; and
(k) other Liens securing Funded Debt or Current Debt (in
addition to those permitted by the foregoing provisions of this
[Section] 5.10), provided that the Notes shall be equally and ratably
secured pursuant to agreements or instruments in form and substance
satisfactory to the Noteholders as evidenced by their prior written
consent thereto in accordance with the provisions of [Section] 7.1.
Section 5.11. Restricted Payments. The Company will not, except as
hereinafter provided:
(a) Declare any dividends, either in cash or property, on
any shares of its capital stock of any class (except dividends or
other distributions payable solely in shares of capital stock of the
Company); or
(b) Directly or indirectly, or through any Subsidiary,
purchase, redeem or retire any shares of its capital stock of any
class or any warrants, rights or options to purchase or acquire any
shares of its capital stock, other than purchases, redemptions or
retirements of its capital stock in connection with any employee
benefit plans to the extent that the aggregate amount of such
purchases, redemptions and retirements during the fiscal year which
includes the date of the purchase, redemption or retirement in
question does not exceed the sum of (1) $100,000 plus (2) the proceeds
from sales of shares of the Company's capital stock in connection with
employee benefit plans during such fiscal year; or
(c) Make any other payment or distribution, either directly
or indirectly or through any Subsidiary, in respect of its capital
stock; or
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The Timberland Company Note Agreement
(d) make, or permit any Restricted Subsidiary to make, any
Restricted Investment;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options, and all such
other distributions and Restricted Investments being herein collectively called
"Restricted Payments"), if after giving effect thereto the aggregate amount of
Restricted Payments made during the period from and after December 31, 1988 to
and including the date of the making of the Restricted Payment in question,
would exceed the sum of (i) $33,879,500 plus (ii) 50% of Consolidated Net
Income for the period from and after December 31, 1993, computed on a
cumulative basis for said entire period (or if such Consolidated Net Income is
a deficit figure, then minus 100% of such deficit), plus (iii) the aggregate
net cash proceeds to the Company during such period from the sale of shares of
its capital stock or warrants, rights or option to purchase or acquire any
shares of its capital stock (other than any such sale in connection with
employee benefit plans), plus (iv) the aggregate amount of net proceeds
received by the Company and its Restricted Subsidiaries in connection with any
sale or disposition of Restricted Investments made during such period provided
that for the purposes of this [Section] 5.11 the amount of proceeds from the
sale or disposition of any Restricted Investment may not exceed the original
amount of such Restricted Investment.
The Company will not declare any dividend which constitutes a
Restricted Payment payable more than 60 days after the date of declaration
thereof.
For the purposes of this [Section] 5.11 the amount of any Restricted
Payment declared, paid or distributed in property of the Company shall be
deemed to be the greater of the book value or fair market value (as determined
in good faith by the Board of Directors of the Company) of such property at the
time of the making of the Restricted Payment in question.
Section 5.12. Sale and Leasebacks. The Company will not, and will
not permit any Restricted Subsidiary to, enter into any arrangement whereby the
Company or any Restricted Subsidiary shall sell or transfer any property owned
by the Company or any Restricted Subsidiary to any Person other than the
Company or a Restricted Subsidiary and thereupon the Company or any Restricted
Subsidiary shall lease or intend to lease, as lessee, the same property unless
(i) such property was constructed or installed for the Company or such
Restricted Subsidiary and is sold and leased back to the Company or such
Restricted Subsidiary within 18 months after such construction or installation,
and (ii) such sale by the Company or such Restricted Subsidiary and leaseback
to the Company or such Restricted Subsidiary would not violate the provisions
of [Section] 5.8 hereof.
Section 5.13. Mergers, Consolidations and Sales of Assets. (a) The
Company will not, and will not permit any Restricted Subsidiary to (i)
consolidate with or be a party to a merger with any other corporation or (ii)
sell, lease or otherwise dispose of all or any substantial part (as defined in
paragraph (d) of this Section) of the assets of the Company and its Restricted
Subsidiaries, provided, however, that:
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The Timberland Company Note Agreement
(1) any Restricted Subsidiary may merge or consolidate with
or into any other corporation so long as (i) in any merger or
consolidation involving the Company, the Company shall be the surviving
or continuing corporation and (ii) in any merger or consolidation
involving a corporation other than the Company, (x) the survivor shall
be a Restricted Subsidiary and the Minority Interests in the surviving
corporation, expressed as a percentage of the net worth of such
surviving corporation after giving effect to such merger or
consolidation, would not exceed the lesser of (I) 25% and (II) 10% plus
the Minority Interests in such Restricted Subsidiary on the date of
this Agreement or, if the Restricted Subsidiary is acquired or
designated after the date of this Agreement, on the date of such
acquisition or designation, and (y) aggregate Tangible Minority
Interests (as defined in paragraph (d) of this Section) in all
Restricted Subsidiaries after giving effect to such merger or
consolidation would not exceed 10% of Consolidated Tangible Net Worth;
(2) the Company may consolidate or merge with any other
corporation if (i) the surviving or continuing corporation is a
corporation organized under the laws of any state of the United
States, (ii) at the time of such consolidation or merger and after
giving effect thereto no Default or Event of Default shall have
occurred and be continuing, and (iii) after giving effect to such
consolidation or merger the surviving corporation would be permitted
to incur at least $1.00 of additional Funded Debt under the provisions
of [Section] 5.8(a)(3);
(3) any Restricted Subsidiary may sell, lease or otherwise
dispose of all or any substantial part of its assets to the Company or
any Wholly-owned Restricted Subsidiary;
(4) the Company or any Restricted Subsidiary may sell,
transfer or otherwise dispose of any Restricted Investment and any
shares of stock in any Unrestricted Subsidiary; and
(5) a Restricted Subsidiary may consolidate or merge with
any other corporation in a transaction permitted under the provisions
of [Section] 5.13(c).
(b) The Company will not permit any Restricted Subsidiary to issue
or sell any shares of stock of any class (including as "stock" for the purposes
of this [Section] 5.13, any warrants, rights or options to purchase or
otherwise acquire stock or other Securities exchangeable for or convertible
into stock) of such Restricted Subsidiary to any Person other than the Company
or a Wholly-owned Restricted Subsidiary, unless (i) such issue or sale does not
constitute a substantial part (as hereinafter defined) of the assets of the
Company and its Restricted Subsidiaries, and (ii) to the extent that (x) the
Minority Interests in such Restricted Subsidiary, expressed as a percentage of
the net worth of such Restricted Subsidiary after giving effect to such
issuance or sale would not exceed the lesser of (I) 25% and (II) 10% plus the
Minority Interests in such Restricted Subsidiary on the date of this Agreement
or, if such Restricted Subsidiary is acquired or designated after the date of
this Agreement, on the date of such acquisition or designation, and (y)
aggregate Tangible
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The Timberland Company Note Agreement
Minority Interests in all Restricted Subsidiaries after giving effect to such
issuance or sale would not exceed 10% of Consolidated Tangible Net Worth.
(c) The Company will not sell, transfer or otherwise dispose of any
shares of stock in any Restricted Subsidiary (except to qualify directors) or
any Indebtedness of any Restricted Subsidiary, and will not permit any
Restricted Subsidiary to sell, transfer or otherwise dispose of (except to the
Company or a Wholly-owned Restricted Subsidiary) any shares of stock or any
Indebtedness of any other Restricted Subsidiary, unless:
(1) either (x) such sale, transfer or disposition is made
within the limitations of [Section] 5.13(b), or (y) simultaneously with
such sale, transfer, or disposition, all shares of stock and all
Indebtedness (excluding any trade receivables) owed by such Restricted
Subsidiary at the time owned by the Company and by every other
Subsidiary shall be sold, transferred or disposed of as an entirety;
(2) the Board of Directors of the Company shall have
determined, as evidenced by a resolution thereof, that such sale,
transfer or disposition is in the best interests of the Company;
(3) such stock and Indebtedness is sold, transferred or
otherwise disposed of to a Person, for consideration and on terms
reasonably deemed by the Board of Directors to be adequate and
satisfactory, provided that (i) the amount of any non-cash
consideration received by the Company or a Restricted Subsidiary shall
be determined in good faith by the Board of Directors of the Company, as
evidenced by a certificate of the president or any vice president of the
Company setting forth in reasonable detail the basis of such
determination and delivered to the Note Purchasers, which determination
shall, upon the written request of the holder or holders of not less
than 25% of the unpaid principal amount of the Notes, be subject to
verification by an independent appraiser designated and compensated by
the Company and not objected to by such holders, and (ii) any non-cash
consideration will be deemed a Restricted Investment made by the
Company or such Restricted Subsidiary on the date of such sale, transfer
or disposition in the amount of such valuation;
(4) except in the case of transactions permitted by
[Section] 5.13(b), the Restricted Subsidiary being disposed of shall
not have any continuing investment in the Company or any other
Restricted Subsidiary not being simultaneously disposed of; and
(5) such sale or other disposition does not involve a
substantial part (as hereinafter defined) of the assets of the Company
and its Restricted Subsidiaries.
(d) As used in this [Section] 5.13:
(1) A sale, lease or other disposition of assets (other
than Restricted Investments and investments in Unrestricted
Subsidiaries) shall be deemed to be a "substantial part" of the assets
of the Company and its Restricted Subsidiaries only if the book value
of such assets when added to the book value of all other assets sold,
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The Timberland Company Note Agreement
leased or otherwise disposed of by the Company and its Restricted
Subsidiaries (other than Securitized Asset Transactions and other
transactions in the ordinary course of business) during the same
fiscal year, exceeds 15% of the Consolidated Net Tangible Assets of the
Company and its Restricted Subsidiaries determined as of the end of the
immediately preceding fiscal year or contributed more than 15% of Net
Income Available for Interest Charges, during the next preceding three
fiscal years taken as a whole. Sales or other realization on
delinquent receivables shall not be included in any computation of
sales or other dispositions hereunder. Sales of assets shall not be
included in any computations under this paragraph (d) to the extent
that (x) the proceeds from such sale are applied to prepay the Notes
pursuant to [Section] 2.2 hereof, (y) the proceeds from such sale are
applied to the voluntary prepayment of Funded Debt, or (z) the proceeds
of such sale are applied, within one year of such sale, to the purchase
of other property useful and to be used in the business of the Company
and its Restricted Subsidiaries and, pending such application, are
maintained by the Company or any Restricted Subsidiary in a separate
segregated account.
(2) The term "Tangible Minority Interests" shall mean, with
respect to any Restricted Subsidiary, the amount that bears the same
relationship to Minority Interests in such Subsidiary as the
Consolidated Tangible Net Worth of such Subsidiary bears to the net
worth of such Subsidiary. For purposes of this definition, the
"Consolidated Tangible Net Worth" of a Restricted Subsidiary shall be
determined for such Subsidiary and its Restricted Subsidiaries in
accordance with the definitions set forth in [Section] 8.1, mutatis
mutandis.
(3) "Securitized Asset Transaction" shall mean a sale or
other transfer by any of the Company and its Restricted Subsidiaries of
receivables which were produced in the ordinary course of business and
not contingent upon any performance or product guarantee on the part of
the Company or any Restricted Subsidiary, which sale or transfer does
not involve the creation of any recourse obligation in respect thereof
on the part of the Company or any Restricted Subsidiary (other than
matters of title to, and the character of, the receivables so sold or
transferred).
Section 5.14. Guaranties. The Company will not and will not permit
any Restricted Subsidiary to become or be liable in respect of any Guaranty
except Guaranties by the Company and its Restricted Subsidiaries of the
obligations of any Person so long as the Company and/or the Restricted
Subsidiary guaranteeing such obligation could have incurred such obligation
within the limits of this Agreement, provided that such underlying obligation
shall be deemed to have been incurred by, and to be the continuing direct
obligation of, the guarantor for all purposes of this Agreement.
Section 5.15. Repurchase of Notes. Neither the Company nor any
Restricted Subsidiary or Affiliate, directly or indirectly, may repurchase or
make any offer to repurchase any Notes unless the offer has been made to
repurchase Notes, pro rata, from all holders of the Notes at the same time and
upon the same terms. In case the Company repurchases any Notes, such Notes
shall thereafter be canceled and no Notes shall be issued in substitution
therefor.
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The Timberland Company Note Agreement
Section 5.16. Transactions with Affiliates. The Company will not,
and will not permit any Restricted Subsidiary to, enter into or be a party to,
any transaction or arrangement with any Affiliate (including without
limitation, the purchase from, sale to or exchange of property with, or the
rendering of any service by or for, any Affiliate), except in the ordinary
course of and pursuant to the reasonable requirements of the Company's or such
Restricted Subsidiary's business and upon fair and reasonable terms (as
determined in good faith by the Board of Directors of the Company) no less
favorable to the Company or such Restricted Subsidiary than would obtain in a
comparable arm's-length transaction with a Person other than an Affiliate.
Section 5.17. Investments. The Company will not, and will not permit
any Restricted Subsidiary to, make any investments in or loans, advances or
extensions of credit to, any Person, except:
(a) investments, loans, advances and extensions of
credit by the Company and its Restricted Subsidiaries in a
corporation which, after giving effect to such investment,
will be a Restricted Subsidiary;
(b) investments in commercial paper maturing in 270
days or less from the date of issuance which, at the time of
acquisition by the Company or any Restricted Subsidiary, is
accorded a rating of P-1 by Standard & Poor's Corporation or a
rating of A-1 by Moody's Investors Services, Inc.;
(c) investments in direct obligations issued or
guaranteed by the full faith and credit of the United States of
America, maturing, except in the case of investments made with
security deposits of rental customers, in twelve months or less
from the date of acquisition thereof;
(d) investments in certificates of deposit maturing
within one year from the date of origin or other obligations
(including repurchase agreements), issued by a bank or trust
company organized under the laws of the United States or any
state thereof, having capital, surplus and undivided profits
aggregating at least $250,000,000 and a long term deposit
rating of A or better from either Standard & Poor's Corporation
or Moody's Investors Service, Inc.;
(e) loans or advances not exceeding $1,000,000 in
the aggregate in the usual and ordinary course of business to
officers, directors and employees of the Company and its
Restricted Subsidiaries;
(f) Investments in money market preferred stock,
which, at the time of acquisition by the Company or any
Restricted Subsidiary, is accorded a rating of AA or better by
Standard & Poor's Corporation or a rating of Aa2 or better by
Moody's Investors Services, Inc.;
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The Timberland Company Note Agreement
(g) Investments in money market mutual funds having
total assets aggregating at least $1,000,000,000 or which
invests primarily in assets described in clauses (b), (c), (d)
and (f) of this [Section] 5.17;
(h) Investments in demand deposits and endorsements
for collection;
(i) Investments to the extent that the
consideration therefor consists of capital stock of the
Company; and
(j) Restricted Investments, subject to the
limitations of [Section] 5.11.
In valuing any investments, loans and advances for the purpose of
applying the limitations set forth in this [Section] 5.17 and [Section] 5.11
such investments, loans and advances shall be taken at the original cost
thereof, without allowance for any subsequent write-offs or appreciation or
depreciation therein, but less any amount repaid or recovered on account of
capital or principal.
For purposes of this [Section] 5.17, at any time when a corporation
becomes a Restricted Subsidiary, all investments of such corporation at such
time shall be deemed to have been made by such corporation, as a Restricted
Subsidiary, at such time.
Section 5.18. Termination of Pension Plans. The Company will not and
will not permit any Subsidiary to permit any employee benefit plan maintained
by it to be terminated in a manner which could result in the imposition of a
Lien on any property of the Company or any Subsidiary pursuant to Section 4068
of the Employee Retirement Income Security Act of 1974, as amended, if the
incurrence of such Lien would not be permitted by [Section] 5.10.
Section 5.19. Reports and Rights of Inspection. The Company will
keep, and will cause each Subsidiary to keep, proper books of record and
account in which full and correct entries will be made of all dealings or
transactions of or in relation to the business and affairs of the Company or
such Subsidiary, in accordance with generally accepted accounting principles
consistently applied (except for changes disclosed in the financial statements
furnished to you pursuant to this [Section] 5.19 and concurred in by the
independent public accountants referred to in [Section] 5.19(b) hereof), and
will furnish to you so long as you are the holder of any Note and to each other
institutional holder of the then outstanding Notes (in duplicate if so
specified below or otherwise requested):
(a) Quarterly Statements. As soon as available and
in any event within 55 days after the end of each quarterly
fiscal period (except the last) of each fiscal year, duplicate
copies of:
(1) consolidated and consolidating balance
sheets of the Company and its Restricted Subsidiaries
and of the Company and its consolidated Subsidiaries as
of the close of such quarter setting forth, in the case
of such consolidated statements, in comparative form
the amount for the end of the preceding fiscal year,
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The Timberland Company Note Agreement
(2) consolidated and consolidating
statements of income of the Company and its Restricted
Subsidiaries and of the Company and its consolidated
Subsidiaries for such quarterly period, setting forth,
in the case of such consolidated statements, in
comparative form the amount for the corresponding
period of the preceding fiscal year, and
(3) consolidated statements of cash flows
of the Company and its Restricted Subsidiaries and of
the Company and its consolidated Subsidiaries for the
portion of the fiscal year ending with such quarter,
setting forth in comparative form the amount for the
corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and correct, by an
authorized financial officer of the Company, provided that so long as the
Company shall file a quarterly report on Form 10-Q or any similar form with the
Securities and Exchange Commission or any successor agency which contains the
information set forth in this paragraph (a), the requirements of this paragraph
(a) shall be satisfied by forwarding Form 10-Q to the holders of the Notes
within 55 days after the end of such quarterly fiscal period but, in any event,
within five days of filing such Form 10-Q with the Securities and Exchange
Commission, and provided, further that so long as the Unrestricted Subsidiaries
of the Company taken as a whole do not constitute a Significant Subsidiary, the
Company shall not be required to deliver to you financial statements of the
Company and its Restricted Subsidiaries referred to in paragraphs (1), (2) and
(3) of this [Section] 5.19(a);
(b) Annual Statements. As soon as available and in
any event within 110 days after the close of each fiscal year
of the Company, duplicate copies of:
(1) consolidated and consolidating balance
sheets of the Company and its Restricted Subsidiaries
and of the Company and its consolidated Subsidiaries as
of the close of such fiscal year, and
(2) consolidated and consolidating
statements of income and stockholders' equity and cash
flows of the Company and its Restricted Subsidiaries
and of the Company and its consolidated Subsidiaries
for such fiscal year,
in each case setting forth in comparative form the consolidated figures for the
preceding fiscal year, all in reasonable detail and accompanied by an opinion
thereon of a firm of independent public accountants of recognized national
standing selected by the Company to the effect that the consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied (except for changes in application in which
such accountants concur) and present fairly the financial condition of the
companies reported on and that the examination of such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and accordingly,
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The Timberland Company Note Agreement
includes such tests of the accounting records and such other
auditing procedures as were considered necessary in the
circumstances, provided that so long as the Company shall file an
annual report on Form 10-K or any similar form with the Securities
and Exchange Commission or any successor agency which contains the
information set forth in this paragraph (b), the requirements of
this paragraph (b) shall be satisfied by forwarding Form 10-K to the
holders of the Notes within 110 days after the end of such fiscal
year but, in any event, within five days of filing such Form 10-K
with the Securities and Exchange Commission, and provided further
that so long as the Unrestricted Subsidiaries of the Company taken
as a whole do not constitute a Significant Subsidiary, the Company
shall not be required to deliver to you financial statements of the
Company and its Restricted Subsidiaries referred to in paragraphs
(1) and (2) of this [Section] 5.19(b);
(c) Audit Reports. Promptly upon receipt thereof, one copy
of each interim or special audit made by independent accountants of
the books of the Company or any Restricted Subsidiary and any
management letter received from such accountants;
(d) SEC and Other Reports. Promptly upon their becoming
available, one copy of each financial statement, report, notice or
proxy statement sent by the Company to stockholders generally and of
each regular or periodic report, and any registration statement or
prospectus filed by the Company or any Subsidiary with any
securities exchange or the Securities and Exchange Commission or any
successor agency, and copies of any orders in any proceedings to
which the Company or any of its Subsidiaries is a party, issued by
any governmental agency, Federal or state, having jurisdiction over
the Company or any of its Subsidiaries;
(e) Requested Information. With reasonable promptness,
such other data and information as you or any such institutional
holder may reasonably request, provided, that with respect to any
data and information obtained by you as a result of any request
pursuant to this paragraph (e), you agree that, to the extent that
such data and information has not theretofore otherwise been
disclosed by or as authorized by the Company in such a manner as to
render such data and information no longer confidential, you will
use reasonable efforts (consistent with your established procedures)
to reasonably maintain (and cause persons referred to in (i) below
to maintain) the confidential nature of the data and information
therein contained; provided, that anything herein contained to the
contrary notwithstanding, you may, to the extent necessary, disclose
or disseminate such data and information to: (i) your employees,
agents, attorneys, and accountants who would ordinarily have access
to such data and information in the normal course of the performance
of their duties; (ii) such third parties as you may, in your
discretion, deem reasonably necessary or desirable in connection
with or in response to (x) compliance with any law, ordinance or
governmental order, regulation, rule, policy, subpoena,
investigation, regulatory authority request or request, or (y) any
order, decree, judgment, subpoena, notice of discovery or similar
ruling or pleading issued, filed, served or purported on its face to
be issued, filed or served (A) by or under authority of any court,
tribunal, arbitration board of any governmental or industry agency,
commission, authority,
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The Timberland Company Note Agreement
board or similar entity or (B) in connection with any proceeding,
case or matter pending (or on its face purported to be pending)
before any court, tribunal, arbitration board or any governmental
agency, commission, authority, board or similar entity; (iii) any
prospective purchaser, securities broker or dealer or investment
banker in connection with the resale or proposed resale by you of
any portion of the Notes who shall agree in writing to accept such
information subject to the provisions of this paragraph (e); (iv)
any Person holding your debt Securities who shall have requested to
inspect such information subject to the provisions of this paragraph
(e); (v) the National Association of Insurance Commissioners; and
(vi) any entity utilizing such information to rate or classify your
debt or equity Securities or to report to the public concerning the
industry of which you are a part; and, provided further, that you
shall not be liable to the Company or any other Person for damages
for any failure by you, despite your reasonable efforts so to do,
to comply with the provisions of this paragraph (e).
(f) Officers' Certificates. Within the periods provided in
paragraphs (a) and (b) above, a certificate of an authorized
financial officer of the Company stating that he has reviewed the
provisions of this Agreement and setting forth: (i) the information
and computations (in sufficient detail) required in order to
establish whether the Company was in compliance with the
requirements of [Section] 5.5 through [Section] 5.18, inclusive, at
the end of the period covered by the financial statements then being
furnished, and (ii) whether there existed as of the date of such
financial statements and whether, to the best of his knowledge,
there exists on the date of the certificate or existed at any time
during the period covered by such financial statements any Default
or Event of Default and, if any such condition or event exists on
the date of the certificate, specifying the nature and period of
existence thereof and the action the Company is taking and proposes
to take with respect thereto;
(g) Accountant's Certificates. Within the period provided
in paragraph (b) above, a certificate of the accountants who render
an opinion with respect to such financial statements, stating that
they have reviewed this Agreement and stating further, whether in
making their audit, such accountants have become aware of any
Default or Event of Default under any of the terms or provisions of
[Section] 5.6 through [Section] 5.14, inclusive, [Section] 5.17 or
[Section] 5.18 of this Agreement insofar as any such terms or
provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists,
specifying the nature and period of existence thereof; and
(h) Unrestricted Subsidiaries. Within the respective
periods provided in paragraph (b) above, financial statements of the
character and for the dates and periods as in said paragraph (b)
provided covering Unrestricted Subsidiaries on a consolidated and
consolidating basis.
Without limiting the foregoing, the Company will permit you, so
long as you are the holder of any Note, and each institutional holder of the
then outstanding Notes (or such Persons as either you or such holder may
designate) to visit and inspect, under the
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The Timberland Company Note Agreement
Company's guidance, any of the properties of the Company or any Subsidiary, to
examine all their books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers, employees, and
independent public accountants (and by this provision the Company authorizes
said accountants to discuss with you the finances and affairs of the Company
and its Subsidiaries) all at such reasonable times and as often as may be
reasonably requested. The Company shall not be required to pay or reimburse
you or any such holder for expenses which you or any such holder may incur in
connection with any such visitation or inspection.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 6.1. Events of Default. Any one or more of the following
shall constitute an "Event of Default" as the term is used herein:
(a) Default shall occur in the payment of interest on any
Note when the same shall have become due and such default shall
continue for more than five days; or
(b) Default shall occur in the making of any payment of the
principal of any Note or the premium thereon at any date fixed for
prepayment; or
(c) Default shall occur in the making of any other payment
of the principal of any Note or the premium thereon at the expressed
or any accelerated maturity date; or
(d) Default shall be made in the payment of the principal
of or interest on any Indebtedness of the Company or any Restricted
Subsidiary for borrowed money in an aggregate principal amount in
excess of $1,000,000, as and when the same shall become due and
payable by the lapse of time, by declaration, by call for redemption
or otherwise, and such default shall continue beyond the period of
grace, if any, allowed with respect thereto; or
(e) Default or the happening of any event shall occur under
any indenture, agreement, or other instrument under which any
Indebtedness of the Company or any Restricted Subsidiary for
borrowed money in an aggregate principal amount in excess of
$1,000,000 may be issued and such default or event shall continue
for a period of time sufficient to permit the acceleration of the
maturity of any Indebtedness of the Company or any Restricted
Subsidiary outstanding thereunder; or
(f) Default shall occur in the observance or performance of
any covenant or agreement contained in [Section] 5.6 through
[Section] 5.15, inclusive, or [Section] 5.17 hereof; or
(g) Default shall occur in the observance or performance of
any other provision of this Agreement which is not remedied within
30 days after notice thereof to the Company by the holder of any
Note; or
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The Timberland Company Note Agreement
(h) If any representation or warranty made by the Company
herein, or made by the Company in any statement or certificate
furnished by the Company in connection with the consummation of the
issuance and delivery of the Notes or furnished by the Company
pursuant hereto, is untrue in any material respect as of the date of
the issuance or making thereof; or
(i) The Company or any Significant Subsidiary which is a
Restricted Subsidiary becomes insolvent or bankrupt, is generally
not paying its debts as they become due or makes an assignment for
the benefit of creditors, or the Company or any Significant
Subsidiary which is a Restricted Subsidiary causes or suffers an
order for relief to be entered with respect to it under applicable
Federal bankruptcy law or applies for or consents to the appointment
of a custodian, trustee or receiver for the Company or such
Significant Subsidiary which is a Restricted Subsidiary or for the
major part of the property of either; or
(j) A custodian, trustee or receiver is appointed for the
Company or any Significant Subsidiary which is a Restricted
Subsidiary or for the major part of the property of either and is
not discharged within 30 days after such appointment; or
(k) Final judgment or judgments for the payment of money
aggregating in excess of $100,000 is or are outstanding against the
Company or any Significant Subsidiary which is a Restricted
Subsidiary or against any property or assets of either and any one
of such judgments has remained unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of 30 days from the
date of its entry; or
(l) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or
against the Company or any Significant Subsidiary which is a
Restricted Subsidiary and, if instituted against the Company or any
Significant Subsidiary which is a Restricted Subsidiary, are
consented to or are not dismissed within 60 days after such
institution.
Section 6.2. Notice to Holders. When any Event of Default described
in the foregoing [Section] 6.1 has occurred, or if the holder of any Note or
of any other evidence of Indebtedness of the Company gives any notice or takes
any other action with respect to a claimed default, the Company agrees to give
prompt notice of such event to all holders of the Notes then outstanding, such
notice to be in writing and sent by registered or certified mail or by
telegram.
Section 6.3. Acceleration of Maturities. When any Event of Default
described in paragraph (a), (b) or (c) of [Section] 6.1 has happened and is
continuing, any holder of any Note may declare its Notes to be, and its Notes
shall thereupon become, forthwith due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived. When any Event of Default described in paragraphs (a) through (h),
inclusive, and (k) of said [Section] 6.1 has happened and is continuing, the
holder or holders of 25% or more of the principal amount of Notes at the time
outstanding may, by
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The Timberland Company Note Agreement
notice in writing sent by registered or certified mail to the Company, declare
the entire principal and all interest accrued on all Notes to be, and all Notes
shall thereupon become, forthwith due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived. When any Event of Default described in paragraphs (i), (j) and (l) of
[Section] 6.1 has occurred, then all outstanding Notes shall immediately become
due and payable without presentment, demand or notice of any kind. Upon any or
all Notes becoming due and payable as a result of any Event of Default as
aforesaid, the Company will forthwith pay to the holders of such Notes the
entire principal and interest accrued on such Notes and, with respect to a
payment made as a result of an Event of Default described in paragraph (a),
(b), (c) or (f) of [Section] 6.1, and to the extent permitted by law,
liquidated damages for the loss of the bargain evidenced hereby in an amount
equal to the Make-Whole Amount. No course of dealing on the part of any
Noteholder nor any delay or failure on the part of any Noteholder to exercise
any right shall operate as a waiver of such right or otherwise prejudice such
holder's rights, powers and remedies. The Company further agrees, to the
extent permitted by law, to pay to the holder or holders of the Notes all costs
and expenses incurred by them in the collection of any Notes upon any default
hereunder or thereon, including reasonable compensation to such holder's or
holders' attorneys for all services rendered in connection therewith.
Section 6.4. Rescission of Acceleration. The provisions of
[Section] 6.3 are subject to the condition that if the principal of and accrued
interest on all or any outstanding Notes have been declared immediately due and
payable by reason of the occurrence of any Event of Default described in
paragraphs (a) through (h), inclusive, and (k) of [Section] 6.1, the holders of
51% in aggregate principal amount of the Notes then outstanding may, by written
instrument filed with the Company, rescind and annul such declaration and the
consequences thereof, provided that at the time such declaration is annulled
and rescinded:
(a) no judgment or decree has been entered for the payment
of any monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement (except
any principal, interest or premium on the Notes which has become due
and payable solely by reason of such declaration under [Section]
6.3) shall have been duly paid; and
(c) each and every other Default and Event of Default shall
have been made good, cured or waived pursuant to [Section] 7.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
Section 7.1. Consent Required. (a) Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular
instance and either retroactively or
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The Timberland Company Note Agreement
prospectively), if the Company shall have obtained the consent in writing of
the holders of at least 51% in aggregate principal amount of outstanding Notes;
provided that without the written consent of the holders of all of the Notes
then outstanding, no such waiver, modification, alteration or amendment shall
be effective (i) which will change the time of payment of the principal of or
the interest on any Note or change the principal amount thereof or change the
rate of interest thereon, or (ii) which will change any of the provisions with
respect to optional prepayments, or (iii) which will change the percentage of
holders of the Notes required to consent to any such amendment, alteration or
modification or any of the provisions of this [Section] 7 or [Section] 6.
(b) So long as any outstanding Notes are owned by you, the Company
will not solicit, request or negotiate for or with respect to any proposed
waiver or amendment of any of the provisions of this Agreement or the Notes
unless each holder of the Notes (irrespective of the amount of Notes then owned
by it) shall be informed thereof by the Company and shall be afforded the
opportunity of considering the same and shall be supplied by the Company with
sufficient information to enable it to make an informed decision with respect
thereto. Executed or true and correct copies of any waiver or consent effected
pursuant to the provisions of this [Section] 7.1 shall be delivered by the
Company to each holder of outstanding Notes forthwith following the date on
which the same shall have been executed and delivered by the holder or holders
of the requisite percentage of outstanding Notes. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest, fee or otherwise, to any holder of
the Notes as consideration for or as an inducement to the entering into by any
holder of the Notes of any waiver or amendment of any of the terms and
provisions of this Agreement unless such remuneration is concurrently paid, on
the same terms, ratably to the holders of all of the Notes then outstanding,
provided however, that if any holder of Notes fails to consent to a transaction
which will result in a violation of [Section] 5.13 hereof, and as a result of
such failure the Notes of such holder are prepaid pursuant to [Section] 2.3
hereof, such holder shall not be entitled to any remuneration pursuant to this
[Section] 7.1(b) in connection with the requested consent to such transaction.
Section 7.2. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation
not expressly amended or waived or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 8.1. Definitions. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined:
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The Timberland Company Note Agreement
"Affiliate" shall mean any Person (other than a Restricted Subsidiary)
(i) which directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or (iii) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Capitalized Lease" shall mean any lease the obligation for Rentals
with respect to which is required to be capitalized on a balance sheet of the
lessee in accordance with generally accepted accounting principles.
"Capitalized Rentals" shall mean as of the date of any determination
the amount at which the aggregate Rentals due and to become due under all
Capitalized Leases under which the Company or any Restricted Subsidiary is a
lessee would be reflected as a liability on a consolidated balance sheet of the
Company and its Restricted Subsidiaries.
"Consolidated Current Assets" and "Consolidated Current Liabilities"
shall mean such assets and liabilities of the Company and its Restricted
Subsidiaries on a consolidated basis as shall be determined in accordance with
generally accepted accounting principles to constitute current assets and
current liabilities (including in current liabilities, in any event, Guaranties
of current liabilities of others), respectively.
"Consolidated Net Income" for any period shall mean the gross revenues
of the Company and its Restricted Subsidiaries for such period less all
expenses and other proper charges (including taxes on income), determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied and after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) any gains or losses on the sale or other disposition of
investments or fixed or capital assets, to the extent any such gain
or loss constitutes an "extraordinary item" under generally
accepted accounting principles, and any taxes on such excluded
gains and any tax deductions or credits on account of any such
excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Restricted Subsidiary
accrued prior to the date it became a Restricted Subsidiary;
(d) net earnings and losses of any corporation (other than
a Restricted Subsidiary), substantially all the assets of which
have been acquired in any manner, realized by such other
corporation prior to the date of such acquisition;
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The Timberland Company Note Agreement
(e) net earnings and losses of any corporation (other than
a Restricted Subsidiary) with which the Company or a Restricted
Subsidiary shall have consolidated or which shall have merged into
or with the Company or a Restricted Subsidiary prior to the date of
such consolidation or merger;
(f) net earnings of any business entity (other than a
Restricted Subsidiary) in which the Company or any Restricted
Subsidiary has an ownership interest unless such net earnings shall
have actually been received by the Company or such Subsidiary in
the form of cash distributions;
(g) any portion of the net earnings of any Restricted
Subsidiary which for any reason is unavailable for payment of
dividends to the Company or any other Restricted Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or
write-up of assets;
(i) any deferred or other credit representing any excess of
the equity in any Subsidiary at the date of acquisition thereof
over the amount invested in such Subsidiary;
(j) any gain arising from the acquisition of any Securities
of the Company or any Restricted Subsidiary; and
(k) any reversal of any contingency reserve, except to the
extent that provision for such contingency reserve shall have been
made from income arising during such period.
"Consolidated Net Tangible Assets" shall mean as of the date of any
determination thereof the total amount of all Tangible Assets of the Company
and its Restricted Subsidiaries after deducting all Restricted Investments and
all items which in accordance with generally accepted accounting principles
would be included on the liability side of a consolidated balance sheet, except
deferred income taxes, deferred investment tax credits, capital stock of any
class, surplus, and Funded Debt.
"Consolidated Tangible Net Worth" shall mean, as of the date of any
determination thereof, Consolidated Net Tangible Assets less all outstanding
Funded Debt, deferred income taxes, deferred investment tax credits and
Minority Interests, all determined in accordance with generally accepted
accounting principles consolidating the Company and its Restricted
Subsidiaries.
"Current Debt" as of the date of any determination thereof shall mean
(i) all Indebtedness for money borrowed other than Funded Debt, (ii) all
Indebtedness with respect to documentary letters of credit and bankers'
acceptances, and (iii) Guaranties of Current Debt of others. "Consolidated"
when used as a prefix to any Current Debt shall mean the aggregate amount of
all such Current Debt of the Company and its Restricted Subsidiaries on a
consolidated basis eliminating intercompany items.
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The Timberland Company Note Agreement
"Default" shall mean any event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in [Section] 6.1.
"Fixed Charges" for any period shall mean on a consolidated basis the
sum of (i) all Rentals (other than Rentals on Capitalized Leases) payable
during such period by the Company and its Restricted Subsidiaries, and (ii) all
Interest Charges during such period on all Indebtedness (including the interest
component of Rentals on Capitalized Leases) of the Company and its Restricted
Subsidiaries.
"Funded Debt" of any Person shall mean (i) all Indebtedness for
borrowed money or which has been incurred in connection with the acquisition of
assets in each case having a final maturity of one or more than one year from
the date of origin thereof (or which is renewable or extendible at the option
of the obligor for a period or periods of one or more than one year from the
date of origin, but excluding revolving lines of credit renewable or extendible
at the option of the obligor for a period or periods of one or more than one
year from the date of origin except to the extent such option shall have been
exercised), including all payments in respect thereof that are required to be
made within one year from the date of any determination of Funded Debt, whether
or not included in Consolidated Current Liabilities, (ii) all Capitalized
Rentals, and (iii) all Guaranties of Funded Debt of others. "Consolidated"
when used as a prefix to any Funded Debt shall mean the aggregate amount of all
such Funded Debt of the Company and its Restricted Subsidiaries on a
consolidated basis eliminating intercompany items.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent
or otherwise, by such Person: (i) to purchase such Indebtedness or obligation
or any property or assets constituting security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of such Indebtedness or
obligation, (y) to maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase or payment of
such Indebtedness or obligation, or (iii) to lease property or to purchase
Securities or other property or services primarily for the purpose of assuring
the owner of such Indebtedness or obligation of the ability of the primary
obligor to make payment of the Indebtedness or obligation, or (iv) otherwise to
assure the owner of the Indebtedness or obligation of the primary obligor
against loss in respect thereof. For the purposes of all computations made
under this Agreement, a Guaranty in respect of any Indebtedness for borrowed
money shall be deemed to be Indebtedness equal to the principal amount of such
Indebtedness for borrowed money which has been guaranteed, and a Guaranty in
respect of any other obligation or liability or any dividend shall be deemed to
be Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend.
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The Timberland Company Note Agreement
"Indebtedness" of any Person shall mean and include all obligations of
such Person which in accordance with generally accepted accounting principles
shall be classified upon a balance sheet of such Person as liabilities of such
Person, and in any event shall include all (i) obligations of such Person for
borrowed money or which has been incurred in connection with the acquisition of
property or assets, (ii) obligations secured by any Lien upon property or
assets owned by such Person, even though such Person has not assumed or become
liable for the payment of such obligations, (iii) obligations created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person, notwithstanding the fact that the
rights and remedies of the seller, lender or lessor under such agreement in the
event of default are limited to repossession or sale of property, and (iv)
Capitalized Rentals under any Capitalized Lease. For the purpose of computing
the Indebtedness of any Person, there shall be excluded any particular
Indebtedness to the extent that, upon or prior to the maturity thereof, there
shall have been deposited with the proper depository in trust the necessary
funds (or evidences of such Indebtedness, if permitted by the instrument
creating such Indebtedness) for the payment, redemption or satisfaction of such
Indebtedness; and thereafter such funds and evidences of Indebtedness so
deposited shall not be included in any computation of the assets of such
Person.
"Interest Charges" for any period shall mean all interest and all
amortization of debt discount and expense on any particular Indebtedness for
which such calculations are being made. Computations of Interest Charges on a
pro forma basis for Indebtedness having a variable interest rate shall be
calculated at the rate in effect on the date of any determination.
"Lien" shall mean any mortgage, pledge, security interest, lien,
encumbrance or other charge of any kind on any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Make-Whole Amount" as at any date a payment thereof is due (the
"payment date") in connection with a payment or prepayment in respect of the
Notes shall mean the excess of (i) the present value as at the payment date of
the remaining principal and interest payments to become due in respect of that
portion of the principal amount of the Notes to be so paid or prepaid,
discounted semiannually at an annual rate which is equal to the Treasury Rate
plus 0.50% over (ii) the aggregate principal amount of the Notes then to be
paid or prepaid plus accrued interest on such principal amount. To the extent
that the Treasury Rate plus 0.50% at the time of determination of the
Make-Whole Amount is equal to or higher than 8.94%, the Make-Whole Amount is
zero. For purposes of any determination of the Make-Whole Amount:
(a) The applicable "Treasury Rate" means the
yield to maturity implied by the yields reported, as of 10:00 a.m.
(New York City time) on the business day next preceding the payment
date, on the display designated as "Page 678" on the Telerate
Service (or such other display as may replace "Page 678" on the
Telerate Service) for actively traded U.S. Treasury securities
having a maturity equal, or if such yields shall not be reported as
of such time or the yields reported as of such time shall not be
ascertainable, the yield to maturity of customarily-issued United
States Treasury obligations with a constant maturity (as compiled
by and published in the United States Federal Reserve Bulletin
H.15(519) or its successor publication for each of the two weeks
immediately preceding the payment date) most nearly equal to the
remaining Weighted Average Life to Maturity of the Notes as of the
business day next preceding the payment date. If no maturity
exactly corresponding to such remaining Weighted Average Life to
Maturity shall appear therein, yields for the two most closely
corresponding published maturities shall be calculated pursuant
to the foregoing sentence and the Treasury Rate shall be interpolated
from such yields on a straight-line basis (rounding to the
nearest month).
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The Timberland Company Note Agreement
If such rates shall not have been so published, the Treasury
Rate in respect of such determination date shall be calculated
pursuant to the next preceding sentence on the basis of the
arithmetic mean of the arithmetic means of the secondary market ask
rates, as of approximately 3:30 P.M., New York City time, on the
last business days of each of the two weeks preceding the payment
date, for the actively traded U.S. Treasury security or securities
with a maturity or maturities most closely corresponding to such
Weighted Average Life to Maturity, as reported by three primary
United States Government securities dealers in New York City of
national standing selected in good faith by the Company.
(b) "Weighted Average Life to Maturity" with respect to the
Notes means, as at the payment date, the number of years obtained by
dividing the then Remaining Dollar-years of the Notes by the
outstanding principal amount of the Notes. The term "Remaining
Dollar-years" of the Notes means the product obtained by (i)
multiplying (A) the amount of each then remaining required principal
repayment (including repayment at final maturity), by (B) the number
of years (calculated to the nearest one-twelfth) which will elapse
between the time of determination and the date such required
repayment is due, and (ii) totaling all the products obtained in the
computations described in clause (i).
"Minority Interests" shall mean any shares of stock of any class of a
Restricted Subsidiary (other than directors' qualifying shares as required by
law, and other than shares of the Class A Stock of The Outdoor Footwear Company
so long as the number of outstanding shares of such Class A Stock do not exceed
50,000 at any time and the certificate of incorporation of The Outdoor Footwear
Company is not amended after the date hereof to increase the rights of the
holders of Class A Stock in the event of a liquidation of The Outdoor Footwear
Company) that are not owned by the Company and/or one or more of its Restricted
Subsidiaries. Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary liquidating value
of such preferred stock, whichever is greater, and by valuing Minority
Interests constituting common stock at the book value of capital and surplus
applicable thereto adjusted, if necessary, to reflect any changes from the book
value of such common stock required by the foregoing method of valuing Minority
Interests in preferred stock.
"Net Income Available for Fixed Charges" for any period shall mean the
sum of (i) Consolidated Net Income during such period plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for any
Federal, state or other income taxes
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The Timberland Company Note Agreement
made by the Company and its Restricted Subsidiaries during such period and
(iii) Fixed Charges of the Company and its Restricted Subsidiaries during such
period.
"Net Income Available for Interest Charges" for any period shall mean
the sum of (i) Consolidated Net Income during such period plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for any
Federal, state or other income taxes made by the Company and its Restricted
Subsidiaries during such period and (iii) Interest Charges during such period,
determined on a pro forma basis giving effect as of the beginning of such
period (x) to the disposition during such period of assets constituting a
substantial part of the assets of the Company and its Restricted Subsidiaries
taken as a whole, (y) to the acquisition or disposition during such period of
all or substantially all of the stock or assets of an entity or assets
consisting of a line of business of an entity, and (z) to the acquisition,
designation or disposition during such period of a Restricted Subsidiary;
provided, however, that any such determination of the amount to be included in
Consolidated Net Income on a pro forma basis taking into account the earnings
of an entity, the stock or assets of which have been acquired by the Company or
a Restricted Subsidiary, shall include only such amounts as are based on the
actual historical financial results of such entity during such period,
determined in accordance with generally accepted accounting principles.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political
subdivision thereof.
"Pro Forma Interest Charges" for any period shall mean, as of the date
of any determination thereof, the maximum aggregate amount of Interest Charges
which would have become payable by the Company and its Restricted Subsidiaries
in such period determined on a pro forma basis giving effect as of the
beginning of such period to the incurrence of any Funded Debt (including
Capitalized Rentals) and the retirement of outstanding Funded Debt or
termination of any Capitalized Leases.
"Rentals" shall mean and include all fixed rents (including as such all
payments which the lessee is obligated to make to the lessor on termination of
the lease or surrender of the property) payable by the Company or a Restricted
Subsidiary, as lessee or sublessee under a lease of real or personal property,
but shall be exclusive of any amounts required to be paid by the Company or a
Restricted Subsidiary (whether or not designated as rents or additional rents)
on account of maintenance, repairs, insurance, taxes and similar charges. Fixed
rents under any so-called, "percentage leases" shall be computed solely on the
basis of the minimum rents, if any, required to be paid by the lessee
regardless of sales volume or gross revenues.
"Restricted Investments" shall mean all investments, loans and advances
existing on or made after the date of this Agreement of the Company and its
Restricted Subsidiaries other than investments, loans or advances permitted by
paragraphs (a) through (i), inclusive, of [Section] 5.17 hereof. The Company
and its Restricted Subsidiaries shall be deemed to have made a Restricted
Investment (i) to the extent of the equity of the Company and its Restricted
Subsidiaries in the net assets of a Restricted Subsidiary which has become an
Unrestricted
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The Timberland Company Note Agreement
Subsidiary on the date that the Restricted Subsidiary becomes an Unrestricted
Subsidiary and (ii) to the extent of the value of any non-cash consideration
received by the Company and its Restricted Subsidiaries in connection with a
sale of stock or Indebtedness permitted by [Section] 5.13(c)(3) hereof.
"Restricted Subsidiary" shall mean any Subsidiary which is designated
as a Restricted Subsidiary on Annex A of the Closing Certificate or any other
Subsidiary (i) which is organized under the laws of the United States or any
State thereof, Canada, Cayman Islands, the Dominican Republic, France, Puerto
Rico, the United Kingdom, West Germany, Australia, Austria, Belgium, Denmark,
Finland, Republic of Ireland, Italy, Luxembourg, Netherlands, New Zealand,
Norway, Portugal, Spain, Sweden, Switzerland, and U.S. Virgin Islands; (ii)
which conducts substantially all of its business and has substantially all of
its assets within the United States, Canada, the Dominican Republic, France,
Puerto Rico, the United Kingdom, West Germany, Australia, Austria, Belgium,
Denmark, Finland, Republic of Ireland, Italy, Luxembourg, Netherlands, New
Zealand, Norway, Portugal, Spain, Sweden, Switzerland, and U.S. Virgin Islands;
(iii) of which more than 75% (by number of votes) of the Voting Stock is owned
by the Company and/or one or more Restricted Subsidiaries; and (iv) which is
designated a Restricted Subsidiary at the time it first becomes a Subsidiary,
provided, the Board of Directors of the Company may designate any Unrestricted
Subsidiary as a Restricted Subsidiary but only if (i) after giving effect to
such designation the Company and its Restricted Subsidiaries could incur $1 of
additional Consolidated Funded Debt and (ii) at the time of such designation
and after giving effect thereto no Default or Event of Default shall have
occurred and be continuing. Any Subsidiary which is designated by the Board of
Directors of the Company as a Restricted Subsidiary after having been an
Unrestricted Subsidiary may not be redesignated an Unrestricted Subsidiary. The
Company shall give prompt notice to the Noteholders of designation of a
Restricted Subsidiary.
"Security" shall have the same meaning as in Section 2(1)of the
Securities Act of 1933, as amended.
"Significant Subsidiary" shall mean any Subsidiary which meets any of
the following conditions:
(1) The Company's and its other Subsidiaries' investments
in and advances to the Subsidiary exceed 10 percent of the Consolidated
Tangible Net Worth of the Company and its Subsidiaries as of the end of
the most recently completed fiscal year; or
(2) The Company's and its other Subsidiaries' proportionate
share of the Consolidated Tangible Net Worth of the Subsidiary exceeds
10 percent of the Consolidated Tangible Net Worth of the Company and
its Subsidiaries as of the end of the most recently completed fiscal
year; or
(3) The Company's and its other Subsidiaries' equity in the
income from continuing operations before income taxes, extraordinary
items and cumulative effect
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The Timberland Company Note Agreement
of a change in accounting principle of the Subsidiary exceeds 10
percent of such income of the Company and its Subsidiaries consolidated
for the most recently completed fiscal year.
"Specified Debt" shall mean, without duplication, any Indebtedness of
Restricted Subsidiaries which Indebtedness is permitted by [Section] 5.8(a)(5)
hereof and any Indebtedness of the Company secured by Liens permitted by
[Section] 5.10(j) hereof.
The term "subsidiary" shall mean, as to any particular parent
corporation, any corporation of which more than 50% (by number of votes) of the
Voting Stock shall be owned by such parent corporation and/or one or more
corporations which are themselves subsidiaries of such parent corporation. The
term "Subsidiary" shall mean a subsidiary of the Company.
"Tangible Assets" shall mean as of the date of any determination
thereof, the total amount of all assets of the Company and its Restricted
Subsidiaries (less depreciation, depletion and other properly deductible
valuation reserves) after deducting good will, patents, trade names, trade
marks, copyrights, franchises, experimental expense, organization expense,
unamortized debt discount and expense, deferred assets other than prepaid
insurance and prepaid taxes, the excess of cost of shares acquired over book
value of related assets and such other assets as are properly classified as
"intangible assets" in accordance with generally accepted accounting
principles.
"Total Debt" of the Company and its Restricted Subsidiaries as at any
date shall mean the sum of (i) Consolidated Funded Debt of the Company and its
Restricted Subsidiaries as at such date, plus (ii) the Average Outstanding
during the applicable Low Period. For purposes of this definition:
(a) "Average Outstanding" shall mean the average of the
unpaid principal amounts of Consolidated Current Debt of the Company
and its Restricted Subsidiaries outstanding at the close of business on
each day within a period of 30 consecutive days; and
(b) "Low Period" shall mean the period of 30 consecutive
days for which Average Outstanding is the lowest of any period of 30
consecutive days during the period of 15 consecutive months ending with
the date of determination of Total Debt.
"Total Equity" as at any date shall mean stockholders' equity
determined in accordance with generally accepted accounting principles
consolidating the Company and its Restricted Subsidiaries.
"Unrestricted Subsidiary" shall mean any Subsidiary which is not a
Restricted Subsidiary; provided, that the Board of Directors may designate any
Restricted Subsidiary as an Unrestricted Subsidiary but only if (i) the
Subsidiary so designated shall then own no Funded Debt or capital stock of any
Restricted Subsidiary, (ii) after giving effect to such designation, the
Company and its Restricted Subsidiaries could issue $1 of additional
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The Timberland Company Note Agreement
Consolidated Funded Debt and (iii) at the time of such designation and after
giving effect thereto no Default or Event of Default shall have occurred and be
continuing. Any Subsidiary which is designated by the Board of Directors of
the Company as an Unrestricted Subsidiary after having been a Restricted
Subsidiary may not be redesignated a Restricted Subsidiary. The Company shall
give prompt notice to the Noteholders of any designation of an Unrestricted
Subsidiary.
"Voting Stock" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"Wholly-owned" when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares and, in the case of The Outdoor
Footwear Company, Class A Stock so long as such Class A Stock is excluded from
the definition of "Minority Interests") are owned by the Company and its
Wholly-owned Subsidiaries.
Section 8.2. Accounting Principles. Where the character or
amount of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in
accordance with generally accepted accounting principles, to the extent
applicable, except where such principles are inconsistent with the requirements
of this Agreement.
Section 8.3. Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action
in question is taken directly or indirectly by such Person.
SECTION 9. MISCELLANEOUS.
Section 9.1. Registered Notes. The Company shall cause to be kept
at its principal office a register for the registration and transfer of the
Notes (hereinafter called the "Note Register"), and the Company will register
or transfer or cause to be registered or transferred, as hereinafter provided
and under such reasonable regulations as it may prescribe, any Note issued
pursuant to this Agreement.
At any time and from time to time the registered holder of any Note
which has been duly registered as hereinabove provided may transfer such Note
upon surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or its attorney duly authorized in writing.
The Person in whose name any registered Note shall be registered shall
be deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or
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The Timberland Company Note Agreement
on account of the principal, premium, if any, and interest on any registered
Note shall be made to or upon the written order of such registered holder.
Section 9.2. Exchange of Notes;. At any time, and from time to time,
upon not less than ten days' notice to that effect given by the holder of any
Note initially delivered or of any Note substituted therefor pursuant to
[Section] 9.1, this [Section] 9.2 or [Section] 9.3, and, upon surrender of
such Note at its office, the Company will deliver in exchange therefor, without
expense to the holder, except as set forth below, Notes for the same aggregate
principal amount as the then unpaid principal amount of the Note so
surrendered, in the denomination of $100,000 or any amount in excess thereof as
such holder shall specify, dated as of the date to which interest has been paid
on the Note so surrendered or, if such surrender is prior to the payment of any
interest thereon, then dated as of the date of issue, payable to such Person or
Persons, or order, as may be designated by such holder, and otherwise of the
same form and tenor as the Notes so surrendered for exchange. The Company may
require the payment of a sum sufficient to cover any stamp tax or governmental
charge imposed upon such exchange or transfer.
Section 9.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
any Note, and in the case of any such loss, theft or destruction upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of the Note, the Company will make and deliver without expense
to the holder thereof, a new Note, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Note. If the Purchaser or any subsequent institutional
holder is the owner of any such lost, stolen or destroyed Note, then the
affidavit of an authorized officer of such owner, setting forth the fact of
loss, theft or destruction and of its ownership of the Note at the time of such
loss, theft or destruction shall be accepted as satisfactory evidence thereof
and no further indemnity shall be required as a condition to the execution and
delivery of a new Note other than the written agreement of such owner to
indemnify the Company.
Section 9.4. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to
pay directly all of your reasonable out-of-pocket expenses in connection with
the preparation, execution and delivery of this Agreement and the transactions
contemplated hereby, including but not limited to the reasonable charges and
disbursements of Chapman and Cutler, your special counsel, duplicating and
printing costs and charges for shipping the Notes, adequately insured to you at
your home office or at such other place as you may designate, and all such
expenses relating to any amendment, waivers or consents pursuant to the
provisions hereof. The Company also agrees that it will pay and save you
harmless against any and all liability with respect to stamp and other taxes
(other than transfer taxes or taxes on income or revenues), if any, which may
be payable or which may be determined to be payable in connection with the
execution and delivery of this Agreement or the Notes, whether or not any Notes
are then outstanding. The Company agrees to protect and indemnify you against
any liability for any and all brokerage fees and commissions payable or claimed
to be payable to any Person in connection with the transactions contemplated by
this Agreement. You hereby
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The Timberland Company Note Agreement
represent and warrant that you have not engaged any investment banker or broker
in connection with your purchase of the Notes.
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative. No
delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to [Section] 7 hereof, shall extend to or affect any
obligation or right not expressly waived or consented to.
Section 9.6. Notices. All communications provided for hereunder
shall be in writing and, if to you, delivered or mailed by registered or
certified mail, addressed to you at your address appearing on Schedule I
to this Agreement or such other address as you or the subsequent holder
of any Note initially issued to you, may designate to the Company in writing,
and if to the Company, delivered or mailed by registered or certified mail
to the Company at 200 Domain Drive, Stratham, New Hampshire 03885,
Attention: Chief Financial Officer or to such other address as the Company may
in writing designate to you or to a subsequent holder of the Note initially
issued to you. Notice shall be effective upon the earlier of (i) three business
days after such notice is sent or (ii) actual receipt of such notice.
Section 9.7. Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to your benefit
and to the benefit of your successors and assigns, including each successive
holder or holders of any Notes.
Section 9.8. Survival of Covenants and Representations. All
covenants, representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of this Agreement and
the Notes.
Section 9.9. Severability. Should any part of this Agreement for any
reason be declared invalid, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in force and effect as
if this Agreement had been executed with the invalid portion thereof eliminated
and it is hereby declared the intention of the parties hereto that they would
have executed the remaining portion of this Agreement without including therein
any such part, parts, or portion which may, for any reason, be hereafter
declared invalid.
Section 9.10. Governing Law. This Agreement and the Notes issued
and sold hereunder shall be governed by and construed in accordance with
New York law.
Section 9.11. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
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39
The execution hereof by you shall constitute a contract
between us for the uses and purposes hereinabove set forth, and
this Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all
together only one agreement.
THE TIMBERLAND COMPANY
By /s/ Carden N. Welsh
----------------------------------
Its Treasurer
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By /s/ Gail McDermott
----------------------------------
Its Senior Vice President
PRUCO LIFE INSURANCE COMPANY
By /s/ Gail McDermott
----------------------------------
Its Senior Vice President
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT CRC
By /s/ Joseph H. Gareau
----------------------------------
Its Executive Vice President
HARTFORD FIRE INSURANCE COMPANY
By /s/ Joseph H. Gareau
----------------------------------
Its Executive Vice President
HARTFORD LIFE AND ACCIDENT
INSURANCE COMPANY
By /s/ Joseph H. Gareau
----------------------------------
Its Executive Vice President
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40
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By /s/ Clint Woods
----------------------------------
Its Counsel
By /s/ Christopher J. Henderson
----------------------------------
Its Counsel
GREAT NORTHERN INSURED ANNUITY
CORPORATION
By /s/ William D. Koski
----------------------------------
Its Assistant Vice President
Investments
JOHN ALDEN LIFE INSURANCE COMPANY
By /s/ Richard S. Halligan
----------------------------------
Its Vice President Investments
CENTURY LIFE OF AMERICA
By: Century Investment
Management Co.
By /s/ Joseph P. Young
----------------------------------
Its Investment Officer
CUNA MUTUAL INSURANCE SOCIETY
By: Century Investment
Management Co.
By /s/ Joseph P. Young
----------------------------------
Its Investment Officer
THE OHIO CASUALTY INSURANCE COMPANY
By /s/ Richard B. Kelly
----------------------------------
Its Senior Investment Officer
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Asset Allocation & Management
Company as Agent for
PHYSICIANS LIFE INSURANCE COMPANY
By /s/ Kathy R. Lange
----------------------------------
Its Senior Portfolio Manager
Asset Allocation & Management
Company as Agent for
FRONTEIR INSURANCE COMPANY
By /s/ Kathy R. Lange
----------------------------------
Its Senior Portfolio Manager
Asset Allocation & Management
Company as Agent for
GUARANTEE TRUST LIFE INSURANCE
COMPANY
By /s/ Kathy R. Lange
----------------------------------
Its Senior Portfolio Manager
Asset Allocation & Management
Company as Agent for
WORLD INSURANCE COMPANY
By /s/ Kathy R. Lange
----------------------------------
Its Senior Portfolio Manager
WASHINGTON NATIONAL INSURANCE
COMPANY
By /s/ C. Bruce Dunn
----------------------------------
Its Director of Investments
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42
THE TIMBERLAND COMPANY
8.94% Senior Note
Due December 15, 2001
PPN:
No. R-
_____________, 19__
THE TIMBERLAND COMPANY, a Delaware corporation (the "Company"), for value
received, hereby promises to pay to
or registered assigns
on the fifteenth day of December, 2001
the principal amount of
Dollars ($_______________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at
the rate of 8.94% per annum from the date hereof until maturity, payable
semiannually on the fifteenth of each June and December in each year,
commencing June 15, 1995, and at maturity. The Company agrees to pay
interest on overdue principal (including any overdue optional prepayment of
principal) and premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest, at the rate of 10.94% per annum after maturity,
whether by acceleration or otherwise, until paid. Both the principal hereof
and interest hereon are payable at the principal office of the Company in
Hampton, New Hampshire in coin or currency of the United States of America
which at the time of payment shall be legal tender for the payment of public
and private debts.
This Note is one of the 8.94% Senior Notes due December 15, 2001 (the
"Notes") of the Company in the aggregate principal amount of $106,000,000
issued or to be issued under and pursuant to the terms and provisions of the
separate Note Agreements, each dated as of December 15, 1994 (the "Note
Agreements"), entered into by the Company with the original purchasers therein
referred to. This Note and the holder hereof are entitled equally and ratably
with the holders of all other Notes outstanding under the Note Agreements to
all the benefits and security provided for thereby or referred to therein.
Reference is hereby made to the Note Agreements for a statement of such rights
and benefits.
This Note and the other Notes outstanding under the Note Agreements may
be declared due prior to their expressed maturity dates, all in the events, on
the terms and in the manner and amounts as provided in the Note Agreements.
EXHIBIT A
(to Note Agreement)
43
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
THE TIMBERLAND COMPANY
By ____________________________
Its