<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
---------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
BRIGGS & STRATTON CORPORATION
(NAME OF ISSUER)
BRIGGS & STRATTON CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
109043109
(CUSIP NUMBER OF CLASS OF SECURITIES)
ROBERT H. ELDRIDGE
EXECUTIVE VICE PRESIDENT &
CHIEF FINANCIAL OFFICER, SECRETARY-TREASURER
BRIGGS & STRATTON CORPORATION
P.O. BOX 702
MILWAUKEE, WISCONSIN 53201-0702
(414) 259-5333
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING
STATEMENT)
---------------------
COPIES TO:
ELIZABETH A. RAYMOND, ESQ.
MAYER, BROWN & PLATT
190 SOUTH LA SALLE STREET
CHICAGO, IL 60603
APRIL 22, 1997
(DATE TENDER OFFER FIRST PUBLISHED,
SENT OR GIVEN TO SECURITY HOLDERS)
---------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
=============================================================================================
TRANSACTION VALUATION* AMOUNT OF FILING FEE
- ---------------------------------------------------------------------------------------------
<S> <C>
$299,625,000 $59,925
=============================================================================================
</TABLE>
* Calculated solely for the purpose of determining the filing fee, based upon
the purchase of 5,875,000 shares at $51.00 per share.
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE AND THE DATE OF ITS FILING.
AMOUNT PREVIOUSLY PAID: N/A FILING PARTY: N/A
FORM OR REGISTRATION NO.: N/A DATE FILED: N/A
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<PAGE> 2
ITEM 1. SECURITY AND ISSUER.
(a) The issuer of the securities to which this Schedule 13E-4 relates is
Briggs & Stratton Corporation, a Wisconsin corporation (the "Company"), and the
address of its principal executive office is 12301 West Wirth Street, Wauwatosa,
Wisconsin 53222.
(b) This Schedule 13E-4 relates to the offer by the Company to purchase
5,875,000 shares (or such lesser number of shares as are properly tendered) of
its Common Stock, par value $.01 per share (such shares, together with the
associated Common Stock Purchase Rights (the "Rights") issued pursuant to the
Rights Agreement dated as of August 7, 1996 between the Company and Firstar
Trust Company, as Rights Agent, are hereinafter referred to as the "Shares"),
28,927,000 of which Shares were outstanding as of April 16, 1997, at a price not
in excess of $51.00 nor less than $43.00 per Share in cash upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated April 22,
1997 (the "Offer to Purchase"), and in the related Letter of Transmittal, which
together constitute the "Offer," copies of which are attached as Exhibits (a)(1)
and (a)(2), respectively, and incorporated herein by reference. Executive
officers and directors of the Company may participate in the Offer on the same
basis as the Company's other shareholders, although the Company has been advised
that no director or executive officer of the Company intends to tender any
Shares pursuant to the Offer. The information set forth in "Introduction" and
"The Offer -- Section 1, Number of Shares; Proration" of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in "Introduction" and the "The
Offer -- Section 8, Price Range of Shares; Dividends" of the Offer to Purchase
is incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "The Offer -- Section 9, Source and
Amount of Funds" of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a)-(j) The information set forth in "Introduction" and "The
Offer -- Section 9, Source and Amount of Funds," "The Offer -- Section 2,
Purpose of the Offer; Certain Effects of the Offer," "The Offer -- Section 11,
Interest of Directors and Officers; Transactions and Arrangements Concerning
Shares" and "The Offer -- Section 12, Effects of the Offer on the Market for
Shares; Registration under the Exchange Act" of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "The Offer -- Section 11, Interest of
Directors and Officers; Transactions and Arrangements Concerning Shares" of the
Offer to Purchase is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The information set forth in "Introduction" and "The Offer -- Section 9,
Source and Amount of Funds," "The Offer -- Section 2, Purpose of the Offer;
Certain Effects of the Offer" and "The Offer -- Section 11, Interest of
Directors and Officers; Transactions and Arrangements Concerning Shares" of the
Offer to Purchase is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED, OR TO BE COMPENSATED.
The information set forth in "Introduction" and "The Offer -- Section 16,
Fees and Expenses" of the Offer to Purchase is incorporated herein by reference.
<PAGE> 3
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in "The Offer -- Section 10, Certain
Information Concerning the Company" of the Offer to Purchase is incorporated
herein by reference, the information set forth on pages 12 through 24 and 26 of
the Company's Annual Report to Shareholders incorporated by reference into the
Company's Annual Report on Form 10-K for the year ended June 30, 1996, filed as
Exhibit (g)(1) hereto, is incorporated herein by reference, the information set
forth on pages 3 through 7 of the Company's Quarterly Report on Form 10-Q for
the quarter ended December 29, 1996, filed as Exhibit (g)(2) hereto is
incorporated herein by reference and the information set forth in the Company's
Current Report on Form 8-K dated April 16, 1997, filed as Exhibit (g)(3) hereto
is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in "The Offer -- Section 13, Certain Legal
Matters; Regulatory Approvals" of the Offer to Purchase is incorporated herein
by reference.
(c) The information set forth in "The Offer -- Section 12, Effect of the
Offer on the Market for Shares; Registration under the Exchange Act" of the
Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in the Offer to Purchase and Letter of
Transmittal is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Form of Offer to Purchase, dated April 22, 1997.
(2) Form of Letter of Transmittal (including Certification of Taxpayer
Identification Number on Form W-9).
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(6) Form of Letter from the Company to Participants in the Briggs &
Stratton Employee Savings and Investment Plan.
(7) Form of Letter from the Company to Participants in the Briggs &
Stratton Regional Plants Retirement and Savings Plan.
(8) Form of Instruction Letter to Participants in the Briggs & Stratton
Regional Plants Retirement and Savings Plan.
(9) Text of Press Release issued by the Company, dated April 16, 1997.
(10) Form of Summary Advertisement, dated April 22, 1997.
(11) Form of Letter to Shareholders of the Company, dated April 22,
1997, from Frederick P. Stratton, Jr., Chairman and Chief Executive
Officer of the Company, and John S. Shiely, President and Chief
Operating Officer of the Company.
(12) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(b) Credit Agreement, dated as of April 18, 1997, among the Company, the
banks signatory thereto and Bank of America National Trust and Savings
Association, as agent.
(c) Not applicable.
2
<PAGE> 4
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) (1) Pages 12 through 24 and 26 of the Company's Annual Report to
Shareholders incorporated by reference into the Company's Annual
Report on Form 10-K for the year ended June 30, 1996.
(2) Pages 3 through 7 of the Company's Quarterly Report on Form 10-Q
for the quarter ended December 29, 1996.
(3) The Company's Current Report on Form 8-K dated April 16, 1997.
3
<PAGE> 5
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule 13E-4 is true, complete and
correct.
BRIGGS & STRATTON CORPORATION
By: /s/ ROBERT H. ELDRIDGE
------------------------------------
Name: Robert H. Eldridge
Title: Executive Vice President &
Chief Financial Officer,
Secretary-Treasurer
April 22, 1997
4
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S> <C>
(a)(1) -- Form of Offer to Purchase, April 22, 1997.
(2) -- Form of Letter of Transmittal (including Certification of
Taxpayer Identification Number on Form W-9).
(3) -- Form of Notice of Guaranteed Delivery.
(4) -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(5) -- Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(6) -- Form of Letter from the Company to Participants in the
Briggs & Stratton Employee Savings and Investment Plan.
(7) -- Form of Letter from the Company to Participants in the
Briggs & Stratton Regional Plants Retirement and Savings
Plan.
(8) -- Form of Instruction Letter to Participants in the Briggs &
Stratton Regional Plants Retirement and Savings Plan.
(9) -- Text of Press Release issued by the Company, dated April 16,
1997.
(10) -- Form of Summary Advertisement, dated April 22, 1997.
(11) -- Form of Letter to Shareholders of the Company, dated April
22, 1997, from Frederick P. Stratton, Jr., Chairman and
Chief Executive Officer of the Company, and John S. Shiely,
President and Chief Operating Officer of the Company.
(12) -- Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(b) -- Credit Agreement, dated as of April 18, 1997, among the
Company, the banks signatory thereto and Bank of America
National Trust and Savings Association, as agent.
(c) -- Not applicable.
(d) -- Not applicable.
(e) -- Not applicable.
(f) -- Not applicable.
(g)(1) -- Pages 12 through 24 and 26 of the Company's Annual Report to
Shareholders incorporated by reference into the Company's
Annual Report on Form 10-K for the year ended June 30, 1996.
(2) -- Pages 3 through 7 of the Company's Quarterly Report on Form
10-Q for the quarter ended December 29, 1996.
(3) -- The Company's Current Report on Form 8-K dated April 16,
1997.
</TABLE>
5
<PAGE> 1
EXHIBIT (a)(1)
[BRIGGS & STRATTON LOGO]
OFFER TO PURCHASE FOR CASH UP TO
5,875,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
AT A PURCHASE PRICE NOT IN EXCESS OF $51.00
NOR LESS THAN $43.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY
TIME, ON TUESDAY, MAY 20, 1997, UNLESS THE OFFER IS EXTENDED.
------------------
Briggs & Stratton Corporation, a Wisconsin corporation (the "Company"), hereby
invites its shareholders to tender shares of its common stock, par value $.01
per share (including the associated Common Stock Purchase Rights) (the
"Shares"), to the Company at a price not in excess of $51.00 nor less than
$43.00 per Share in cash, as specified by shareholders tendering their Shares,
upon the terms and subject to the conditions set forth herein and in the related
Letter of Transmittal, which together constitute the "Offer." The Company will
determine the single per Share price, not in excess of $51.00 nor less than
$43.00 per Share, net to the seller in cash (the "Purchase Price"), that it will
pay for Shares properly tendered pursuant to the Offer, taking into account the
number of Shares so tendered and the prices specified by tendering shareholders.
The Company will select the lowest Purchase Price that will allow it to buy
5,875,000 Shares (or such lesser number of shares as are properly tendered at
prices not in excess of $51.00 nor less than $43.00 per Share). All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, subject to the terms and the conditions
of the Offer, including the proration and conditional tender provisions. All
Shares purchased in the Offer will be purchased at the Purchase Price. The
Company reserves the right, in its sole discretion, to purchase more than
5,875,000 Shares pursuant to the Offer. See Section 15.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE
OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
The Shares are listed and traded on the New York Stock Exchange, Inc. (the
"NYSE") under the symbol "BGG." On April 21, 1997, the last full trading day on
the NYSE prior to the commencement of the Offer, the closing per Share sales
price as reported on the NYSE Composite Tape was $47.25. SHAREHOLDERS ARE URGED
TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE SECTION 8.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, NEITHER
THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO SHAREHOLDERS
AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES. EACH SHAREHOLDER
MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES AND
AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED. THE COMPANY HAS BEEN ADVISED
THAT NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES
PURSUANT TO THE OFFER.
IMPORTANT
Any shareholder wishing to tender all or any part of his or her Shares
should either (a) complete and sign a Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
either mail or deliver it with any required signature guarantee and any other
required documents to Firstar Trust Company (the "Depositary"), and either mail
or deliver the stock certificates for such Shares to the Depositary (with all
such other documents) or tender such Shares pursuant to the procedure for
book-entry tender set forth in Section 3, or (b) request a broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
such shareholder. Holders of Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee should contact such person if
they desire to tender their Shares. Any shareholder who desires to tender Shares
and whose certificates for such Shares cannot be delivered to the Depositary or
who cannot comply with the procedure for book-entry transfer or whose other
required documents cannot be delivered to the Depositary, in any case, by the
expiration of the Offer must tender such Shares pursuant to the guaranteed
delivery procedure set forth in Section 3.
To properly tender Shares, shareholders (other than certain Odd Lot Holders
(as defined herein)) must complete the section of the Letter of Transmittal
relating to the price at which they are tendering Shares.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal or the Notice of Guaranteed Delivery may be obtained from the
Information Agent.
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH
THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED LETTER OF
TRANSMITTAL. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
The Dealer Manager for the Offer is:
[CREDIT SUISSE/FIRST BOSTON LOGO]
<PAGE> 2
SUMMARY
This general summary is solely for the convenience of the Company's
shareholders and is qualified in its entirety by reference to the full text and
more specific details in this Offer to Purchase.
Purchase Price............. The Company will select a single Purchase Price
which will be not more than $51.00 nor less than
$43.00 per Share. All Shares purchased by the
Company will be purchased at the Purchase Price
even if tendered at or below the Purchase Price.
Each shareholder (other than certain Odd Lot
Holders) desiring to tender Shares must specify in
the Letter of Transmittal the minimum price (not
more than $51.00 nor less than $43.00 per Share) at
which such shareholder is willing to have his or
her Shares purchased by the Company.
Number of Shares to be
Purchased................ 5,875,000 Shares (or such lesser number of Shares
as are properly tendered).
How to Tender Shares....... See Section 3. Call the Information Agent, the
Dealer Manager or consult your broker for
assistance.
Brokerage Commissions and
Stock Transfer Tax......... Tendering shareholders will not be obligated to pay
brokerage fees or commissions to the Dealer
Manager, the Depositary or the Information Agent
or, except as set forth in Instruction 7 to the
Letter of Transmittal, transfer taxes on the sale
of Shares pursuant to the Offer. A tendering
shareholder who holds securities with such
shareholder's broker may be required by such broker
to pay a service charge or other fee.
Expiration and Proration
Dates...................... Tuesday, May 20, 1997 at 5:00 P.M., New York City
time, unless extended by the Company.
Payment Date............... As soon as practicable after the termination of the
Offer.
Position of the Company and
its Directors.............. Neither the Company nor its Board of Directors
makes any recommendation to any shareholder as to
whether to tender or refrain from tendering Shares.
The Company has been advised that none of its
directors or executive officers intends to tender
any Shares pursuant to the Offer.
Withdrawal Rights.......... Tendered Shares may be withdrawn at any time until
5:00 P.M., New York City time, on Tuesday, May 20,
1997, unless the Offer is extended by the Company,
and, unless previously purchased, after 12:00
Midnight, New York City time, on Tuesday, June 17,
1997. See Section 3.
Odd Lots................... There will be no proration of Shares tendered by
any shareholder owning beneficially less than 100
Shares who tenders all such Shares at or below the
Purchase Price prior to the Proration Date and who
checks the "Odd Lots" box in the Letter of
Transmittal. See Section 1.
2
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
INTRODUCTION.......................................................... 4
THE OFFER............................................................. 6
1. Number of Shares; Proration................................. 6
2. Purpose of the Offer; Certain Effects of the Offer.......... 8
3. Procedures for Tendering Shares............................. 9
4. Withdrawal Rights........................................... 13
5. Purchase of Shares and Payment of Purchase Price............ 14
6. Conditional Tender of Shares................................ 15
7. Certain Conditions of the Offer............................. 15
8. Price Range of Shares; Dividends............................ 17
9. Source and Amount of Funds.................................. 17
10. Certain Information Concerning the Company.................. 18
11. Interest of Directors and Officers; Transactions and 20
Arrangements Concerning Shares............................
12. Effects of the Offer on the Market for Shares; Registration 20
under the Exchange Act....................................
13. Certain Legal Matters; Regulatory Approvals................. 21
14. Certain Federal Income Tax Consequences..................... 21
15. Extension of Offer; Termination; Amendment.................. 24
16. Fees and Expenses........................................... 24
17. Miscellaneous............................................... 25
</TABLE>
3
<PAGE> 4
To the Holders of Common Stock of Briggs & Stratton Corporation:
INTRODUCTION
Briggs & Stratton Corporation, a Wisconsin corporation (the "Company"),
invites its shareholders to tender shares of its Common Stock, par value $.01
per share (such shares, together with the associated Common Stock Purchase
Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of
August 7, 1996, between the Company and Firstar Trust Company, as Rights Agent,
are hereinafter referred to as the "Shares"), at a price not in excess of $51.00
nor less than $43.00 per Share, as specified by shareholders tendering their
Shares, upon the terms and subject to the conditions set forth herein and in the
related Letter of Transmittal, which together constitute the "Offer." The
Company will determine the single per Share price, not in excess of $51.00 nor
less than $43.00 per Share, net to the seller in cash (the "Purchase Price"),
that it will pay for Shares properly tendered pursuant to the Offer, taking into
account the number of Shares so tendered and the prices specified by tendering
shareholders. The Company will select the lowest Purchase Price that will allow
it to buy 5,875,000 Shares (or such lesser number of Shares as are properly
tendered). All Shares acquired in the Offer will be acquired at the Purchase
Price. All Shares properly tendered at prices at or below the Purchase Price and
not withdrawn will be purchased at the Purchase Price, upon the terms and
subject to the conditions of the Offer, including the proration and conditional
tender provisions. Shares tendered at prices in excess of the Purchase Price and
Shares not purchased because of proration or conditional tender will be
returned. The Company reserves the right, in its sole discretion, to purchase
more than 5,875,000 Shares pursuant to the Offer. See Section 15.
THIS OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM NUMBER OF
SHARES BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE MAKING OF THE OFFER.
HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED. THE COMPANY
HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO
TENDER ANY SHARES PURSUANT TO THE OFFER.
Upon the terms and subject to the conditions of the Offer, if at the
expiration of the Offer more than 5,875,000 Shares are properly tendered at or
below the Purchase Price and not withdrawn, the Company will buy Shares first
from all Odd Lot Holders (as defined in Section 1) who properly tender all their
Shares at or below the Purchase Price and then on a pro rata basis from all
other shareholders who properly tender at prices at or below the Purchase Price
(and did not withdraw them prior to the expiration of the Offer). See Section 1.
All Shares not purchased pursuant to the Offer, including Shares tendered at
prices greater than the Purchase Price and not withdrawn and Shares not
purchased because of proration or conditional tenders, will be returned at the
Company's expense to the shareholders who tendered such Shares.
The Purchase Price will be paid net to the tendering shareholder in cash
for all Shares purchased. Tendering shareholders will not be obligated to pay
brokerage fees or commissions to the Dealer Manager, the Depositary or the
Information Agent or, except as set forth in Instruction 7 to the Letter of
Transmittal, transfer taxes on the sale of Shares pursuant to the Offer. A
tendering shareholder who holds securities with such shareholder's broker may be
required by such broker to pay a service charge or other fee. HOWEVER, ANY
TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE, SIGN AND RETURN TO
THE DEPOSITARY THE FORM W-9 THAT IS INCLUDED WITH THE LETTER OF TRANSMITTAL MAY
BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS
PROCEEDS PAYABLE TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER AND
CERTAIN NON-U.S. SHAREHOLDERS MAY BE SUBJECT TO A 30% WITHHOLDING TAX. SEE
SECTION 14. The Company will pay all fees and expenses of Credit Suisse First
Boston Corporation ("Credit Suisse First Boston" or the "Dealer Manager"),
Firstar Trust Company (the "Depositary") and Georgeson & Company Inc. (the
"Information Agent") incurred in connection with the Offer. See Section 16.
4
<PAGE> 5
In recent years, the Company's operations have typically generated
substantial excess cash. Over the past several years, the Company has used this
cash to fund new product development and for significant capital expenditures in
connection with starting up and moving production to three new engine plants,
building a new foundry and expanding its existing facilities in Kentucky and
Missouri. Management of the Company subscribes to the premise that the value of
the Company is enhanced if the capital invested in the Company's operations
yields a cash return that is greater than the Company's cost of capital. Given
this belief, the Company is continuing to implement its financial strategy by
means of the Offer and a proposed public offering of unsecured and
unsubordinated notes (the "Note Offering"). The proceeds of the Note Offering
are expected to be used to repay borrowings incurred under the Company's credit
facilities to fund a portion of the aggregate Purchase Price for Shares accepted
by the Company pursuant to the Offer. See Section 9. The Company believes the
Offer and the Note Offering will provide a capital structure that makes greater
use of financial leverage without imposing excessive risk on either the
Company's shareholders or creditors. The Company believes that the substitution
of lower (after-tax) cost debt for equity in its permanent capital structure
will reduce its overall cost of capital. The Company believes that its
profitability and strong cash flows will accommodate the increased use of debt
without impairing its ability to finance growth or increase cash dividends per
Share.
The Company's Board of Directors also believes that the Company's financial
condition and outlook and current market conditions, including recent trading
prices of the Shares, make this an attractive time to repurchase a portion of
the outstanding Shares. In the view of the Company's Board of Directors, the
Offer is an attractive use of the Company's financial resources and the use of
cash and borrowings to fund the Offer will result in an efficient capital
structure for the Company, as described above. Accordingly, the Offer is
consistent with the Company's long term corporate goal of increasing shareholder
value. Also as part of its financial strategy, subject to the discretion of the
Company's Board of Directors and the requirements of applicable law, the Company
currently intends to increase future cash dividends per Share at a rate that
approximates the inflation rate. After the Offer and the Note Offering are
completed, the Company believes that its financial condition, access to capital
and outlook for continued favorable cash generation will allow it to continue to
reinvest in its core business, including through research and development,
capital expenditures and global expansion.
The Offer provides shareholders who are considering a sale of all or a
portion of their Shares the opportunity to determine the price or prices, not in
excess of $51.00 nor less than $43.00 per Share, at which they are willing to
sell their Shares and, if any such Shares are purchased pursuant to the Offer,
to sell those Shares for cash without the usual transaction costs associated
with open market sales. In addition, the Offer may give shareholders the
opportunity to sell at prices greater than market prices prevailing prior to
announcement of the Offer.
As of April 16, 1997, the Company had issued and outstanding 28,927,000
Shares and had reserved 3,361,935 Shares for issuance upon exercise of
outstanding stock options. The 5,875,000 Shares that the Company is offering to
purchase pursuant to the Offer represent approximately 20% of the outstanding
Shares. The Shares are listed and traded on the NYSE under the symbol "BGG." On
April 15, 1997, the last full trading day prior to the announcement of the
Offer, the closing per Share sales price as reported on the NYSE Composite Tape
was $42.75, and on April 21, 1997, the last full trading day on the NYSE prior
to the commencement of the Offer, the closing per Share sales price as reported
on the NYSE Composite Tape was $47.25. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES. See Section 8.
5
<PAGE> 6
THE OFFER
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase 5,875,000 Shares or such lesser number of Shares as are properly
tendered (and not withdrawn in accordance with Section 4) prior to the
Expiration Date (as defined below) at prices not in excess of $51.00 nor less
than $43.00 per Share in cash. The term "Expiration Date" means 5:00 P.M., New
York City time, on Tuesday, May 20, 1997, unless and until the Company, in its
sole discretion, shall have extended the period of time during which the Offer
will remain open, in which event the term "Expiration Date" shall refer to the
latest time and date at which the Offer, as so extended by the Company, shall
expire. See Section 15 for a description of the Company's right to extend,
delay, terminate or amend the Offer. The Company reserves the right to purchase
more than 5,875,000 Shares pursuant to the Offer. In accordance with applicable
regulations of the Securities and Exchange Commission (the "Commission"), the
Company may purchase pursuant to the Offer an additional amount of Shares not to
exceed 2% of the outstanding Shares without amending or extending the Offer. See
Section 15. In the event of an over-subscription of the Offer as described
below, Shares tendered at or below the Purchase Price prior to the Expiration
Date will be subject to proration, except for Odd Lots as explained below. The
proration period also expires on the Expiration Date.
The Company will select the lowest Purchase Price that will allow it to buy
5,875,000 Shares (or such lesser number of Shares as are properly tendered at
prices not in excess of $51.00 nor less than $43.00 per Share). All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, subject to the terms and the conditions
of the Offer, including the proration and conditional tender provisions. All
Shares purchased in the Offer will be purchased at the Purchase Price.
THE OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM NUMBER OF
SHARES, BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
In accordance with Instruction 5 of the Letter of Transmittal, shareholders
(other than certain Odd Lot Holders) desiring to tender Shares must specify the
price, not in excess of $51.00 nor less than $43.00 per Share, at which they are
willing to sell their Shares to the Company. As promptly as practicable
following the Expiration Date, the Company will, in its sole discretion,
determine the Purchase Price that it will pay for Shares properly tendered
pursuant to the Offer and not withdrawn, taking into account the number of
Shares tendered and the prices specified by tendering shareholders. The Company
intends to select the lowest Purchase Price, not in excess of $51.00 nor less
than $43.00 per Share, that will enable it to purchase 5,875,000 Shares (or such
lesser number of Shares as are properly tendered) pursuant to the Offer. Shares
properly tendered pursuant to the Offer at or below the Purchase Price and not
withdrawn will be purchased at the Purchase Price, subject to the terms and
conditions of the Offer, including the proration and conditional tender
provisions. All Shares tendered and not purchased pursuant to the Offer,
including Shares tendered at prices in excess of the Purchase Price and Shares
not purchased because of proration or conditional tender, will be returned to
the tendering shareholders at the Company's expense as promptly as practicable
following the Expiration Date.
Priority of Purchases. Upon the terms and subject to the conditions of the
Offer, if more than 5,875,000 Shares have been properly tendered at prices at or
below the Purchase Price and not withdrawn prior to the Expiration Date, the
Company will purchase properly tendered Shares on the basis set forth below:
(a) first, all Shares tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Holder who:
(1) tenders all Shares beneficially owned by such Odd Lot Holder at
a price at or below the Purchase Price, including by electing to accept
the Purchase Price determined by the Company (tenders of less than all
Shares owned by such shareholder will not qualify for this preference);
and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) second, after purchase of all of the foregoing Shares, all Shares
conditionally tendered in accordance with Section 6, for which the
condition was satisfied, and all other Shares tendered properly and
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<PAGE> 7
unconditionally at prices at or below the Purchase Price and not withdrawn
prior to the Expiration Date, on a pro rata basis (with appropriate
adjustments to avoid purchases of fractional Shares) as described below;
and
(c) third, if necessary, Shares conditionally tendered, for which the
condition was not satisfied, at or below the Purchase Price and not
withdrawn prior to the Expiration Date, selected by random lot in
accordance with Section 6.
Odd Lots. For purposes of the Offer, the term "Odd Lots" shall mean all
Shares properly tendered prior to the Expiration Date at prices at or below the
Purchase Price and not withdrawn by any person who owns, beneficially or of
record, an aggregate of fewer than 100 Shares (an "Odd Lot Holder") (and so
certified in the appropriate place on the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery). In order to qualify for this
preference, an Odd Lot Holder must tender all such Shares in accordance with the
procedures described in Section 3. As set forth above, Odd Lots will be accepted
for payment before proration, if any, of the purchase of other tendered Shares.
This preference is not available to partial tenders. Any shareholder wishing to
tender all of such shareholder's Shares pursuant to this Section should complete
the box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on
the Notice of Guaranteed Delivery. See Instruction 8 to the Letter of
Transmittal.
The Company also reserves the right, but will not be obligated, to purchase
all Shares duly tendered by any shareholder who tendered all Shares owned,
beneficially or of record, at or below the Purchase Price and who, as a result
of proration, would then own, beneficially or of record, an aggregate of fewer
than 100 Shares. If the Company exercises this right, it will increase the
number of Shares that it is offering to purchase by the number of Shares
purchased through the exercise of the right.
Proration. If proration of tendered Shares is required, the Company will
determine the proration factor as soon as practicable following the Expiration
Date. Proration for each shareholder tendering Shares, other than Odd Lot
Holders, shall be based on the ratio of the number of Shares tendered by such
shareholder to the total number of Shares tendered by all shareholders, other
than Odd Lot Holders, at or below the Purchase Price, subject to the conditional
tender provisions described in Section 6. Because of the difficulty in
determining the number of Shares properly tendered (including Shares tendered by
guaranteed delivery procedures, as described in Section 3) and not withdrawn,
and because of the odd lot procedure, the Company does not expect that it will
be able to announce the final proration factor or commence payment for any
Shares purchased pursuant to the Offer until approximately seven NYSE trading
days after the Expiration Date. The preliminary results of any proration will be
announced by press release as soon as practicable after the Expiration Date.
Shareholders may obtain such preliminary information from the Information Agent
or the Dealer Manager and may be able to obtain such information from their
brokers.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of Shares and will be furnished to brokers, banks and similar
persons whose names, or the names of whose nominees, appear on the Company's
shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
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<PAGE> 8
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
The discussion in the Introduction, this Section 2, Section 9 and Section
10 contains forward-looking statements that involve risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statements. When used in this Offer to Purchase, the words
"anticipate," "believe," "estimate," "intend" and "expect" and similar
expressions are intended to identify such forward-looking statements. The
forward-looking statements are based on the Company's current views and
assumptions and involve risks and uncertainties that include, among other
things, the effects of weather on the purchasing patterns of the Company's
customers and end use purchasers of the Company's engines; the seasonal nature
of the Company's business; actions of competitors; changes in laws and
regulations, including accounting standards; employee relations; customer
demand; prices of purchased raw materials and parts; domestic economic
conditions, including housing starts and changes in consumer disposable income;
and foreign economic conditions, including currency rate fluctuations. Some or
all of the factors are beyond the Company's control.
The Offer provides shareholders who are considering a sale of all or a
portion of their Shares with the opportunity to determine the price or prices
(not in excess of $51.00 nor less than $43.00 per Share) at which they are
willing to sell their Shares and, subject to the terms and conditions of the
Offer, to sell those Shares for cash without the usual transaction costs
associated with market sales. The Offer also allows shareholders to sell a
portion of their Shares while retaining a continuing equity interest in the
Company. In addition, the Offer may give shareholders the opportunity to sell
Shares at prices greater than market prices prevailing prior to announcement of
the Offer. Shareholders who determine not to accept the Offer will realize a
proportionate increase in their relative equity interest in the Company and thus
in the Company's future earnings and assets, subject to the Company's right to
issue additional Shares and other equity securities in the future. To the extent
the purchase of Shares in the Offer results in a reduction of the number of
shareholders of record, the costs of the Company for services to shareholders
may be reduced.
In recent years, the Company's operations have typically generated
substantial excess cash. Over the past several years, the Company has used this
cash to fund new product development and for significant capital expenditures in
connection with starting up and moving production to three new engine plants,
building a new foundry and expanding its existing facilities in Kentucky and
Missouri. Management of the Company subscribes to the premise that the value of
the Company is enhanced if the capital invested in the Company's operations
yields a cash return that is greater than the Company's cost of capital. Given
this belief, the Company is continuing to implement its financial strategy by
means of the Offer and the Note Offering. The proceeds of the Note Offering are
expected to be used to repay borrowings incurred under the Company's credit
facilities to fund a portion of the aggregate Purchase Price for Shares accepted
by the Company pursuant to the Offer. See Section 9. The Company believes the
Offer and the Note Offering will provide a capital structure that makes greater
use of financial leverage without imposing excessive risk on either the
Company's shareholders or creditors. The Company believes that the substitution
of lower (after-tax) cost debt for equity in its permanent capital structure
will reduce its overall cost of capital. The Company believes that its
profitability and strong cash flows will accommodate the increased use of debt
without impairing its ability to finance growth or increase cash dividends per
Share.
The Company's Board of Directors also believes that the Company's financial
condition and outlook and current market conditions, including recent trading
prices of the Shares, make this an attractive time to repurchase a portion of
the outstanding Shares. In the view of the Company's Board of Directors, the
Offer is an attractive use of the Company's financial resources and the use of
cash and borrowings to fund the Offer will result in an efficient capital
structure for the Company, as described above. Accordingly, the Offer is
consistent with the Company's long term corporate goal of increasing shareholder
value. Also as part of its financial strategy, subject to the discretion of the
Company's Board of Directors and the requirements of applicable law, the Company
currently intends to increase future cash dividends per Share at a rate that
approximates the inflation rate. After the Offer and the Note Offering are
completed, the Company believes that its financial condition, access to capital
and outlook for continued favorable cash generation will allow it to continue to
reinvest in its core business, including through research and development,
capital expenditures and global expansion.
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<PAGE> 9
The amounts required to fund a portion of the Offer and pay related
expenses will be provided by the Credit Agreement described in Section 9.
The Company's Board of Directors has declared a dividend of $0.28 per Share
to holders of record of the Company's Common Stock at the close of business on
June 5, 1997, to be paid on or about June 27, 1997. Shares that are purchased
pursuant to the Offer prior to June 5, 1997 will not be entitled to receive such
dividend.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL OF
SUCH SHAREHOLDER'S SHARES AND NEITHER HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN
THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN
DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE
PRICE OR PRICES AT WHICH TO TENDER.
The Company may in the future purchase additional Shares on the open
market, in private transactions, through tender offers or otherwise. The
Company's Board of Directors has authorized the purchase of Shares, by means of
the Offer and one or more open market or private transactions, for up to
$300,000,000 aggregate consideration for the Shares. The Company has not
purchased any Shares pursuant to the authorization, but may purchase Shares
pursuant to the authorization in addition to the Shares purchased pursuant to
the Offer. Any such purchase may be on the same terms or on terms which are more
or less favorable to shareholders than the terms of the Offer. However, Rule
13e-4 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), prohibits the Company and its affiliates from purchasing any Shares,
other than pursuant to the Offer, until at least ten business days after the
Expiration Date. Any possible future purchases by the Company will depend on
many factors, including the results of the Offer, the market price of the
Shares, the Company's business and financial position and general economic and
market conditions.
Shares the Company acquires pursuant to the Offer will be held in the
Company's treasury (unless and until the Company determines to retire such
Shares) and will be available for the Company to issue without further
shareholder action (except as required by applicable law or the rules of the
NYSE or any other securities exchange on which the Shares are listed) for
purposes including, without limitation, the acquisition of other businesses, the
raising of additional capital for use in the Company's business and the
satisfaction of obligations under existing or future employee benefit or
compensation programs or stock plan or compensation programs for directors. The
Company has no current plans for issuance of the Shares repurchased pursuant to
the Offer, except that the Company is authorized to use the repurchased Shares
from time to time in connection with employee benefit or compensation programs
or stock plan or compensation programs for directors maintained by the Company.
3. PROCEDURES FOR TENDERING SHARES.
Proper Tender of Shares. For Shares to be tendered properly pursuant to
the Offer, (a) the certificates for such Shares (or confirmation of receipt of
such Shares pursuant to the procedures for book-entry transfer set forth below),
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof), including any required signature guarantees
and any other documents required by the Letter of Transmittal, must be received
prior to 5:00 P.M., New York City time, on the Expiration Date by the Depositary
at its address set forth on the back cover of this Offer to Purchase or (b) the
tendering shareholder must comply with the guaranteed delivery procedure set
forth below. IN ACCORDANCE WITH INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL,
SHAREHOLDERS (OTHER THAN CERTAIN ODD LOT HOLDERS) DESIRING TO TENDER SHARES
PURSUANT TO THE OFFER MUST PROPERLY INDICATE IN THE SECTION CAPTIONED "PRICE (IN
DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED" ON THE LETTER OF
TRANSMITTAL THE PRICE (IN MULTIPLES OF $.125) AT WHICH THEIR SHARES ARE BEING
TENDERED. Shareholders who desire to tender Shares at more than one price must
complete a separate Letter of Transmittal for each price at which Shares are
tendered, provided that the same Shares cannot be tendered (unless properly
withdrawn previously in accordance with the
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<PAGE> 10
terms of the Offer) at more than one price. IN ORDER TO PROPERLY TENDER SHARES
(OTHER THAN SHARES TENDERED BY CERTAIN ODD LOT HOLDERS), ONE AND ONLY ONE PRICE
BOX MUST BE CHECKED IN THE APPROPRIATE SECTION ON EACH LETTER OF TRANSMITTAL.
In addition, Odd Lot Holders who tender all such Shares must complete the
box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery, in order to qualify for the preferential
treatment available to Odd Lot Holders as set forth in Section 1, except in the
case of certain tenders made pursuant to the book-entry procedures described in
Section 3. See Instruction 8 of the Letter of Transmittal.
To prevent backup federal income tax withholding, and in the case of
certain foreign shareholders, to prevent a 30% withholding tax, certain
completed forms should accompany the Letter of Transmittal. See Section 14.
Signature Guarantees and Method of Delivery. No signature guarantee is
required (a) if the Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this Section 3, shall include any
participant in The Depository Trust Company or the Philadelphia Depository Trust
Company (each, a "Book-Entry Transfer Facility") whose name appears on a
security position listing as the owner of the Shares) tendered therewith and
such holder has not completed the box entitled "Special Delivery Instructions"
on the Letter of Transmittal; or (b) if Shares are tendered for the account of a
firm or other entity that is a member in good standing of the Security Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Guarantee Program or the Stock Exchange Medallion Program (each such entity
being hereinafter referred to as an "Eligible Institution"). See Instruction 1
of the Letter of Transmittal. If a certificate for Shares is registered in the
name of a person other than the person executing a Letter of Transmittal or if
payment is to be made, or Shares not purchased or tendered are to be issued, to
a person other than the registered holder, then the certificate must be endorsed
or accompanied by an appropriate stock power, in either case, signed exactly as
the name of the registered holder appears on the certificate, or stock power
guaranteed by an Eligible Institution.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of
certificates for such Shares (or a timely confirmation of a book-entry transfer
of such Shares into the Depositary's account at a Book-Entry Transfer Facility
as described above), a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal. THE METHOD OF DELIVERY OF ALL DOCUMENTS,
INCLUDING CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF
DELIVERY IS BY MAIL, THEN REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares for purposes of the Offer at each Book-Entry Transfer Facility
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in the respective Book-Entry
Transfer Facility's system may make book-entry delivery of the Shares by causing
such facility to transfer Shares into the Depositary's account in accordance
with the respective Book-Entry Transfer Facility's procedures for transfer.
Although delivery of Shares may be effected through a book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility, either (a) a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) with any required signature guarantees and any other required
documents must, in any case, be transmitted to and received by the Depositary at
its address set forth on the back cover of this Offer to Purchase prior to the
Expiration Date or (b) the guaranteed delivery procedure described below must be
followed. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share certificates cannot be delivered to the
Depositary prior to the Expiration Date (or the procedures for book-entry
transfer cannot be completed on a timely basis) or if time will not permit all
required documents to
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<PAGE> 11
reach the Depositary prior to the Expiration Date, such Shares may nevertheless
be tendered, provided that all of the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives by hand, mail, telegram or facsimile
transmission, prior to the Expiration Date, a properly completed and duly
executed Notice of Guaranteed Delivery in the form the Company has provided
with this Offer to Purchase (specifying the price at which the Shares are
being tendered), including (where required) a signature guarantee by an
Eligible Institution; and
(c) the certificates for all tendered Shares, in proper form for
transfer (or confirmation of book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facilities), together with
a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) and any required signature guarantees or other
documents required by the Letter of Transmittal, are received by the
Depositary within three NYSE trading days after the date of receipt by the
Depositary of such Notice of Guaranteed Delivery.
If any tendered Shares are not purchased or if less than all Shares
evidenced by a shareholder's certificates are tendered, certificates for
unpurchased Shares will be returned as promptly as practicable after the
expiration or termination of the Offer or, in the case of Shares tendered by
book-entry transfer at a Book-Entry Transfer Facility, such Shares will be
credited to the appropriate account maintained by the tendering shareholder at
the appropriate Book-Entry Transfer Facility, in each case without expense to
such shareholder.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the price to be paid for Shares to be accepted and the validity,
form, eligibility (including time of receipt) and acceptance of any tender of
Shares will be determined by the Company, in its sole discretion, and its
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders of any Shares that it determines
are not in appropriate form or the acceptance for payment of or payments for
which may be unlawful. The Company also reserves the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in any tender with
respect to any particular Shares or any particular shareholder. No tender of
Shares will be deemed to have been properly made until all defects or
irregularities have been cured by the tendering shareholder or waived by the
Company. None of the Company, the Dealer Manager, the Depositary, the
Information Agent or any other person shall be obligated to give notice of any
defects or irregularities in tenders, nor shall any of them incur any liability
for failure to give any such notice.
Savings Plans. As of April 15, 1997, the Company's Employee Savings and
Investment Plan (the "Employee Savings Plan") owned 682,665 Shares and the
Company's Regional Plants Retirement and Savings Plan (the "Regional Savings
Plan") owned 64,198 Shares, all of which were held in either the Company Stock
Fund or the PAYSOP Stock Fund (collectively, the "Fund"). Interests in the Fund
are credited to the individual accounts of the participants, beneficiaries of
deceased participants and alternate payees pursuant to qualified domestic orders
(collectively, "Participants") of the Employee Savings Plan and the Regional
Savings Plan, as applicable.
Shares representing a Participant's proportional interest in the Fund under
the Employee Savings Plan will, subject to the limitations of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and applicable
regulations thereunder, be tendered by Firstar Trust Company, as trustee of the
Employee Savings Plan, according to the instructions of such Participant in the
Employee Savings Plan. Employee Savings Plan Shares in the Fund for which the
trustee has not received timely instructions from Participants will not be
tendered. The trustee will make available to the Participants in the Employee
Savings Plan whose accounts are credited with Shares in the Fund all documents
furnished to shareholders generally in connection with the Offer. The Company
will also provide additional information in a separate letter with respect to
the application of the Offer to Participants in the Employee Savings Plan.
BECAUSE THE DEPOSITARY FOR THE OFFER ALSO ACTS AS TRUSTEE OF THE EMPLOYEE
SAVINGS PLAN, PARTICIPANTS IN THE EMPLOYEE SAVINGS PLAN MAY USE THE LETTER OF
TRANSMITTAL TO INSTRUCT THE TRUSTEE REGARDING THE OFFER BY COMPLETING THE BOX
ENTITLED "TENDER OF EMPLOYEE SAVINGS PLAN SHARES." PARTICIPANTS IN THE EMPLOYEE
SAVINGS PLAN ARE URGED TO READ THE LETTER OF TRANSMITTAL AND THE ASSOCIATED
MATERIALS CAREFULLY. Each Participant in the Employee Savings Plan may direct
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<PAGE> 12
that all, some or none of the Shares credited to the Participant's account in
the Fund be tendered and the price at which such Participant's Shares are to be
tendered. All proceeds received by the trustee on account of Shares purchased
from the Employee Savings Plan will be reinvested in the Balanced Fund (Vanguard
Wellington Fund) as soon as administratively possible and such investment will
be credited to the Employee Savings Plan Participants' individual accounts.
Participants may contact Firstar Trust Company at 1-800-236-3982 after the
reinvestment is complete to have any proceeds of the sale of Shares that were
invested in the Balanced Fund (Vanguard Wellington Fund) invested in other
investment options offered under the Employee Savings Plan.
Shares representing a Participant's proportional interest in the Fund under
the Regional Savings Plan will, subject to the limitations of ERISA and
applicable regulations thereunder, be tendered by CG Trust Company ("CG Trust"),
as trustee of the Regional Savings Plan, according to the instructions of such
Participant in the Regional Savings Plan. Regional Savings Plan Shares in the
Fund for which CG Trust has not received timely instructions from Participants
will not be tendered. CG Trust will make available to the Participants in the
Regional Savings Plan whose accounts are credited with Shares in the Fund all
documents furnished to shareholders generally in connection with the Offer. Each
such Participant will also receive a form upon which the Participant may
instruct CG Trust regarding the Offer. The Company will also provide additional
information in a separate letter with respect to the application of the Offer to
Participants in the Regional Savings Plan. PARTICIPANTS IN THE REGIONAL SAVINGS
PLAN MAY NOT USE THE LETTER OF TRANSMITTAL TO DIRECT THE TENDER OF THE SHARES
ATTRIBUTABLE TO THEIR ACCOUNTS, BUT MUST USE THE SEPARATE FORM SENT TO THEM.
PARTICIPANTS IN THE REGIONAL SAVINGS PLAN ARE URGED TO READ THE SEPARATE FORM
AND RELATED MATERIALS CAREFULLY. Each Participant in the Regional Savings Plan
may direct that all, some or none of the Shares credited to the Participant's
account in the Fund be tendered and the price at which such Participant's Shares
are to be tendered. All proceeds received by CG Trust on account of Shares
purchased from the Regional Savings Plan will be reinvested in the Fixed Income
Fund (CIGNA Guaranteed Income Fund) as soon as administratively possible and
such investment will be credited to the Regional Savings Plan Participants'
individual accounts. Participants may contact CG Trust at 1-800-253-2287 after
the reinvestment is complete to have any proceeds of the sale of Shares, which
were invested in the Fixed Income Fund (CIGNA Guaranteed Income Fund), invested
at the Participants direction in the investment options offered under the
Regional Savings Plan, effective at the beginning of the following calendar
quarter.
Dividend Reinvestment Plan. Shares credited to participants' accounts
under the Company's Dividend Reinvestment Plan (the "Dividend Reinvestment
Plan") will be tendered by Firstar Trust Company, as administrator, according to
instructions provided to the administrator from participants in the Dividend
Reinvestment Plan. Dividend Reinvestment Plan Shares for which the administrator
has not received timely instructions from participants will not be tendered. The
administrator will make available to the participants whose accounts are
credited with Shares under the Dividend Reinvestment Plan all documents
furnished to shareholders generally in connection with the Offer. BECAUSE THE
DEPOSITARY FOR THE OFFER ALSO ACTS AS ADMINISTRATOR OF THE DIVIDEND REINVESTMENT
PLAN, PARTICIPANTS IN THE DIVIDEND REINVESTMENT PLAN MAY USE THE LETTER OF
TRANSMITTAL TO INSTRUCT THE ADMINISTRATOR REGARDING THE OFFER BY COMPLETING THE
BOX ENTITLED "TENDER OF DIVIDEND REINVESTMENT PLAN SHARES." Each participant may
direct that all, some or none of the Shares credited to the participant's
account under the Dividend Reinvestment Plan be tendered and the price at which
such participant's Shares are to be tendered. Participants in the Dividend
Reinvestment Plan are urged to read the Letter of Transmittal and related
materials carefully.
If a participant tenders all of such participant's Dividend Reinvestment
Plan Shares, and all such Shares are purchased by the Company pursuant to the
Offer, such tender will be deemed to be authorization and written notice to
Firstar Trust Company of termination of such participant's participation in the
Dividend Reinvestment Plan.
Company Stock Incentive Plan. The Company is not offering, as part of the
Offer, to purchase any of the options (the "Options") outstanding under the
Company's Stock Incentive Plan, and tenders of such Options will not be
accepted. Holders of Options who wish to participate in the Offer may either (a)
comply with the procedures for guaranteed delivery set forth under "Guaranteed
Delivery" above without having to exercise their Options until after the results
of the Offer are known (provided, however, that an Option holder will not be
required to make the requisite tender through an Eligible Institution and may
personally execute and deliver the
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Notice of Guaranteed Delivery) or (b) exercise their Options and purchase Shares
and then tender such Shares pursuant to the Offer, provided that, in the case of
either (a) or (b), any such exercise of an Option and tender of Shares is in
accordance with the terms of the Stock Incentive Plan and the Options. In no
event are any Options to be delivered to the Depositary in connection with a
tender of Shares hereunder. An exercise of an Option cannot be revoked even if
Shares received upon the exercise thereof and tendered in the Offer are not
purchased in the Offer for any reason. All holders of Options are executive
officers or key employees of the Company and have indicated that they do not
intend to tender any Shares pursuant to the Offer.
Tendering Shareholder's Representation and Warranty; Company's Acceptance
Constitutes an Agreement. A tender of Shares pursuant to any of the procedures
described above will constitute the tendering shareholder's acceptance of the
terms and conditions of the Offer, as well as the tendering shareholder's
representation and warranty to the Company that (a) such shareholder has a net
long position in the Shares being tendered within the meaning of Rule 14e-4
promulgated by the Commission under the Exchange Act and (b) the tender of such
Shares complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person,
directly or indirectly, to tender Shares for such person's own account unless,
at the time of tender and at the end of the proration period or period during
which Shares are accepted by lot (including any extensions thereof), the person
so tendering (i) has a net long position equal to or greater than the amount of
(x) Shares tendered or (y) other securities convertible into or exchangeable or
exercisable for the Shares tendered and will acquire such Shares for tender by
conversion, exchange or exercise and (ii) will deliver or cause to be delivered
such Shares in accordance with the terms of the Offer. Rule 14e-4 provides a
similar restriction applicable to the tender or guarantee of a tender on behalf
of another person. The Company's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the tendering
shareholder and the Company upon the terms and conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company pursuant to the Offer, may also be withdrawn
at any time after 12:00 Midnight, New York City time, on Tuesday, June 17, 1997.
For a withdrawal to be effective, a notice of withdrawal must be in
written, telegraphic or facsimile transmission form and must be received in a
timely manner by the Depositary at its address set forth on the back cover of
this Offer to Purchase. Any such notice of withdrawal must specify the name of
the tendering shareholder, the name of the registered holder (if different from
that of the person who tendered such Shares), the number of Shares tendered and
the number of Shares to be withdrawn. If the certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the release of such certificates, the tendering shareholder must also
submit the serial numbers shown on the particular certificates for Shares to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution (except in the case of Shares tendered by an Eligible
Institution). If Shares have been tendered pursuant to the procedure for
book-entry tender set forth in Section 3, the notice of withdrawal also must
specify the name and the number of the account at the applicable Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with the procedures of such facility. None of the Company, the Dealer Manager,
the Depositary, the Information Agent or any other person shall be obligated to
give notice of any defects or irregularities in any notice of withdrawal nor
shall any of them incur liability for failure to give any such notice. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Company, in its sole discretion, which
determination shall be final and binding.
Withdrawals may not be rescinded and any Shares withdrawn will thereafter
be deemed not properly tendered for purposes of the Offer unless such withdrawn
Shares are properly retendered prior to the Expiration Date by again following
one of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or
is unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain tendered Shares on behalf of the Company and such
Shares may
13
<PAGE> 14
not be withdrawn except to the extent tendering shareholders are entitled to
withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, as promptly as
practicable following the Expiration Date, the Company (a) will determine the
Purchase Price it will pay for the Shares properly tendered and not withdrawn
prior to the Expiration Date, taking into account the number of Shares so
tendered and the prices specified by tendering shareholders, and (b) will accept
for payment and pay for (and thereby purchase) Shares properly tendered at
prices at or below the Purchase Price and not withdrawn prior to the Expiration
Date. For purposes of the Offer, the Company will be deemed to have accepted for
payment (and therefore purchased) Shares that are tendered at or below the
Purchase Price and not withdrawn (subject to the proration and conditional
tender provisions of the Offer) only when, as and if it gives oral or written
notice to the Depositary of its acceptance of such Shares for payment pursuant
to the Offer.
Upon the terms and subject to the conditions of the Offer, promptly
following the Expiration Date, the Company will accept for payment and pay a
single per Share Purchase Price for 5,875,000 Shares (subject to increase or
decrease as provided in Section 15) or such lesser number of Shares as are
properly tendered at prices not in excess of $51.00 nor less than $43.00 per
Share and not withdrawn as permitted in Section 4.
The Company will pay for Shares purchased pursuant to the Offer by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering shareholders.
In the event of proration, the Company will determine the proration factor
and pay for those tendered Shares accepted for payment as soon as practicable
after the Expiration Date. However, the Company does not expect to be able to
announce the final results of any proration and commence payment for Shares
purchased until approximately seven NYSE trading days after the Expiration Date.
Certificates for all Shares tendered and not purchased, including all Shares
tendered at prices in excess of the Purchase Price and Shares not purchased due
to proration or conditional tender, will be returned (or, in the case of Shares
tendered by book-entry transfer, such Shares will be credited to the account
maintained with the appropriate Book-Entry Transfer Facility by the participant
therein who so delivered such Shares) to the tendering shareholder at the
Company's expense as promptly as practicable after the Expiration Date without
expense to the tendering shareholders. Under no circumstances will interest on
the Purchase Price be paid by the Company by reason of any delay in making
payment. In addition, if certain events occur, the Company may not be obligated
to purchase Shares pursuant to the Offer. See Section 7.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by
the Offer) if unpurchased Shares are to be registered in the name of, any person
other than the registered holder, or if tendered certificates are registered in
the name of any person other than the person signing the Letter of Transmittal,
the amount of all stock transfer taxes, if any (whether imposed on the
registered holder or such other person), payable on account of the transfer to
such person will be deducted from the Purchase Price unless satisfactory
evidence of the payment of the stock transfer taxes, or exemption therefrom, is
submitted. See Instruction 7 of the Letter of Transmittal.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN
AND RETURN TO THE DEPOSITARY THE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF
31% OF THE GROSS PROCEEDS PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO
THE OFFER. SEE SECTION 14. ALSO SEE SECTION 14 REGARDING FEDERAL INCOME TAX
CONSEQUENCES FOR NON-U.S. SHAREHOLDERS.
14
<PAGE> 15
6. CONDITIONAL TENDER OF SHARES.
Under certain circumstances set forth in Section 1 above, the Company may
prorate the number of Shares purchased pursuant to the Offer. As discussed in
Section 14, the number of Shares to be purchased from a particular shareholder
might affect the tax consequences of such purchase to such shareholder and such
shareholder's decision whether to tender. Accordingly, a shareholder may tender
Shares subject to the condition that a specified minimum number, if any, must be
purchased and any shareholder wishing to make such a conditional tender should
so indicate in the box captioned "Conditional Tender" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery. It is the
tendering shareholder's responsibility to calculate such minimum number of
Shares and each shareholder is urged to consult his or her own tax advisor. If
the effect of accepting tenders on a pro rata basis is to reduce the number of
Shares to be purchased from any shareholder below the minimum number so
specified, such tender will automatically be deemed withdrawn, except as
provided in the next paragraph, and Shares tendered by such shareholder will be
returned as soon as practicable after the Expiration Date.
However, if so many conditional tenders would be deemed withdrawn that the
total number of Shares to be purchased falls below 5,875,000, then, to the
extent feasible, the Company will select enough of such conditional tenders,
which would otherwise have been deemed withdrawn, to purchase such desired
number of Shares. In selecting among such conditional tenders, the Company will
select by random lot and will limit its purchase in each case to the designated
minimum number of Shares to be purchased. Conditional tenders will be selected
by lot only from shareholders who tender all of their Shares.
IN THE EVENT OF PRORATION, ANY SHARES TENDERED PURSUANT TO A CONDITIONAL
TENDER FOR WHICH THE MINIMUM REQUIREMENTS ARE NOT SATISFIED MAY NOT BE ACCEPTED
AND WILL THEREBY BE DEEMED WITHDRAWN.
7. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment, purchase or pay for any Shares tendered and may
terminate or amend the Offer or may postpone the acceptance for payment of, or
the purchase of and the payment for Shares tendered, subject to Rule 13e-4(f)
under the Exchange Act, if at any time on or after April 16, 1997 and prior to
the time of payment for any such Shares (whether any Shares have previously been
accepted for payment pursuant to the Offer) any of the following events shall
have occurred (or shall have been determined by the Company to have occurred)
and, in the Company's judgment in any such case and regardless of the
circumstances giving rise thereto (including any action or omission to act by
the Company), the occurrence of such event or events makes it inadvisable to
proceed with the Offer or with such acceptance for payment or payment:
(a) there shall have been threatened or instituted or be pending any
action or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, before any court, authority, agency or tribunal that directly
or indirectly (i) challenges the making of the Offer, the acquisition of
some or all of the Shares pursuant to the Offer or otherwise relates in any
manner to the Offer; or (ii) in the Company's sole judgment, could
materially and adversely affect the business, condition (financial or
other), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of the business of the Company or any of
its subsidiaries or materially impair the contemplated benefits of the
Offer to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any court or any authority, agency or tribunal
that, in the Company's sole judgment, would or might directly or indirectly
(i) make the acceptance for payment of, or payment for, some or all of the
Shares illegal or otherwise restrict or prohibit consummation of the Offer;
(ii) delay or restrict the ability of the Company, or render the Company
unable, to accept for payment or pay for some or all of the Shares; (iii)
materially impair the contemplated benefits of the Offer to the Company; or
(iv) materially and adversely affect the
15
<PAGE> 16
business, condition (financial or other), income, operations or prospects
of the Company and its subsidiaries, taken as a whole, or otherwise
materially impair in any way the contemplated future conduct of the
business of the Company or any of its subsidiaries;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market; (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States; (iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States; (iv) any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency or authority on, or any
event that, in the Company's sole judgment, might affect the extension of
credit by banks or other lending institutions in the United States; (v) any
significant decrease in the market price of the Shares or any change in the
general political, market, economic or financial conditions in the United
States or abroad that could, in the sole judgment of the Company, have a
material adverse effect on the Company's business, operations or prospects
or the trading in the Shares; (vi) any change in the general political,
market, economic or financial conditions in the United States or abroad
that could have a material adverse effect on the Company's business,
operations or prospects or that, in the sole judgment of the Company, makes
it inadvisable to proceed with the Offer; (vii) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or (viii) any decline in either the Dow
Jones Industrial Average or the Standard and Poor's Index of 500 Industrial
Companies by an amount in excess of 10% measured from the close of business
on April 16, 1997;
(d) a tender or exchange offer with respect to some or all of the
Shares (other than the Offer), or a merger or acquisition proposal for the
Company, shall have been proposed, announced or made by another person or
entity or shall have been publicly disclosed, or the Company shall have
learned that (i) any person, entity or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) shall have acquired or proposed to
acquire beneficial ownership of more than 5% of the outstanding Shares, or
any new group shall have been formed that beneficially owns more than 5% of
the outstanding Shares (other than any such person, entity or group who has
filed a Schedule 13D or Schedule 13G with the Commission before April 16,
1997); (ii) any such person, entity or group who has filed a Schedule 13D
or Schedule 13G with the Commission before April 16, 1997 shall have
acquired or proposed to acquire beneficial ownership of an additional 2% or
more of the outstanding Shares; or (iii) any person, entity or group shall
have filed a Notification and Report Form under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 or made a public announcement reflecting
an intent to acquire the Company or any of its subsidiaries or any of their
respective assets or securities; or
(e) any change or changes shall have occurred in the business,
financial condition, assets, income, operations, prospects or stock
ownership of the Company or its subsidiaries that, in the Company's sole
judgment, is or may be material to the Company or its subsidiaries.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such condition and may be waived by
the Company, in whole or in part, at any time and from time to time in its sole
discretion. The Company's failure at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Company concerning the events described above
will be final and binding.
16
<PAGE> 17
8. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and traded on the NYSE. The following table sets
forth, for the fiscal quarters indicated, the high and low closing per Share
sales prices on the NYSE Composite Tape as compiled from published financial
sources and the cash dividends declared per Share in each such fiscal quarter:
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
---- --- ---------
<S> <C> <C> <C>
Fiscal 1995(1):
September................................................. $39 1/4 $33 1/8 $.23
December.................................................. 36 1/2 30 1/2 .25
March..................................................... 37 3/4 32 1/4 .25
June...................................................... 38 34 .25
Fiscal 1996:
September................................................. $41 $32 3/4 $.26
December.................................................. 44 1/8 39 .26
March..................................................... 44 3/4 39 3/4 .26
June...................................................... 46 7/8 40 1/2 .27
Fiscal 1997:
September................................................. $45 7/8 $36 1/2 $.27
December.................................................. 44 5/8 39 1/4 .27
March..................................................... 46 3/8 43 .27
June (through April 21, 1997)............................. 48 42 3/4 .28
</TABLE>
- ---------------
(1) Adjusted for a two-for-one stock split effective November 14, 1994.
On April 15, 1997, the last full trading day on the NYSE prior to the
announcement of the Offer, the closing per Share sales price on the NYSE
Composite Tape was $42.75. On April 21, 1997, the last full trading day on the
NYSE prior to the commencement of the Offer, the closing per Share sales price
on the NYSE Composite Tape was $47.25. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES.
The Company's Board of Directors has declared a dividend of $0.28 per Share
to holders of record of the Company's Common Stock at the close of business on
June 5, 1997, to be paid on or about June 27, 1997. Shares that are purchased
pursuant to the Offer prior to June 5, 1997 will not be entitled to receive such
dividend.
9. SOURCE AND AMOUNT OF FUNDS.
Assuming the Company purchases 5,875,000 Shares pursuant to the Offer at a
purchase price of $51.00 per Share, the Company expects the maximum aggregate
cost to purchase Shares and to pay related fees and expenses to be approximately
$300,000,000. The Company expects to fund the purchase of Shares pursuant to the
Offer and the payment of related fees and expenses from available cash and bank
borrowings under the Credit Agreement described below. The Company expects to
use the net proceeds of the Note Offering to repay borrowings incurred under the
Company's credit facilities.
On April 18, 1997, the Company entered into a five-year, $250,000,000
revolving credit facility (the "Credit Agreement"), among the Company, the banks
signatory thereto (the "Banks") and Bank of America National Trust & Savings
Association, as agent (the "Agent"). Borrowings under the Credit Agreement by
the Company bear interest at a rate per annum equal to, at the Company's option,
either (a) the higher of (i) the rate of interest publicly announced from time
to time by the Agent as its reference rate and (ii) 0.5% per annum above the
federal funds rate or (b) the interbank reserve adjusted rate for one, two,
three or six month eurocurrency deposits as quoted by the Agent for deposits
with major international banks plus a margin that may be adjusted up or down
based on the Company's debt ratings. An arrangement fee of 0.09% was paid by the
Company to BancAmerica Securities, Inc., as arranger, and a facility fee of
between 0.08% and 0.20% is payable to the Banks quarterly in arrears. Borrowings
under the Credit Agreement are unsecured and mature on April 18, 2002. The
Credit Agreement also contains certain representations and warranties, covenants
and conditions customary to credit facilities of this nature. As of the date
hereof, there have been no borrowings under the Credit Agreement.
The preceding summary of the Credit Agreement is qualified in its entirety
by reference to the text of the Credit Agreement, which is filed as an exhibit
to the Issuer Tender Offer Statement on Schedule 13E-4 (the
17
<PAGE> 18
"Schedule 13E-4") of which this Offer to Purchase forms a part. A copy of the
Schedule 13E-4 may be obtained from the Commission in the manner provided in
Section 10 under the heading "-- Additional Information."
10. CERTAIN INFORMATION CONCERNING THE COMPANY.
GENERAL
The Company is the world's largest producer of air cooled gasoline engines
for outdoor power equipment. The Company designs, manufactures, markets and
services these products for original equipment manufacturers worldwide. These
engines are aluminum alloy gasoline engines ranging from 3 through 25
horsepower. The Company's engines are primarily used in a variety of lawn and
garden applications, including walk-behind lawn mowers, riding lawn mowers and
tillers. The Company's engines are also used in many commercial products for
both industrial and consumer applications, including generators, pumps and
compressors. Many retailers specify the Company's engines on the powered
equipment they sell, and the Company's name is often featured prominently on a
product despite the fact that its engine is just a component.
The Company also manufactures replacement engines and service parts and
sells them to central sales and service distributors. The Company owns its
principal international distributors. In the United States the distributors are
independently owned and operated. These distributors supply service parts and
replacement engines directly to approximately 30,000 independently owned
authorized service dealers throughout the world. These distributors and service
dealers implement the Company's commitment to reliability and service.
CERTAIN FINANCIAL INFORMATION
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The following summary historical financial information as of and for each
of the two fiscal years ended June 30, 1996 was derived from the audited
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended June 30, 1996 (the "Company's 1996 Annual Report").
The following summary historical financial information as of and for the six
months ended December 29, 1996 and December 31, 1995 was derived from the
unaudited consolidated condensed financial statements included in the Company's
Quarterly Report on Form 10-Q for the period ended December 29, 1996 (the
"Company's 1997 Second Quarterly Report"), each of which is hereby incorporated
herein by reference, and other information and data contained in the Company's
1996 Annual Report and the Company's 1997 Second Quarterly Report. More
comprehensive financial information is included in such reports, and the
financial information that follows is qualified in its entirety by reference to
such reports, as such reports may be amended from time to time, and all the
financial statements and related notes contained therein, copies of which may be
obtained as set forth below under the caption "-- Additional Information."
The summary historical financial information as of and for the six months
ended December 29, 1996 and December 31, 1995, is unaudited and was derived from
the accounting records of the Company. In the opinion of management of the
Company, the summary historical financial information as of and for the six
months ended December 29, 1996 and December 31, 1995 include all adjusting
entries (consisting only of normal recurring adjustments) necessary to present
fairly the information set forth therein. Results for an interim period may not
be indicative of the results of operation for any future period.
The summary pro forma financial information gives effect to the purchase of
Shares pursuant to the Offer and the consummation of the Note Offering, based on
certain assumptions described in the Notes to Summary Historical and Pro Forma
Financial Information, as if the purchase of Shares pursuant to the Offer and
the Note Offering were consummated on July 1, 1996 and July 3, 1995, with
respect to the income statement information, and on December 29, 1996 and June
30, 1996, with respect to the balance sheet information.
The summary pro forma financial information is not necessarily indicative
of the results of operations of the Company had the transactions reflected
therein actually been consummated on the dates and at the prices assumed and are
not necessarily indicative of the results of operations for any future period.
18
<PAGE> 19
<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------------------------------
PRO FORMA
---------------------------------
ASSUMED ASSUMED
$43 PER SHARE $51 PER SHARE
PURCHASE PRICE, PURCHASE PRICE,
1996 1996 1996 1995
--------------- --------------- ------ ------
(IN MILLIONS, EXCEPT RATIOS AND PER SHARE INFORMATION)
<S> <C> <C> <C> <C>
INCOME STATEMENT INFORMATION:
Net sales.................................. $1,287 $1,287 $1,287 $1,340
Income before taxes........................ 131 128 149 170
Net income................................. 81 79 92 104
Average number of shares outstanding....... 23 23 29 29
Earnings per share......................... $ 3.51 $ 3.43 $ 3.19 $ 3.62
Ratio of earnings to fixed charges......... 6.3x 5.8x 14.5x 18.0x
BALANCE SHEET INFORMATION
(at end of period):
Working capital............................ $ 186 $ 139 $ 266 $ 256
Total assets............................... 760 713 838 798
Total debt................................. 270 270 95 101
Other long-term liabilities................ 87 87 87 87
Shareholders' investment................... 248 201 501 439
Book value per common share................ $10.76 $ 8.72 $17.30 $15.19
<CAPTION>
SIX MONTHS ENDED
---------------------------------------------------------------
PRO FORMA
---------------------------------
ASSUMED ASSUMED
$43 PER SHARE $51 PER SHARE
PURCHASE PRICE, PURCHASE PRICE,
DECEMBER 29, DECEMBER 29, DECEMBER 29, DECEMBER 31,
1996 1996 1996 1995
--------------- --------------- ------------ ------------
(IN MILLIONS, EXCEPT RATIOS AND PER SHARE INFORMATION)
<S> <C> <C> <C> <C>
INCOME STATEMENT INFORMATION:
Net sales.................................. $ 461 $ 461 $ 461 $ 519
Income before taxes........................ 9 8 18 33
Net income................................. 5 4 11 21
Average number of shares outstanding....... 23 23 29 29
Earnings per share......................... $ .22 $ .17 $ 0.40 $ 0.71
Ratio of earnings to fixed charges......... 1.7x 1.5x 5.5x 7.8x
BALANCE SHEET INFORMATION
(at end of period):
Working capital............................ $ 174 $ 127 $ 254 $ 225
Total assets............................... 924 924 922 905
Total debt................................. 390 437 135 197
Other long-term liabilities................ 104 104 104 86
Shareholders' investment................... 243 196 496 445
Book value per common share................ $10.54 $ 8.50 $17.15 $15.37
</TABLE>
- ---------------
NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The following assumptions were made in presenting the summary historical
and pro forma financial information:
(a) The pro forma income statement information assumes 5,875,000 Shares are
purchased at $43 per Share and $51 per Share, as applicable, with the
purchase being initially financed with borrowings under the Credit Agreement
of $173,000,000 and available cash of $80,000,000 and $127,000,000,
respectively. The borrowings under the Credit Agreement are expected to be
repaid using the anticipated net proceeds from the Note Offering of
$173,000,000. The notes issued pursuant to the Note Offering are assumed to
bear interest at 7.50% per annum. The income statement information also
assumes increased interest expense under the Company's credit facilities to
fund seasonal working capital requirements and less interest income as a
result of less available cash.
(b) The December 29, 1996 pro forma balance sheet information assumes 5,875,000
Shares are purchased at $43 per Share and $51 per Share, as applicable, with
the purchase being financed with net borrowings under the Credit Agreement
of $80,000,000 and $127,000,000, respectively, and borrowings related to the
Note Offering of $173,000,000. It is anticipated that at the Expiration Date
the Company will utilize borrowings under the Credit Agreement of
$173,000,000 and available cash of $80,000,000 and $127,000,000,
respectively, to fund the purchase of Shares pursuant to the Offer. The
borrowings under the Credit Agreement are expected to be repaid using the
anticipated net proceeds from the Note Offering of $173,000,000.
(c) The June 30, 1996 pro forma balance sheet information assumes 5,875,000
Shares are purchased at $43 per Share and $51 per Share, as applicable, with
the purchase being initially financed with borrowings under the Credit
Agreement of $173,000,000 and available cash of $80,000,000 and
$127,000,000, respectively. The borrowings under the Credit Agreement are
expected to be repaid using the anticipated net proceeds from the Note
Offering of $173,000,000.
(d) For the computation of the ratio of earnings to fixed charges, "earnings"
has been calculated by adding income before taxes, interest expense and
fixed charges of unconsolidated subsidiaries. "Fixed charges" consist of
interest expense and fixed charges of unconsolidated subsidiaries.
(e) Book value per share is calculated as total shareholders' investment divided
by the number of pro forma shares outstanding at the end of the period.
19
<PAGE> 20
ADDITIONAL INFORMATION
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is obligated to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be disclosed in
proxy statements distributed to the Company's shareholders and filed with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 2120, Washington, D.C. 20549; at its
regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and 7 World Trade Center, New York, New York 10048. Copies
of such material may also be obtained by mail, upon payment of the Commission's
customary charges, from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
also maintains a Web site on the World Wide Web at http://www.sec.gov that
contains reports, proxy statements and other information regarding registrants
that file electronically with the Commission. Such reports, proxy statements and
other information concerning the Company also can be inspected at the offices of
the NYSE, 20 Broad Street, New York, New York 10005, on which the Shares are
listed.
11. INTEREST OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING
SHARES.
As of April 16, 1997 the Company had issued and outstanding 28,927,000
Shares and had reserved for issuance upon exercise of outstanding stock options
3,361,935 Shares. The 5,875,000 Shares that the Company is offering to purchase
pursuant to the Offer represent approximately 20% of the outstanding Shares. As
of April 16, 1997, the Company's directors and executive officers as a group (20
persons) beneficially owned an aggregate of 1,247,160 Shares, representing
approximately 4.3% of the outstanding Shares. Each of the Company's executive
officers and directors has advised the Company that he does not intend to tender
any Shares pursuant to the Offer. If the Company purchases 5,875,000 Shares
pursuant to the Offer, then immediately after the purchase of Shares pursuant to
the Offer, the Company's executive officers and directors as a group will
beneficially own approximately 5.4% of the outstanding Shares.
Neither the Company nor any subsidiary of the Company nor, to the best of
the Company's knowledge, any of the Company's directors or executive officers
nor any affiliates of any of the foregoing, had any transactions involving the
Shares during the 40 business days prior to the date hereof.
Except for outstanding options to purchase Shares granted from time to time
to certain employees (including executive officers) of the Company pursuant to
the Company's Stock Incentive Plan and except as otherwise described herein,
neither the Company nor, to the best of the Company's knowledge, any of its
affiliates, directors or executive officers, is a party to any contract,
arrangement, understanding or relationship with any other person relating,
directly or indirectly, to the Offer with respect to any securities of the
Company including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any such securities,
joint ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies, consents or
authorizations.
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise be traded publicly and may reduce the
number of shareholders. Nonetheless, the Company anticipates that there will be
a sufficient number of Shares outstanding and publicly traded following
consummation of the Offer to ensure a continued trading market for the Shares.
Based upon published guidelines of the NYSE, the Company does not believe that
its purchase of Shares pursuant to the Offer will cause the Company's remaining
Shares to be delisted from the NYSE.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using such Shares as collateral.
20
<PAGE> 21
The Company believes that, following the purchase of Shares pursuant to the
Offer, the Shares will continue to be "margin securities" for purposes of the
Federal Reserve Board's margin regulations.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its shareholders
and the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's shareholders. The Company believes that its
purchase of Shares pursuant to the Offer will not result in the Shares becoming
eligible for deregistration under the Exchange Act.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company is not aware of any license or regulatory permit that appears
to be material to the Company's business that might be adversely affected by the
Company's acquisition of Shares as contemplated herein or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Company as contemplated herein. Should
any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought. The Company is
unable to predict whether it may determine that it is required to delay the
acceptance for payment of or payment for Shares tendered pursuant to the
Offering pending the outcome of any such matter. There can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that the failure to obtain any such
approval or other action might not result in adverse consequences to the
Company's business. The Company's obligations under the Offer to accept for
payment and pay for Shares is subject to certain conditions. See Section 7.
14. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary of the material U.S. federal income tax
consequences of the exchange of Shares for cash pursuant to the Offer. This
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), its legislative history, Treasury Regulations thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change (possibly on a retroactive basis). This summary
does not discuss all the tax consequences that may be relevant to a particular
shareholder in light of the shareholder's particular circumstances and it is not
intended to be applicable in all respects to all categories of shareholders,
some of whom -- such as insurance companies, tax-exempt persons, financial
institutions, regulated investment companies, dealers in securities or
currencies, persons that hold Shares received in the exchange as a position in a
"straddle," as part of a "synthetic security," "hedge," "conversion transaction"
or other integrated investment, persons who received Shares as compensation or
persons whose functional currency is other than United States dollars -- may be
subject to different rules not discussed below. In addition, this summary does
not address any state, local or foreign tax considerations that may be relevant
to a shareholder's decision to tender Shares pursuant to the Offer. This summary
discusses only Shares held as capital assets within the meaning of Section 1221
of the Code. EACH SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISER
WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL CONSEQUENCES OF PARTICIPATING
IN THE OFFER, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY
OTHER TAXING JURISDICTION.
Consequences of an Exchange of Shares for Cash Pursuant to the Offer. An
exchange of Shares for cash will be treated as a sale of Shares by the
exchanging shareholder provided that at least one of the following tests is met:
(a) as a result of the exchange, the shareholder's equity interest in
the Company is completely terminated;
(b) there results from the exchange, a "substantially
disproportionate" reduction in the shareholder's equity interest in the
Company; or
(c) the receipt of cash in exchange for the shareholder's Shares is
not "essentially equivalent to a dividend."
21
<PAGE> 22
In applying the foregoing tests, the constructive ownership rules of
Section 318 of the Code apply. Thus, a shareholder generally takes into account
Shares actually owned by the shareholder as well as Shares actually (and in some
cases constructively) owned by others, but which the shareholder is treated as
owning by reason of the application of the constructive ownership rules.
Pursuant to the constructive ownership rules, a shareholder will be considered
to own those Shares owned, directly or indirectly, by certain members of the
shareholder's family and certain related entities (such as corporations,
partnerships, trusts and estates) in which the shareholder has an interest, as
well as Shares which the shareholder has an option to purchase. Under certain
circumstances, sales of Shares by a shareholder which are contemporaneous with
such shareholder's exchange of Shares for cash pursuant to the Offer may be
taken into account in determining whether any of the above tests are satisfied.
If a shareholder could meet the complete termination of interest test
except for attribution from family members, such attribution can be waived if a
number of requirements are met, including the timely filing of an agreement with
the Internal Revenue Service (the "IRS"). A "substantially disproportionate"
reduction will occur if the shareholder's percentage interest in the voting and
common stock of the Company immediately after the exchange is less than 80% of
such shareholder's percentage interest in the voting and common stock of the
Company immediately before the exchange. The receipt of cash by a shareholder
pursuant to the Offer may not be "essentially equivalent to a dividend" if, as a
result of the exchange, the shareholder has had a "meaningful reduction" in its
proportionate equity interest in the Company. The IRS has stated that the
"meaningful reduction" test is generally met by a minority shareholder with a
minimal interest when there is any reduction in such a shareholder's interest,
so long as such shareholder does not exercise any control over the affairs of
the Company. Each shareholder should consult his or her own tax advisor as to
the application of these rules to his or her particular situation.
If an exchange of Shares for cash pursuant to the Offer is treated as a
sale because a shareholder meets any of the above three tests, the shareholder
will recognize gain or loss on the exchange in an amount equal to the difference
between the amount of cash received by the shareholder and such shareholder's
tax basis in the Shares exchanged. Such gain or loss will be a capital gain or
loss and will be long-term capital gain or loss if the Shares were held more
than one year. Calculation of gain or loss must be made separately for each
block of Shares owned by a shareholder (i.e., Shares acquired in a single
transaction). A shareholder may be able to designate which blocks and the order
of such blocks of Shares to be tendered pursuant to the Offer. However, under
legislation recently proposed by the Treasury Department, gain or loss would be
determined based on the average tax basis of all Shares held by the beneficial
owner. Such legislation is proposed to be effective 30 days after the date of
enactment.
If a shareholder's exchange of Shares for cash pursuant to the Offer
satisfies none of the foregoing three tests, the receipt of cash by the
shareholder will be treated as a distribution from the Company and will be taxed
to the shareholder as ordinary dividend income to the extent of the Company's
current and accumulated earnings and profits. Any portion of such a distribution
that is not taxed to the shareholder as a dividend will be treated first as a
tax-free return of capital to the shareholder, reducing the tax basis of the
shareholder's Shares by the amount of such distribution (but not below zero),
with any amount of the distribution in excess of the shareholder's tax basis
taxable as capital gain. The tax basis of a shareholder's Shares which are
exchanged for cash pursuant to the Offer is added to such shareholder's tax
basis in his or her remaining Shares and cannot be used to offset such
shareholder's dividend income, if any, from the exchange.
In the case of a corporate shareholder, if the cash paid is treated as a
dividend, such dividend income may be eligible for the 70% dividends-received
deduction. The dividends-received deduction is subject to certain limitations,
and may not be available if the corporate shareholder does not satisfy certain
holding period requirements with respect to the Shares or if the Shares are
treated as "debt financed portfolio Stock" within the meaning of Code Section
246A(c). Additionally, if a dividends-received deduction is available, the
dividend may be treated as an "extraordinary dividend" under section 1059(a) of
the Code, in which case a corporate shareholder's adjusted tax basis in the
Shares retained by such shareholder would be reduced, but not below zero, by the
amount of the nontaxed portion of such dividend. Any amount of the nontaxed
portion of the dividend in excess of the corporate shareholder's adjusted tax
basis generally will be subject to tax upon a sale or other taxable disposition
of the Shares. Corporate shareholders are urged to consult their own tax
advisors as to the
22
<PAGE> 23
effect of Section 1059 of the Code on the adjusted tax basis of their Shares.
Legislation recently proposed by the Treasury Department would, if enacted as
currently written, alter these rules in certain respects.
The Company cannot predict whether or the extent to which the Offer will be
oversubscribed. If the Offer is oversubscribed, proration of tenders pursuant to
the Offer will cause the Company to accept fewer shares than are tendered.
Consequently, the Company can give no assurance that a sufficient number of any
shareholder's Shares will be purchased pursuant to the Offer to ensure that such
purchase will be treated as a sale or exchange, rather than as a dividend, for
federal income tax purposes pursuant to the rules discussed above. However, see
Section 6 regarding a shareholder's right to tender Shares subject to the
condition that a specified minimum number of such Shares must be purchased (if
any are purchased).
Consequences to Shareholders Who Do Not Tender Pursuant to the
Offer. Shareholders who do not accept the Company's Offer to tender their
Shares will not incur any tax liability as a result of the consummation of the
Offer.
Backup Federal Income Tax Withholding. Payments in connection with the
Offer may be subject to "backup withholding" at a 31% rate. Backup withholding
generally applies if the shareholder (a) fails to furnish such shareholder's
social security number or other taxpayer identification number ("TIN"), (b)
furnishes an incorrect TIN, (c) fails to properly report to the IRS interest or
dividends or (d) under certain circumstances, fails to provide a certified
statement, signed under penalties of perjury, that the TIN provided is such
shareholder's current number and that such shareholder is not subject to backup
withholding. To prevent backup withholding each shareholder should complete the
substitute IRS Form W-9 included in the Letter of Transmittal. Certain persons
generally are exempt from backup withholding, including corporations, financial
institutions and certain Non-U.S. shareholders. In order to qualify for an
exemption from backup withholding, a Non-U.S. shareholder must submit a properly
executed IRS Form W-8 to the Depositary.
Withholding for Non-U.S. Shareholders. Although a Non-U.S. shareholder may
be exempt from U.S. federal backup withholding, certain payments to Non-U.S.
shareholders are subject to U.S. withholding tax at a rate of 30%. The
Depositary will withhold the 30% tax from gross payments made to Non-U.S.
shareholders pursuant to the Offer unless the Depositary determines that a
Non-U.S. shareholder is either exempt from the withholding or entitled to a
reduced withholding rate under an income tax treaty. For purposes of this
discussion, a "Non-U.S. shareholder" means a shareholder who is not (a) a
citizen or resident of the United States, (b) a corporation, partnership or
other entity created or organized under the laws of the United States or of any
State or political subdivision of the foregoing, (c) an estate the income of
which is includible in gross income for U.S. federal income tax purposes
regardless of its source, or (d) a "United States Trust". A United States Trust
is (a) for taxable years beginning after December 31, 1996, or if the trustee of
a trust elects to apply the following definition to an earlier taxable year, any
trust if, and only if, (i) a court within the United States is able to exercise
primary supervision over the administration of the trust and (ii) one or more
U.S. trustees have the authority to control all substantial decisions of the
trust, and (b) for all other taxable years, any trust the income of which is
includible in gross income for U.S. federal income tax purposes regardless of
its source. A Non-U.S. shareholder will not be subject to the withholding tax if
the payment from the Company is effectively connected with the conduct of a
trade or business in the United States by such Non-U.S. shareholder (and, if
certain tax treaties apply, is attributable to a United States permanent
establishment maintained by such Non-U.S. shareholder) and the Non-U.S.
shareholder has furnished the Depositary with a properly executed IRS Form 4224
prior to the time of payment.
A Non-U.S. shareholder who is eligible for a reduced rate of withholding
pursuant to a U.S. income tax treaty must certify such to the Depositary by
providing to the Depositary a properly executed IRS Form 1001 prior to the time
payment is made. A Non-U.S. shareholder may be eligible to obtain from the IRS a
refund of tax withheld if such Non-U.S. shareholder is able to establish that no
tax (or a reduced amount of tax) is due.
ALL SHAREHOLDERS OF SHARES OF THE COMPANY ARE ADVISED TO CONSULT THEIR OWN
TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF
EXCHANGING SHARES FOR CASH PURSUANT TO THE OFFER IN LIGHT OF THEIR OWN
PARTICULAR CIRCUMSTANCES.
23
<PAGE> 24
15. EXTENSION OF OFFER; TERMINATION; AMENDMENT.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 7 shall have occurred or shall be deemed by the Company to
have occurred, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of and payment for any Shares by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. The Company also expressly reserves the right, in its sole
discretion, to terminate the Offer and not accept for payment or pay for any
Shares not previously accepted for payment or paid for or, subject to applicable
law, to postpone payment for Shares upon the occurrence of any of the conditions
specified in Section 7 by giving oral or written notice of such termination or
postponement to the Depositary and making a public announcement thereof. The
Company's reservation of the right to delay payment for Shares which it has
accepted for payment is limited by Rule 13e-4(f)(5) promulgated under the
Exchange Act, which requires that the Company must pay the consideration offered
or return the Shares tendered promptly after termination or withdrawal of a
tender offer. Subject to compliance with applicable law, the Company further
reserves the right, in its sole discretion, and regardless of whether any of the
events set forth in Section 7 shall have occurred or shall be deemed by the
Company to have occurred, to amend the Offer in any respect (including, without
limitation, by decreasing or increasing the consideration offered in the Offer
to holders of Shares or by decreasing or increasing the number of Shares being
sought in the Offer). Amendments to the Offer may be made at any time and from
time to time effected by public announcement thereof, such announcement, in the
case of an extension, to be issued no later than 9:00 a.m., New York City time,
on the next business day after the last previously scheduled or announced
Expiration Date. Any public announcement made pursuant to the Offer will be
disseminated promptly to shareholders in a manner reasonably designated to
inform shareholders of such change. Without limiting the manner in which the
Company may choose to make a public announcement, except as required by
applicable law, the Company shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) promulgated under the Exchange Act. These rules require that the
minimum period during which an offer must remain open following material changes
in the terms of the Offer or information concerning the Offer (other than a
change in price or a change in percentage of securities sought) will depend on
the facts and circumstances, including the relative materiality of such terms or
information. If (a) the Company increases or decreases the price to be paid for
Shares, the number of Shares being sought in the Offer or the Dealer Manager's
soliciting fees and, in the event of an increase in the number of Shares being
sought, such increase exceeds 2% of the outstanding Shares, and (b) the Offer is
scheduled to expire at any time earlier than the expiration of a period ending
on the tenth business day from and including the date that such notice of an
increase or decrease is first published, sent or given in the manner specified
in this Section 15, the Offer will be extended until the expiration of such
period of ten business days.
16. FEES AND EXPENSES.
The Company has retained Credit Suisse First Boston to act as the Dealer
Manager in connection with the Offer. Credit Suisse First Boston will receive a
fee for its services of $.09 per Share accepted for payment pursuant to the
Offer. The Company also has agreed to reimburse Credit Suisse First Boston for
certain out-of-pocket expenses incurred in connection with the Offer and to
indemnify Credit Suisse First Boston against certain liabilities in connection
with the Offer, including liabilities under the federal securities laws. Credit
Suisse First Boston is expected to be lead managing underwriter of the Note
Offering.
The Company has retained Georgeson & Company Inc. to act as Information
Agent and Firstar Trust Company to act as Depositary in connection with the
Offer. The Information Agent may contact holders of Shares by mail, telephone,
telegraph and personal interviews and may request brokers, dealers and other
nominee shareholders to forward materials relating to the Offer to beneficial
owners. The Information Agent and the
24
<PAGE> 25
Depositary will each receive reasonable and customary compensation for their
respective services, will be reimbursed by the Company for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities in
connection with the Offer, including certain liabilities under the federal
securities laws.
No fees or commissions will be payable to brokers, dealers or other persons
(other than fees to the Dealer Manager, the Information Agent and the Depositary
as described above) for soliciting tenders of Shares pursuant to the Offer. The
Company, however, upon request, will reimburse brokers, dealers and commercial
banks for customary mailing and handling expenses incurred by such persons in
forwarding the Offer and related materials to the beneficial owners of Shares
held by any such person as a nominee or in a fiduciary capacity. No broker,
dealer, commercial bank or trust company has been authorized to act as the agent
of the Company, the Dealer Manager, the Information Agent or the Depositary for
purposes of the Offer. The Company will pay or cause to be paid all stock
transfer taxes, if any, on its purchase of Shares except as otherwise provided
in Instruction 7 in the Letter of Transmittal.
17. MISCELLANEOUS.
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer is not in compliance with any valid
applicable law, the Company will make a good faith effort to comply with such
law. If, after such good faith effort, the Company cannot comply with such law,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of Shares residing in such jurisdiction. In any jurisdiction the
securities or blue sky laws of which require the Offer to be made by a licensed
broker or dealer, the Offer is being made on the Company's behalf by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission an Issuer Tender Offer
Statement on Schedule 13E-4 which contains additional information with respect
to the Offer. Such Schedule 13E-4, including the exhibits and any amendments
thereto, may be examined, and copies may be obtained, at the same places and in
the same manner as is set forth in Section 10 with respect to information
concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGER IN CONNECTION WITH
THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE DEALER
MANAGER.
BRIGGS & STRATTON CORPORATION
April 22, 1997
25
<PAGE> 26
Facsimile copies of the Letter of Transmittal will be accepted from
Eligible Institutions. The Letter of Transmittal and certificates for Shares and
any other required documents should be sent or delivered by each shareholder or
his or her broker, dealer, commercial bank, trust company or nominee to the
Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
FIRSTAR TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Hand:
Firstar Trust Company IBJ Schroeder Bank & Trust
Corporate Trust Services One State Street Plaza
Post Office Box 2077 New York, New York 10004
Milwaukee, Wisconsin 53201-2077 Attn: Securities Processing
Window
Subcellar One (SC-1)
By Facsimile Transmission: Telephone: By Overnight Courier:
(414) 276-4226 (800) 637-7549 Firstar Trust Company
(for Eligible Institutions Corporate Trust Services
Only)
Confirm by Telephone 615 East Michigan Street
4th Floor
Milwaukee, Wisconsin 53202
</TABLE>
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at the telephone
numbers and locations listed below. Shareholders may also contact their local
broker, dealer, commercial bank, trust company or nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON
Eleven Madison Avenue
New York, NY 10010-3629
(800) 881-8320
April 22, 1997
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
BRIGGS & STRATTON CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED APRIL 22, 1997
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON TUESDAY, MAY 20, 1997, UNLESS THE OFFER IS EXTENDED.
TO: FIRSTAR TRUST COMPANY, DEPOSITARY:
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand:
Firstar Trust Company (for Eligible Institutions IBJ Schroeder Bank & Trust
Corporate Trust Services Only) One State Street Plaza
Post Office Box 2077 (414) 276-4226 New York, New York 10004
Milwaukee, Wisconsin Attn: Securities Processing
53201-2077 Confirm by Telephone: Window
(800) 637-7549 Subcellar One (SC-1)
By Overnight Courier:
Firstar Trust Company
Corporate Trust Services
615 East Michigan Street
4th Floor
Milwaukee, Wisconsin 53202
</TABLE>
---------------------
Delivery of this instrument and all other documents to the address or
transmission of instructions to a facsimile number other than as set forth above
does not constitute a valid delivery.
PLEASE READ THE ENTIRE LETTER OR TRANSMITTAL, INCLUDING THE
ACCOMPANYING INSTRUCTIONS, CAREFULLY BEFORE CHECKING ANY BOX BELOW.
<TABLE>
<S><C>
- ---------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
- ---------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE USE PRE-ADDRESSED LABEL OR FILL IN TENDERED CERTIFICATES
EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S) (ATTACH SIGNED ADDITIONAL LIST IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------------
NUMBER OF
CERTIFICATE NUMBER SHARES
NUMBER(S)* OF SHARES TENDERED**
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
TOTAL SHARES
TENDERED
- ---------------------------------------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which Shares are to be purchased in event of
proration. (Attach additional list if necessary.) *** See Instruction 10.
1st: 2nd: 3rd: 4th: 5th:
- ---------------------------------------------------------------------------------------------------------------
* DOES NOT need to be completed if Shares are tendered by book-entry transfer.
** If you desire to tender fewer than all Shares evidenced by any certificates listed above, please indicate
in this column the number of Shares you wish to tender. Otherwise, all Shares evidenced by such
certificates will be deemed to have been tendered. See Instruction 4.
*** If you do not designate an order, in the event less than all Shares tendered are purchased due to
proration, Shares will be selected for purchase by the Depositary.
- ---------------------------------------------------------------------------------------------------------------
[ ] Check here if any of the certificates representing Shares that you own have been lost or destroyed.
See Instruction 18.
Number of Shares represented by lost or destroyed certificates:
--------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
This Letter of Transmittal is to be used only if (a) certificates for
Shares (as defined below) are to be forwarded herewith or (b) a tender of Shares
is being made concurrently by book-entry transfer to the account maintained by
Firstar Trust Company (the "Depositary") at The Depository Trust Company or the
Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility")
pursuant to Section 3 of the Offer to Purchase. See Instruction 2.
THIS LETTER OF TRANSMITTAL MAY BE USED FOR SHARES CREDITED TO THE ACCOUNTS
OF PARTICIPANTS IN THE COMPANY'S EMPLOYEE SAVINGS AND INVESTMENT PLAN (THE
"EMPLOYEE SAVINGS PLAN") (SEE SECTION ENTITLED "EMPLOYEE SAVINGS PLAN SHARES")
AND FOR SHARES CREDITED TO ACCOUNTS IN THE COMPANY'S DIVIDEND REINVESTMENT PLAN
(THE "DIVIDEND REINVESTMENT PLAN") (SEE SECTION ENTITLED "DIVIDEND REINVESTMENT
PLAN SHARES"), BUT THIS LETTER OF TRANSMITTAL MAY NOT BE USED FOR SHARES
ATTRIBUTABLE TO ACCOUNTS UNDER THE COMPANY'S REGIONAL PLANTS RETIREMENT AND
SAVINGS PLAN. SEE INSTRUCTIONS 14 AND 15.
2
<PAGE> 3
NOTE: SIGNATURE MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
Shareholders who cannot deliver the certificates for their Shares to the
Depositary prior to the Expiration Date (as defined in the Offer to Purchase (as
defined below)) or who cannot complete the procedure for book-entry transfer on
a timely basis or who cannot deliver a Letter of Transmittal and all other
required documents to the Depositary prior to the Expiration Date must, in each
case, tender their Shares pursuant to the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase. See Instruction 2.
Shareholders who desire to tender Shares pursuant to the Offer (as defined
below) and who cannot deliver their certificates for their Shares (or who are
unable to comply with the procedures for book-entry transfer on a timely basis)
and all other documents required by this Letter of Transmittal to the Depositary
at or before the Expiration Date (as defined in the Offer to Purchase) may
tender their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2. Delivery of documents to
one of the Book-Entry Transfer Facilities does not constitute delivery to the
Depositary.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
----------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Company
Account Number
-----------------------------------------------------------------
Transaction Code Number
--------------------------------------------------------
[ ] CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):
---------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------------
Name of Institution that Guaranteed Delivery:
-------------------------------
Check Box of Applicable Book-Entry Transfer Facility and Give Account Number
if Delivered by Book-Entry Transfer.
[ ] The Depository Trust Company
[ ] Philadelphia Depository Company
Account Number
-----------------------------------------------------------------
3
<PAGE> 4
CONDITIONAL TENDER
(SEE INSTRUCTION 9)
( ) Check here if tender of Shares is conditional on the Company purchasing all
or a minimum number of the tendered Shares and complete the following:
Minimum number of Shares to be sold:
-------------------------------------------------------------------------
ODD LOTS
(SEE INSTRUCTION 8)
To be completed ONLY if the Shares are being tendered by or on behalf of a
person who owns, beneficially or of record, an aggregate of fewer than 100
Shares. The undersigned either (check one box):
( ) is the beneficial or record owner of an aggregate of fewer than 100 Shares,
all of which are being tendered; or
( ) is a broker dealer, commercial bank trust company, or other nominee that (a)
is tendering for the beneficial owner(s) thereof, Shares with respect to
which it is the record holder and (b) believes, based upon representations
made to it by such beneficial owner(s), that each such person is the
beneficial owner of an aggregate of fewer than 100 Shares and is tendering
all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
( ) at the Purchase Price (defined below), as the same shall be determined by
the Company in accordance with the terms of the Offer (persons checking this
box need not indicate the price per Share below); or
( ) at the price per Share indicated below under "Price (in Dollars) per Share
at which Shares are being tendered in this Letter of Transmittal."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
4
<PAGE> 5
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
TO FIRSTAR TRUST COMPANY:
The undersigned hereby tenders to Briggs & Stratton Corporation, a
Wisconsin corporation (the "Company"), the above described shares of the
Company's common stock, $.01 par value per share (including the associated
Common Stock Purchase Rights) (the "Shares"), at the price per Share indicated
in this Letter of Transmittal (unless this Letter of Transmittal is for an Odd
Lot Holder who has elected to accept the Purchase Price determined by the
Company), net to the seller in cash, upon the terms and subject to the
conditions set forth in the Company's Offer to Purchase, dated April 22, 1997
(the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which together constitute the "Offer").
Subject to and effective upon acceptance for payment of the Shares tendered
hereby in accordance with the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
such extension or amendment), the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to all the Shares that are being tendered hereby and orders the registration
of all such Shares if tendered by book-entry transfer and hereby irrevocably
constitutes and appoints the Depositary as the true and lawful agent and
attorney-in-fact of the undersigned (with full knowledge that said Depositary
also acts as the agent of the Company) with respect to such Shares with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to:
(a) deliver certificate(s) for such Shares or transfer ownership of
such Shares on the account books maintained by any Book-Entry Transfer
Facility, together in either such case with all accompanying evidences of
transfer and authenticity, to, or upon the order of, the Company upon
receipt by the Depositary, as the undersigned's agent, of the aggregate
Purchase Price (as defined below) with respect to such Shares;
(b) present certificates for such Shares for cancellation and transfer
on the Company's books; and
(c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, subject to the next paragraph, all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants to the Company that:
(a) the undersigned understands that tenders of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the instructions hereto will constitute the undersigned's acceptance of
the terms and conditions of the Offer, including the undersigned's
representation and warranty that:
(i) the undersigned has a net long position in Shares or equivalent
securities at least equal to the Shares tendered within the meaning of
Rule 14e-4 under the Securities Exchange Act of 1934, as amended, and
(ii) such tender of Shares complies with Rule 14e-4;
(b) when and to the extent the Company accepts such Shares for
purchase, the Company will acquire good, marketable and unencumbered title
to them, free and clear of all security interests, liens, charges,
encumbrances, conditional sales agreements or other obligations relating to
their sale or transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any
additional documents the Depositary or the Company deems necessary or
desirable to complete the assignment, transfer and purchase of the Shares
tendered hereby; and
(d) the undersigned has read and agrees to all of the terms of the
Offer.
All authorities conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, executors, administrators, successors, assigns,
trustees in bankruptcy, and legal representatives of the undersigned. Except as
stated in the Offer to Purchase, this tender is irrevocable.
5
<PAGE> 6
The name(s) and address(es) of the registered holder(s) should be printed
above, if they are not already printed above, exactly as they appear on the
certificates representing Shares tendered hereby. The certificate numbers, the
number of Shares represented by such certificates and the number of Shares that
the undersigned wishes to tender, should be set forth in the appropriate boxes
above. The price at which such Shares are being tendered should be indicated in
the box below (unless this Letter of Transmittal is for an Odd Lot Holder who
has elected to accept the Purchase Price determined by the Company).
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single per Share price (not
in excess of $51.00 nor less than $43.00 per Share) net to the seller in cash
(the "Purchase Price") that it will pay for Shares properly tendered and not
withdrawn prior to the Expiration Date pursuant to the Offer, taking into
account the number of Shares so tendered and the prices (in multiples of $.125)
specified by tendering shareholders. The undersigned understands that the
Company will select the lowest Purchase Price that will allow it to buy
5,875,000 shares (or such lesser number of Shares as are properly tendered at
prices not in excess of $51.00 nor less than $43.00 per share) pursuant to the
Offer. The undersigned understands that all Shares properly tendered at prices
at or below the Purchase Price and not withdrawn prior to the Expiration Date
will be purchased at the Purchase Price, upon the terms and subject to the
conditions of the Offer, including its proration and conditional tender
provisions, and that the Company will return all other Shares not purchased
pursuant to the Offer, including Shares tendered at prices greater than the
Purchase Price and not withdrawn prior to the Expiration Date and Shares not
purchased because of proration or conditional tender.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may accept for payment fewer than all of the Shares tendered hereby. In any such
event, the undersigned understands that certificate(s) for any Shares delivered
herewith but not tendered or not purchased will be returned to the undersigned
at the address indicated above, unless otherwise indicated under the "Special
Payment Instructions" or "Special Delivery Instructions" below. The undersigned
recognizes that the Company has no obligation, pursuant to the Special Payment
Instructions, to transfer any certificate for Shares from the name of its
registered holder, or to order the registration or transfer of Shares tendered
by book-entry transfer, if the Company purchases none of the Shares represented
by such certificate or tendered by such book-entry transfer.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
The check for the aggregate Purchase Price for such of the Shares tendered
hereby as are purchased will be issued to the order of the undersigned and
mailed to the address indicated above, unless otherwise indicated under the
Special Payment Instructions or the Special Delivery Instructions below.
6
<PAGE> 7
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(Shareholders who desire to tender Shares at more than one price must
complete a separate Letter of Transmittal for each price at which Shares
are tendered.)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
[ ] $43.000 [ ] $43.875 [ ] $44.750 [ ] $45.625 [ ] $46.500
[ ] $43.125 [ ] $44.000 [ ] $44.875 [ ] $45.750 [ ] $46.625
[ ] $43.250 [ ] $44.125 [ ] $45.000 [ ] $45.875 [ ] $46.750
[ ] $43.375 [ ] $44.250 [ ] $45.125 [ ] $46.000 [ ] $46.875
[ ] $43.500 [ ] $44.375 [ ] $45.250 [ ] $46.125 [ ] $47.000
[ ] $43.625 [ ] $44.500 [ ] $45.375 [ ] $46.250 [ ] $47.125
[ ] $43.750 [ ] $44.625 [ ] $45.500 [ ] $46.375 [ ] $47.250
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C>
[ ] $47.375 [ ] $48.250 [ ] $49.125 [ ] $50.000 [ ] $50.875
[ ] $47.500 [ ] $48.375 [ ] $49.250 [ ] $50.125 [ ] $51.000
[ ] $47.625 [ ] $48.500 [ ] $49.375 [ ] $50.250
[ ] $47.750 [ ] $48.625 [ ] $49.500 [ ] $50.375
[ ] $47.875 [ ] $48.750 [ ] $49.625 [ ] $50.500
[ ] $48.000 [ ] $48.875 [ ] $49.750 [ ] $50.625
[ ] $48.125 [ ] $49.000 [ ] $49.875 [ ] $50.750
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 11)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or any check for the aggregate Purchase Price of Shares purchased
are to be issued in the name of and sent to someone other than the undersigned.
Issue:
[ ] Check to:
[ ] Certificates to:
Name(s)
-------------------------------------------------------------------------
(PLEASE PRINT)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ZIP CODE)
- --------------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 11)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or any check for the Purchase Price of Shares purchased, issued in
the name of the undersigned, are to be mailed to someone other than the
undersigned or to the undersigned at an address other than that shown above.
Mail:
[ ] Check to:
[ ] Certificates to:
Name(s)
-------------------------------------------------------------------------
(PLEASE PRINT)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ZIP CODE)
7
<PAGE> 8
EMPLOYEE SAVINGS PLAN SHARES
(SEE INSTRUCTION 14)
To be completed ONLY if Shares held in the Employee Savings Plan are to be
tendered.
[ ] By checking this box, the undersigned represents that the undersigned is a
participant in the Employee Savings Plan and hereby instructs Firstar Trust
Company, as trustee of the Employee Savings Plan, to tender on behalf of the
undersigned Shares reflecting the interest of the undersigned in the Fund
allocated to the undersigned's Employee Savings Plan individual account in
the percentage indicated below at the Purchase Price per Share indicated in
the box entitled "Price (In Dollars) Per Share At Which Shares Are Being
Tendered" in this Letter of Transmittal:
Percentage:
----------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN SHARES
(SEE INSTRUCTION 14)
To be completed ONLY if Shares held in the Dividend Reinvestment Plan are
to tendered.
[ ] By checking this box, the undersigned represents that the undersigned is a
participant in the Dividend Reinvestment Plan and hereby instructs Firstar
Trust Company, as depositary, to tender on behalf of the undersigned the
following number of Shares credited to the Dividend Reinvestment Plan
account of the undersigned at the Purchase Price per Share indicated in the
box entitled "Price (In Dollars) Per Share At Which Shares Are Being
Tendered" in this Letter of Transmittal:
Number of Shares:
-----------------------------------------------------------
THE UNDERSIGNED UNDERSTANDS AND AGREES THAT ALL SHARES HELD IN THE DIVIDEND
REINVESTMENT PLAN ACCOUNT(S) OF THE UNDERSIGNED WILL BE TENDERED IF THE ABOVE
BOX IS CHECKED AND THE SPACE ABOVE IS LEFT BLANK.
8
<PAGE> 9
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL SHAREHOLDERS)
(PLEASE COMPLETE AND RETURN THE ENCLOSED FORM W-9)
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificate(s) and documents transmitted with
this Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or another
person acting in a fiduciary or representative capacity, please set forth full
title and see Instruction 6.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Dated: , 1997
------------
Name(s):
------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code(s) and Telephone Number(s):
----------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6)
Name of Firm:
-------------------------------------------------------------------
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
(PLEASE PRINT)
Title:
--------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
---------------------------------------------
Dated: , 1997
------------
9
<PAGE> 10
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required if:
(a) this Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of such Shares) exactly as the name
of the registered holder appears on the certificate tendered with this
Letter of Transmittal and payment and delivery are to be made directly to
such owner unless such owner has completed either the box entitled "Special
Payment Instructions" or "Special Delivery Instructions" above;
(b) such Shares are tendered for the account of a firm or other entity
that is a member in good standing of the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program
or the Stock Exchange Medallion Program (each such entity, an "Eligible
Institution"); or
(c) this Letter of Transmittal is signed by either: (i) a participant
in the Employee Savings Plan; or (ii) a participant in the Dividend
Reinvestment Plan.
In all other cases, an Eligible Institution must guarantee all signatures
on this Letter of Transmittal. See Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be used only if certificates for
Shares are delivered with it to the Depositary (or such certificates will be
delivered pursuant to a Notice of Guaranteed Delivery previously sent to the
Depositary) or if a tender for Shares is being made concurrently pursuant to the
procedure for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. Certificates for all physically tendered Shares or confirmation of
a book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility of Shares tendered electronically, together in each case with a
properly completed and duly executed Letter of Transmittal or duly executed and
manually signed facsimile of it, and any other documents required by this Letter
of Transmittal, should be mailed or delivered to the Depositary at the
appropriate address set forth herein and must be delivered to the Depositary on
or before the Expiration Date (as defined in the Offer to Purchase). DELIVERY OF
DOCUMENTS TO ONE OF THE BOOK-ENTRY TRANSFER FACILITIES DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
Shareholders whose certificates are not immediately available or who cannot
deliver certificates for their Shares and all other required documents to the
Depositary before the Expiration Date, or whose Shares cannot be delivered on a
timely basis pursuant to the procedures for book-entry transfer, must, in any
such case, tender their Shares by or through any Eligible Institution by
properly completing and duly executing and delivering a Notice of Guaranteed
Delivery (or facsimile of it) and by otherwise complying with the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to
such procedure, certificates for all physically tendered Shares or book-entry
confirmations, as the case may be, as well as a properly completed and duly
executed Letter of Transmittal (or facsimile of it) and all other documents
required by this Letter of Transmittal, must be received by the Depositary
within three New York Stock Exchange trading days after receipt by the
Depositary of such Notice of Guaranteed Delivery, all as provided in Section 3
of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice. For Shares to be tendered validly pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
I-1
<PAGE> 11
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares, except as expressly
provided in the Offer to Purchase. All tendering shareholders, by execution of
this Letter of Transmittal (or a facsimile of it), waive any right to receive
any notice of the acceptance of their tender.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Shares Tendered" is inadequate, the certificate numbers and/or
the number of Shares should be listed on a separate signed schedule and attached
to this Letter of Transmittal.
4. PARTIAL TENDERS AND UNPURCHASED SHARES. (Not applicable to shareholders
who tender by book-entry transfer.) If fewer than all of the Shares evidenced by
any certificate are to be tendered, fill in the number of Shares that are to be
tendered in the column entitled "Number of Shares Tendered," in the box
captioned "Description of Shares Tendered." In such case, if any tendered Shares
are purchased, a new certificate for the remainder of the Shares (including any
Shares not purchased) evidenced by the old certificate(s) will be issued and
sent to the registered holder(s), unless otherwise specified in either the
"Special Payment Instructions" or "Special Delivery Instructions" box on this
Letter of Transmittal, as soon as practicable after the Expiration Date. Unless
otherwise indicated, all Shares represented by the certificate(s) listed and
delivered to the Depositary will be deemed to have been tendered.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. Except if this
Letter of Transmittal is for an Odd Lot Holder who has elected to accept the
Purchase Price determined by the Company and has checked the appropriate box,
for Shares to be properly tendered, the shareholder MUST check the box
indicating the price per Share at which he or she is tendering Shares under
"Price (In Dollars) Per Share at Which Shares Are Being Tendered" on this Letter
of Transmittal. ONLY ONE BOX MAY BE CHECKED. IF MORE THAN ONE BOX IS CHECKED OR
IF NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF SHARES. A shareholder wishing
to tender portions of his or her Share holdings at different prices must
complete a separate Letter of Transmittal for each price at which he or she
wishes to tender each such portion of his or her Shares. The same Shares cannot
be tendered (unless previously properly withdrawn as provided in Section 4 of
the Offer to Purchase) at more than one price.
6. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the certificate(s) without any change
whatsoever.
(b) If the Shares are registered in the names of two or more joint holders,
each such holder must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles of it) as there are different
registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered holder(s)
of the Shares listed and transmitted hereby, no endorsement(s) of certificate(s)
representing such Shares or separate stock power(s) are required unless payment
is to be made or the certificate(s) for Shares not tendered or not purchased are
to be issued to a person other than the registered holder(s). SIGNATURE(S) ON
SUCH CERTIFICATE(S) MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. If this
Letter of Transmittal is signed by a person other than the registered holder(s)
of the certificate(s) listed, or if payment is to be made or their
certificate(s) for Shares not tendered or not purchased are to be issued to a
person other than the registered holder(s), the certificate(s) must be endorsed
or accompanied by appropriate stock power(s), in either case signed exactly as
the name(s) of the registered holder(s) appears on the certificate(s), and the
signature(s) on such certificate(s) or stock power(s) must be guaranteed by an
Eligible Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificate(s) or stock power(s)
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or
I-2
<PAGE> 12
representative capacity, such persons should so indicate when signing and must
submit proper evidence satisfactory to the Company of their authority so to act.
7. STOCK TRANSFER TAXES. Except as provided in this Instruction 7, no stock
transfer tax stamps or funds to cover such stamps need accompany this Letter of
Transmittal. The Company will pay or cause to be paid any stock transfer taxes
payable on the transfer to it of Shares purchased pursuant to the Offer. If,
however:
(a) payment of the aggregate Purchase Price for Shares tendered hereby
and accepted for purchase is to be made to any person other than the
registered holder(s);
(b) Shares not tendered or not accepted for purchase are to be
registered in the name(s) of any person(s) other than the registered
holder(s); or
(c) tendered certificates are registered in the name(s) of any
person(s) other than the person(s) signing this Letter of Transmittal;
then the Depositary will deduct from such aggregate Purchase Price the amount of
any stock transfer taxes (whether imposed on the registered holder, such other
person or otherwise) payable on account of the transfer to such person, unless
satisfactory evidence of the payment of such taxes or any exemption from them is
submitted.
8. ODD LOTS. As described in Section 1 of the Offer to Purchase, if the
Company is to purchase fewer than all Shares tendered before the Expiration Date
and not withdrawn, the Shares purchased first will consist of all Shares
tendered by any shareholder who owned of record or owned beneficially an
aggregate of fewer than 100 Shares, and who tenders all of his or her Shares at
or below the Purchase Price (an "Odd Lot Holder"). This preference will not be
available unless the box captioned "Odd Lots" is completed.
9. CONDITIONAL TENDERS. As described in Sections 1 and 6 of the Offer to
Purchase, shareholders may condition their tenders on all or a minimum number of
their tendered Shares being purchased ("Conditional Tenders"). If the Company is
to purchase less than all Shares tendered before the Expiration Date and not
withdrawn, the Depositary will perform a preliminary proration, and any Shares
tendered at or below the Purchase Price pursuant to a Conditional Tender for
which the condition was not satisfied shall be deemed withdrawn, subject to
reinstatement if such conditionally tendered Shares are subsequently selected by
random lot for purchase subject to Sections 1 and 6 of the Offer to Purchase.
Conditional Tenders will be selected by lot only from shareholders who tender
all of their Shares. All tendered Shares shall be deemed unconditionally
tendered unless the "Conditional Tender" box is completed. The Conditional
Tender alternative is made available so that a shareholder may assure that the
purchase of Shares from the shareholder pursuant to the Offer will be treated as
a sale of such Shares by the shareholder, rather than the payment of a dividend
to the shareholder, for federal income tax purposes. Odd Lot Shares, which will
not be subject to proration, cannot be conditionally tendered. It is the
tendering shareholder's responsibility to calculate the minimum number of Shares
that must be purchased from the shareholder in order for the shareholder to
qualify for sale (rather than dividend) treatment, and each shareholder is urged
to consult his or her own tax advisor.
IN THE EVENT OF PRORATION, ANY SHARES TENDERED PURSUANT TO A CONDITIONAL
TENDER FOR WHICH THE MINIMUM REQUIREMENTS ARE NOT SATISFIED MAY NOT BE ACCEPTED
AND THEREBY DEEMED WITHDRAWN.
10. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 1 of
the Offer to Purchase, shareholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase may
have an effect on the federal income tax treatment of the Purchase Price for the
Shares purchased. See Sections 1 and 14 of the Offer to Purchase.
11. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If certificate(s) for
Shares not tendered or not purchased and/or check(s) are to be issued in the
name of a person other than the signer of the Letter of Transmittal or if such
certificates and/or checks are to be sent to someone other than the person
signing the Letter of Transmittal or to the signer at a different address, the
boxes captioned "Special Payment Instructions" and/or "Special Delivery
Instructions" on this Letter of Transmittal should be completed as applicable
and signatures must be guaranteed as described in Instruction 1.
I-3
<PAGE> 13
12. IRREGULARITIES. All questions as to the number of Shares to be
accepted, the price to be paid therefor and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Company in its sole discretion, which determinations
shall be final and binding on all parties. The Company reserves the absolute
right to reject any or all tenders of Shares it determines not to be in proper
form or the acceptance of which or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer and any defect or irregularity in the
tender of any particular Shares, and the Company's interpretation of the terms
of the Offer (including these instructions) will be final and binding on all
parties. No tender of Shares will be deemed to be properly made until all
defects and irregularities have been cured or waived. Unless waived, any defects
or irregularities in connection with tenders must be cured within such time as
the Company shall determine. None of the Company, the Dealer Manager (as defined
in the Offer to Purchase), the Depositary, the Information Agent (as defined in
the Offer to Purchase) or any other person is or will be obligated to give
notice of any defects or irregularities in tenders and none of them will incur
any liability for failure to give any such notice.
13. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, the Notice of Guaranteed Delivery and this Letter of
Transmittal may be obtained from, the Information Agent or the Dealer Manager at
their addresses and telephone numbers set forth at the end of this Letter of
Transmittal or from your broker, dealer, commercial bank or trust company.
14. EMPLOYEE SAVINGS PLAN AND DIVIDEND REINVESTMENT PLAN. If a participant
in the Employee Savings Plan desires to have Shares attributable to the
participant's account under the Employee Savings Plan tendered pursuant to the
Offer, the box captioned "Employee Savings Plan Shares" should be completed. A
participant in the Employee Savings Plan wishing to tender portions of his or
her interests in Shares at different prices must complete a separate Letter of
Transmittal for each price at which he or she wishes to tender each such
portion. Percentages of Shares on all Letters of Transmittal for each
participant may not exceed 100%.
If a tendering shareholder desires to tender Shares credited to the
shareholder's account under the Dividend Reinvestment Plan pursuant to the
Offer, the box captioned "Dividend Reinvestment Plan Shares" must be completed.
A participant in the Dividend Reinvestment Plan may complete such box on only
one Letter of Transmittal submitted by such participant. If a participant
submits more than one Letter of Transmittal and completes such box on more than
one Letter of Transmittal, the participant will be deemed to have elected to
tender all Shares credited to the participant's account under the Dividend
Reinvestment Plan at the lowest of the prices specified in such Letters of
Transmittal.
15. THE COMPANY'S REGIONAL PLANTS RETIREMENT AND SAVINGS
PLAN. Participants in the Company's Regional Plants Retirement and Savings Plan
may not use this Letter of Transmittal to direct the tender of Shares
attributable to their individual accounts, but must use the separate instruction
form sent to them by CG Trust Company, as trustee of the Company's Regional
Plants Retirement and Savings Plan.
16. 31% BACKUP WITHHOLDING. Under Federal income tax law, a shareholder
(other than a participant in a Savings Plan) who receives a payment pursuant to
the offer is required to provide the Depositary (as payer) with such
shareholder's correct taxpayer identification number ("TIN") on Substitute Form
W-9 below. If the shareholder is an individual, the TIN is his or her social
security number. If the Depositary is not provided with the correct TIN,
payments that are made to such shareholder or other payee with respect to the
Offer may be subject to 31% backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the shareholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
I-4
<PAGE> 14
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the shareholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld, provided that the
required information is given to the Internal Revenue Service. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
submitting shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
shareholder if a TIN is provided to the Depositary within 60 days.
The shareholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
17. WITHHOLDING FOR NON-U.S. SHAREHOLDERS. Although a Non-U.S. shareholder
may be exempt from U.S. federal backup withholding, certain payments to Non-U.S.
shareholders are subject to U.S. withholding tax at a rate of 30%. The
Depositary will withhold the 30% tax from gross payments made to Non-U.S.
shareholders pursuant to the Offer unless the Depositary determines that a
Non-U.S. shareholder is either exempt from the withholding or entitled to a
reduced withholding rate under an income tax treaty. For purposes of this
discussion, a "Non-U.S. shareholder" means a shareholder who is not (i) a
citizen or resident of the United States, (ii) a corporation or partnership
created or organized in the United States or under the law of the United States
or of any State or political subdivision of the foregoing, (iii) an estate the
income of which is includible in gross income for U.S. federal income tax
purposes regardless of its source, or (iv) a "United States Trust". A United
States Trust is (a) for taxable years beginning after December 31, 1996, or if
the trustee of a trust elects to apply the following definition to an earlier
taxable year, any trust if, and only if, (i) a court within the United States is
able to exercise primary supervision over the administration of the trust and
(ii) one or more U.S. trustees have the authority to control all substantial
decisions of the trust, and (b) for all other taxable years, any trust the
income of which is includible in gross income for United States Federal income
tax purposes regardless of its source. A Non-U.S. shareholder will not be
subject to the withholding tax if the payment from the Company is effectively
connected with the conduct of a trade or business in the United States by such
Non-U.S. shareholder (and, if certain tax treaties apply, is attributable to a
United States permanent establishment maintained by such Non-U.S. shareholder)
and the Non-U.S. shareholder has furnished the Depositary with a properly
executed IRS Form 4224 prior to the time of payment.
A Non-U.S. shareholder who is eligible for a reduced rate of withholding
pursuant to a U.S. income tax treaty must certify such to the Depositary by
providing to the Depositary a properly executed IRS Form 1001 prior to the time
payment is made. A Non-U.S. shareholder may be eligible to obtain from the IRS a
refund of tax withheld if such Non-U.S. shareholder is able to establish that no
tax (or a reduced amount of tax) is due.
18. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary by checking the box provided in the box titled
"Description of Shares Tendered" and indicating the number of Shares so lost,
destroyed or stolen. The shareholder will then be instructed by the Depositary
as to the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost, destroyed or stolen certificates have been
followed.
I-5
<PAGE> 15
FIRSTAR TRUST COMPANY
<TABLE>
<S><C>
- -------------------------------------------------------------------------------------------------------------
Social security
number
---------------------
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT OR
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW
---------------------
Employer
identification number
-----------------------------------------------------------------------
Part 2 -- CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer
Department of the Treasury Identification Number (or I am waiting for a number to be issued to
Internal Revenue Service me) and
PAYER'S REQUEST FOR TAXPAYER (2) I am not subject to backup withholding either because: (a) I am
IDENTIFICATION NUMBER (TIN) exempt from backup withholding, or (b) I have not been notified by the
Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
-----------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you
have been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your
tax return. However, if after being notified by the IRS that you are
subject to backup withholding, you received another notification from
the IRS that you are no longer subject to backup withholding, do not
cross out such item (2).
SIGNATURE ____ DATE
- -------------------------------------------------------------------------------------------------------------
Part 3
Awaiting TIN [ ]
- -------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office, or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld; but that such amounts will be
refunded to me if I then provide a Taxpayer Identification Number within sixty
(60) days.
- ---------------------------------------------------------- ------------------
Signature Date
I-6
<PAGE> 16
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, NY 10005
Banks and Brokers (Call Collect): (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON
Eleven Madison Avenue
New York, NY 10010-3692
(800) 881-8320
IMPORTANT: This Letter of Transmittal or a facsimile hereof (together with
certificates for the Shares being tendered and all other required documents), or
a Notice of Guaranteed Delivery must be received prior to 5:00 p.m., New York
City time, on the Expiration Date. SHAREHOLDERS ARE ENCOURAGED TO RETURN A
COMPLETED FORM W-9 WITH THEIR LETTER OF TRANSMITTAL.
I-7
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
BRIGGS & STRATTON CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED APRIL 22, 1997
This form or a facsimile hereof must be used to accept the Offer (as
defined below) if:
(a) certificates for shares of common stock, $.01 par value per share
(including the associated Common Stock Purchase Rights) (the "Shares"), of
Briggs & Stratton Corporation, a Wisconsin corporation (the "Company"),
cannot be delivered to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Company's Offer to Purchase dated April 22,
1997 (the "Offer to Purchase")); or
(b) the procedure for book-entry transfer (set forth in Section 3 of
the Offer to Purchase) cannot be completed on a timely basis; or
(c) the Letter of Transmittal (or a facsimile thereof) and all other
required documents cannot be delivered to the Depositary prior to the
Expiration Date.
This form, properly completed and duly executed, may be delivered by hand,
mail or facsimile transmission to the Depositary. See Section 3 of the Offer to
Purchase.
TO: FIRSTAR TRUST COMPANY, DEPOSITARY
<TABLE>
<S> <C> <C> <C>
By Mail: Facsimile Transmission: By Hand:
Firstar Trust Company (for Eligible Institutions Only) IBJ Schroeder Bank & Trust Company
Corporate Trust Services (414) 276-4226 One State Street Plaza
Post Office Box 2077 New York, New York 10004
Milwaukee, Wisconsin 53201-2077 Confirm by Telephone: Attn: Securities Processing Window
(800) 637-7549 Subcellar One (SC-1)
By Overnight Courier:
Firstar Trust Company
Corporate Trust Services
615 East Michigan Street
4th Floor
Milwaukee, Wisconsin 53202
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
1
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to the Company at the price per Share
indicated in this Notice of Guaranteed Delivery, upon the terms and subject to
the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of both of which is
hereby acknowledged, ____________ Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase.
CONDITIONAL TENDER
(SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL)
[ ] check here if tender of Shares is conditional on the Company purchasing all
or a minimum number of the tendered Shares and complete the following:
Minimum number of Shares to be sold: _____________________________________
ODD LOTS
To be completed ONLY if the Shares are being tendered by or on behalf of a
person owning beneficially or of record an aggregate of fewer than 100 Shares.
The undersigned either (check one box):
[ ] is the beneficial or record owner of an aggregate of fewer than 100
Shares, all of which are being tendered; or
[ ] is a broker, dealer, commercial bank, trust company, or other nominee
that (a) is tendering for the beneficial owner(s) thereof, Shares with
respect to which it is the record holder, and (b) believes, based upon
representations made to it by such beneficial owner(s), that each such
person is the beneficial owner of an aggregate of fewer than 100 Shares
and is tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[ ] at the Purchase Price, as the same shall be determined by the Company
in accordance with the terms of the Offer (persons checking this box
need not indicate the price per Share below); or
[ ] at the price per Share indicated below under "Price (in Dollars) per
Share at which Shares are being tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
2
<PAGE> 3
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(SHAREHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A
SEPARATE NOTICE OF GUARANTEE FOR EACH PRICE AT WHICH SHARES ARE TENDERED.)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
[ ] $43.000 [ ] $44.375 [ ] $45.750 [ ] $47.125 [ ] $48.500 [ ] $49.875
[ ] $43.125 [ ] $44.500 [ ] $45.875 [ ] $47.250 [ ] $48.625 [ ] $50.000
[ ] $43.250 [ ] $44.625 [ ] $46.000 [ ] $47.375 [ ] $48.750 [ ] $50.125
[ ] $43.375 [ ] $44.750 [ ] $46.125 [ ] $47.500 [ ] $48.875 [ ] $50.250
[ ] $43.500 [ ] $44.875 [ ] $46.250 [ ] $47.625 [ ] $49.000 [ ] $50.375
[ ] $43.625 [ ] $45.000 [ ] $46.375 [ ] $47.750 [ ] $49.125 [ ] $50.500
[ ] $43.750 [ ] $45.125 [ ] $46.500 [ ] $47.875 [ ] $49.250 [ ] $50.625
[ ] $43.875 [ ] $45.250 [ ] $46.625 [ ] $48.000 [ ] $49.375 [ ] $50.750
[ ] $44.000 [ ] $45.375 [ ] $46.750 [ ] $48.125 [ ] $49.500 [ ] $50.875
[ ] $44.125 [ ] $45.500 [ ] $46.875 [ ] $48.250 [ ] $49.625 [ ] $51.000
[ ] $44.250 [ ] $45.625 [ ] $47.000 [ ] $48.375 [ ] $49.750
- --------------------------------------------------------------------------------------------
</TABLE>
(Please type or print)
Certificate Nos. (if available):
- ---------------------------------------------------
- ---------------------------------------------------
Name(s)
- ---------------------------------------------------
Address(es)
- ---------------------------------------------------
- ---------------------------------------------------
Area Code(s) and Telephone Number(s)
SIGN HERE
- ---------------------------------------------------
Signature(s)
- ---------------------------------------------------
Dated:
If Shares will be tendered by book-entry transfer,
check one box:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Company
Account
Number:
--------------------------------------------
3
<PAGE> 4
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned is a firm or other entity that is a member in good standing
of the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
and represents that: (a) the above-named person(s) "own(s)" the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended, and (b) such tender of Shares complies with
such Rule 14e-4, and guarantees that the Depositary will receive (i)
certificates of the Shares tendered hereby in proper form for transfer, or (ii)
confirmation that the Shares tendered hereby have been delivered pursuant to the
procedure for book-entry transfer (set forth in Section 3 of the Offer to
Purchase) into the Depositary's account at The Depository Trust Company or
Philadelphia Depository Company, as the case may be, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and any
other documents required by the Letter of Transmittal, all within three New York
Stock Exchange trading days after the date the Depositary receives this Notice
of Guaranteed Delivery.
Authorized Signature:
------------------------------------------
Name:
----------------------------------------------------------
(Please Print)
---------------------------------------------------------------
---------------------------------------------------------------
Title:
---------------------------------------------------------
Name of Firm:
--------------------------------------------------
Address:
-------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone Number:
--------------------------------
Date: , 1997
----------------------------------------------------
DO NOT SEND CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE
SENT WITH THE LETTER OF TRANSMITTAL.
4
<PAGE> 1
EXHIBIT (a)(4)
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
BRIGGS & STRATTON CORPORATION
Offer To Purchase For Cash Up To
5,875,000 Shares Of Its Common Stock
(Including the Associated Common Stock Purchase Rights)
At A Purchase Price Not In Excess Of $51.00
Nor Less Than $43.00 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON TUESDAY, MAY 20, 1997, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
Briggs & Stratton Corporation, a Wisconsin corporation (the "Company"), has
appointed us to act as Dealer Manager in connection with its offer to purchase
for cash 5,875,000 shares (or such lesser number of shares as are properly
tendered) of its Common Stock, par value $.01 per share (including the
associated Common Stock Purchase Rights) (the "Shares"), at a price not in
excess of $51.00 nor less than $43.00 per Share in cash, as specified by its
shareholders tendering their Shares, upon the terms and subject to the
conditions set forth in its Offer to Purchase, dated April 22, 1997, and in the
related Letter of Transmittal (which together constitute the "Offer").
The Company will determine the single per Share price, not in excess of
$51.00 nor less than $43.00 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering shareholders. The Company will select the lowest Purchase Price that
will allow it to buy 5,875,000 Shares (or such lesser number of Shares as are
properly tendered). All Shares acquired in the Offer will be acquired at the
Purchase Price. All Shares properly tendered at prices at or below the Purchase
Price and not withdrawn will be purchased at the Purchase Price, upon the terms
and subject to the conditions of the Offer, including the proration and
conditional tender provisions. Shares tendered at prices in excess of the
Purchase Price and Shares not purchased because of proration or conditional
tender will be returned. The Company reserves the right, in its sole discretion,
to purchase more than 5,875,000 Shares pursuant to the Offer. See Sections 1 and
15 of the Offer to Purchase.
If, prior to the Expiration Date (as defined in the Offer to Purchase),
more than 5,875,000 Shares (or such greater number of Shares as the Company may
elect to purchase) are properly tendered and not withdrawn, the Company will,
upon the terms and subject to the conditions of the Offer, accept Shares for
purchase (i) first from Odd Lot Holders (as defined in the Offer to Purchase)
who properly tender all Shares beneficially owned by such Odd Lot Holder at or
below the Purchase Price, (ii) second, after purchase of all of the foregoing
shares, all Shares conditionally tendered, for which the condition was
satisfied, and all other Shares tendered unconditionally at prices at or below
the Purchase Price, on a pro-rata basis and (iii) third, if necessary, Shares
conditionally tendered, for which the condition was not satisfied, at prices at
or below the Purchase Price, by random lot. If any shareholder tenders Shares
and does not wish to have such Shares purchased subject to proration, such
shareholder may tender Shares subject to the condition that a specified minimum
number of Shares (which may be represented by designated stock certificates) or
none of such Shares be purchased. The Company also reserves the right, but will
not be obligated, to purchase all Shares duly tendered by any shareholder who
tendered all Shares owned, beneficially or of record, at or below the Purchase
Price and who, as a result of proration, would then own, beneficially or of
record, an aggregate of fewer than 100 Shares. If the Company exercises this
right, it
<PAGE> 2
will increase the number of Shares that it is offering to purchase by the number
of Shares purchased through the exercise of the right. See Sections 1, 3 and 6
of the Offer to Purchase.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 7 OF THE OFFER TO PURCHASE.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase, dated April 22, 1997;
2. Letter to Clients which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
3. Letter, dated April 22, 1997, from Frederick P. Stratton, Jr.,
Chairman and Chief Executive Officer of the Company, and John S. Shiely,
President and Chief Operating Officer of the Company, to shareholders of
the Company;
4. Letter of Transmittal for your use and for the information of your
clients (together with accompanying Form W-9); and
5. Notice of Guaranteed Delivery to be used to accept the Offer if the
Share certificates and all other required documents cannot be delivered to
the Depositary by the Expiration Date or if the procedure for book-entry
transfer cannot be completed on a timely basis.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON TUESDAY, MAY 20, 1997, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any person
for soliciting tenders of Shares pursuant to the Offer other than fees paid to
the Dealer Manager, the Information Agent or the Depositary as described in the
Offer to Purchase. The Company will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to the beneficial owners of Shares held by you as a nominee
or in a fiduciary capacity. The Company will pay or cause to be paid any stock
transfer taxes applicable to its purchase of Shares, except as otherwise
provided in Instruction 7 of the Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
As described in Section 3, "The Offer -- Procedure for Tendering Shares,"
of the Offer to Purchase, tenders may be made without the concurrent deposit of
stock certificates or concurrent compliance with the procedure for book-entry
transfer if such tenders are made by or through a broker or dealer which is a
firm or other entity that is a member in good standing of the Security Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Guarantee Program or the Stock Exchange Medallion Program. Certificates for
Shares so tendered (or a confirmation of a book-entry transfer of such Shares
into the Depositary's account at one of the "Book-Entry Transfer Facilities"
described in the Offer to Purchase), together with a properly completed and duly
executed Letter of Transmittal and any other documents required by the Letter of
Transmittal, must be received by the Depositary within three New York Stock
Exchange trading days after timely receipt by the Depositary of a properly
completed and duly executed Notice of Guaranteed Delivery.
Any inquiries you may have with respect to the Offer should be addressed to
Credit Suisse First Boston Corporation or to the Information Agent at their
respective addresses and telephone numbers set forth on the back cover page of
the Offer to Purchase.
2
<PAGE> 3
Additional copies of the enclosed material may be obtained from the
undersigned, telephone: (800) 881-8320 (toll free) or from the Information
Agent, Georgeson & Company Inc., telephone: (212) 440-9800 or (800) 223-2064.
Very truly yours,
Credit Suisse First Boston Corporation
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, THE
DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM
IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
EXHIBIT (a)(5)
BRIGGS & STRATTON CORPORATION
Offer To Purchase For Cash Up To
5,875,000 Shares Of Its Common Stock
(Including the Associated Common Stock Purchase Rights)
At A Purchase Price Not In Excess Of $51.00
Nor Less Than $43.00 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON TUESDAY, MAY 20, 1996, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated April 22,
1997, and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the Offer by Briggs & Stratton Corporation, a
Wisconsin corporation (the "Company"), to purchase 5,875,000 shares (or such
lesser numbered shares as are properly tendered) of its Common Stock, par value
$.01 per share (including the associated Common Stock Purchase Rights) (the
"Shares"), at a price not in excess of $51.00 nor less than $43.00 per Share,
specified by tendering shareholders, upon the terms and subject to the
conditions set forth in the Offer.
The Company will determine the single per Share price, not in excess of
$51.00 nor less than $43.00 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering shareholders. The Company will select the lowest Purchase Price that
will allow it to buy 5,875,000 Shares (or such lesser number of Shares as are
properly tendered). All Shares acquired in the Offer will be acquired at the
Purchase Price. All Shares properly tendered at prices at or below the Purchase
Price and not withdrawn will be purchased at the Purchase Price, upon the terms
and subject to the conditions of the Offer, including the proration and
conditional tender provisions. Shares tendered at prices in excess of the
Purchase Price and Shares not purchased because of proration or conditional
tender will be returned. The Company reserves the right, in its sole discretion,
to purchase more than 5,875,000 Shares pursuant to the Offer. See Sections 1 and
15 of the Offer to Purchase.
If, prior to the Expiration Date (as defined in the Offer to Purchase),
more than 5,875,000 Shares (or such greater number of Shares as the Company may
elect to purchase) are properly tendered and not withdrawn, the Company will,
upon the terms and subject to the conditions of the Offer, accept Shares for
purchase (i) first from Odd Lot Holders (as defined in the Offer to Purchase)
who properly tender all Shares beneficially owned by such Odd Lot Holder at or
below the Purchase Price, (ii) second, after purchase of all of the foregoing
shares, all Shares conditionally tendered, for which the condition was
satisfied, and all other Shares tendered unconditionally at prices at or below
the Purchase Price, on a pro-rata basis and (iii) third, if necessary, Shares
conditionally tendered, for which the condition was not satisfied, at prices at
or below the Purchase Price, by random lot. If any shareholder tenders Shares
and does not wish to have such Shares purchased subject to proration, such
shareholder may tender Shares subject to the condition that a specified minimum
number of Shares (which may be represented by designated stock certificates) or
none of such Shares be purchased. See Sections 1, 3 and 6 of the Offer to
Purchase.
We are the owner of record of Shares held for your account. As such, we are
the only ones who can tender your Shares, and then only pursuant to your
instructions. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION
ONLY; YOU CANNOT USE IT TO TENDER SHARES WE HOLD FOR YOUR ACCOUNT.
Please instruct us as to whether you wish us to tender any or all of the
Shares we hold for your account on the terms and subject to the conditions of
the Offer.
We call your attention to the following:
1. You may tender Shares at prices not in excess of $51.00 nor less
than $43.00 per Share as indicated in the attached Instruction Form, net to
you in cash.
<PAGE> 2
2. You may condition your tender of Shares on the Company purchasing
all or a minimum number of your Shares.
3. You may designate the priority in which your Shares shall be
purchased in the event of proration.
4. The Offer is not conditioned upon any minimum number of Shares
being tendered.
5. The Offer, proration period and withdrawal rights will expire at
5:00 P.M., New York City time, on Tuesday, May 20, 1997, unless the Company
extends the Offer.
6. The Offer is for 5,875,000 Shares, constituting approximately 20.3%
of the Shares outstanding as of April 16, 1997.
7. Tendering shareholders will not be obligated to pay brokerage fees
or commissions to the Dealer Manager, the Depositary or the Information
Agent or, except as set forth in Instruction 7 to the Letter of
Transmittal, transfer taxes on the sale of Shares pursuant to the Offer. A
tendering shareholder who holds securities with such shareholder's broker
may be required by such broker to pay a service charge or other fee.
8. If you beneficially hold an aggregate of fewer than 100 Shares, and
you instruct us to tender on your behalf all such Shares at or below the
Purchase Price before the Expiration Date (as defined in the Offer to
Purchase) and check the box captioned "Odd Lots" in the attached
Instruction Form, the Company, upon the terms and subject to the conditions
of the Offer, will accept all such Shares for purchase before proration, if
any, of the purchase of other Shares properly tendered at or below the
Purchase Price.
9. If you wish to tender portions of your Shares at different prices,
you must complete a separate Instruction Form for each price at which you
wish to tender each such portion of your Shares. We must submit a separate
Letter of Transmittal on your behalf for each price you will accept.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the attached
Instruction Form. An envelope to return your Instruction Form to us is enclosed.
If you authorize us to tender your Shares, we will tender all such Shares unless
you specify otherwise on the attached Instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE OFFER.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON TUESDAY, MAY 20, 1997, UNLESS THE COMPANY EXTENDS THE OFFER.
As described in Section 1 of the Offer to Purchase, if more than 5,875,000
Shares have been properly tendered at prices at or below the Purchase Price and
not withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase), the Company will purchase properly tendered Shares on the basis set
forth below:
(a) first, all Shares properly tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Holder (as defined below) who:
(1) tenders all Shares beneficially owned by such Odd Lot Holder at
a price at or below the Purchase Price, including by electing to accept
the Purchase Price determined by the Company (tenders of less than all
Shares owned by such shareholder will not qualify for this preference);
and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and if applicable on the Notice of Guaranteed Delivery; and
(b) second, after purchase of all of the foregoing Shares, all Shares
conditionally tendered in accordance with Section 6 of the Offer to
Purchase, for which the condition was satisfied, and all other Shares
tendered properly and unconditionally at prices at or below the Purchase
Price and not withdrawn prior to the Expiration Date, on a pro rata basis
(with appropriate adjustments to avoid purchases of fractional Shares) as
described in Section 1 of the Offer to Purchase; and
(c) third, if necessary, Shares conditionally tendered, for which the
condition was not satisfied at or below the Purchase Price and not
withdrawn prior to the Expiration Date, selected by random lot in
accordance with Section 6 of the Offer to Purchase.
2
<PAGE> 3
You may condition your tender on the Company purchasing a minimum number of
your tendered Shares. In such case, if as a result of the preliminary proration
provisions in the Offer to Purchase the Company would purchase less than such
minimum number of your Shares, then the Company will not purchase any of your
Shares, except as provided in the next sentence. In such case, if as a result of
conditionally tendered Shares not being purchased the total number of Shares
that would have been purchased falls below 5,875,000, the Company will select,
by random lot, Shares for purchase from shareholders who conditionally tendered
Shares for which the condition, based on a preliminary proration, has not been
satisfied. See Sections 1 and 6 of the Offer to Purchase.
The Offer is being made to all holders of Shares. The Company is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Company becomes aware
of any valid state statute prohibiting the making of the Offer, the Company will
make a good faith effort to comply with such statute. If, after such good faith
effort, the Company cannot comply with such statute, the Offer will not be made
to, nor will tenders be accepted from or on behalf of, holders of Shares in such
state. In those jurisdictions whose securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer shall be deemed
to be made on behalf of the Company by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdictions.
INSTRUCTION FORM
INSTRUCTIONS FOR TENDER OF SHARES OF
BRIGGS & STRATTON CORPORATION
Please tender to Briggs & Stratton Corporation (the "Company"), on (our)
(my) behalf, the number of Shares indicated below, which are beneficially owned
by (us) (me) and registered in your name, upon the terms and subject to the
conditions contained in the Offer to Purchase of the Company dated April 22,
1997, and the related Letter of Transmittal, the receipt of both of which is
acknowledged.
NUMBER OF SHARES TO BE TENDERED:
------------------ SHARES
CONDITIONAL TENDER
[ ] check here if tender of Shares is conditional on the Company purchasing
all or a minimum number of the tendered Shares and complete the
following:
Minimum number of Shares to be sold:
------------------------ Shares
ODD LOTS
(SEE INSTRUCTION 8)
[ ] By checking this box the undersigned represents that the undersigned
owns, beneficially or of record, an aggregate of fewer than 100 Shares
and is tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one
box):
[ ] at the Purchase Price, as the same shall be determined by the
Company in accordance with the terms of the Offer (persons checking
this box need not indicate the price per Share below); or
[ ] at the price per Share indicated below under "Price (in Dollars) per
Share at which Shares are being tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
3
<PAGE> 4
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(SHAREHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A
SEPARATE INSTRUCTION FORM FOR EACH PRICE AT WHICH SHARES ARE TENDERED.)
<TABLE>
<S> <C> <C> <C> <C> <C>
[ ] $43.000 [ ] $43.875 [ ] $44.750 [ ] $45.625 [ ] $46.500
[ ] $43.125 [ ] $44.000 [ ] $44.875 [ ] $45.750 [ ] $46.625
[ ] $43.250 [ ] $44.125 [ ] $45.000 [ ] $45.875 [ ] $46.750
[ ] $43.375 [ ] $44.250 [ ] $45.125 [ ] $46.000 [ ] $46.875
[ ] $43.500 [ ] $44.375 [ ] $45.250 [ ] $46.125 [ ] $47.000
[ ] $43.625 [ ] $44.500 [ ] $45.375 [ ] $46.250 [ ] $47.125
[ ] $43.750 [ ] $44.625 [ ] $45.500 [ ] $46.375 [ ] $47.250
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
[ ] $47.375 [ ] $48.250 [ ] $49.125 [ ] $50.000 [ ] $50.875
[ ] $47.500 [ ] $48.375 [ ] $49.250 [ ] $50.125 [ ] $51.000
[ ] $47.625 [ ] $48.500 [ ] $49.375 [ ] $50.250
[ ] $47.750 [ ] $48.625 [ ] $49.500 [ ] $50.375
[ ] $47.875 [ ] $48.750 [ ] $49.625 [ ] $50.500
[ ] $48.000 [ ] $48.875 [ ] $49.750 [ ] $50.625
[ ] $48.125 [ ] $49.000 [ ] $49.875 [ ] $50.750
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING SHAREHOLDER, IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED.
Signatures(s):-----------------------------------------------------------------
- -------------------------------------------------------------------------------
Name(s):-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please Print)
- -------------------------------------------------------------------------------
(Taxpayer Identification or
Social Security Number)
Address:-----------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone Number:------------------------------------------------
- -------------------------------------------------------------------------------
Date: ____________________ , 1997
4
<PAGE> 1
EXHIBIT (a)(6)
BRIGGS & STRATTON CORPORATION
Offer To Purchase For Cash Up To
5,875,000 Shares Of Its Common Stock
(Including the Associated Common Stock Purchase Rights)
At A Purchase Price Not In Excess Of $51.00
Nor Less Than $43.00 Per Share
To Participants in the Briggs & Stratton Employee Savings and Investment Plan:
Briggs & Stratton Corporation announced that the Company's Board of
Directors approved a plan to repurchase up to 5,875,000 shares of its common
stock.
In this repurchase plan, called a tender offer, shareholders have an
opportunity to sell any or all of their shares at prices not in excess of $51.00
nor less than $43.00 per share. After shares are tendered by shareholders, the
Company selects a price and buys back shares at such selected price (which will
be within the stated range) that have been tendered at or below that price.
Enclosed with this letter are all of the materials relating to this tender
offer, including the Letter of Transmittal to Firstar Trust Company ("Firstar"),
the trustee of your savings plan and the Depositary for the share repurchase.
These materials contain important information about the tender offer and
should be carefully reviewed. When reviewing the information, please keep the
following points in mind:
As a Savings Plan participant, you have the right, under terms of the plan,
to decide whether or not to direct Firstar to tender shares reflecting your
interest in the Briggs & Stratton Corporation Stock Fund or the PAYSOP Stock
Fund (collectively, the "Fund") credited to your individual account. Only
Firstar as the trustee of the Savings Plan can actually tender the shares
attributable to your individual account.
If you decide to direct Firstar to tender any or all of your shares, you
will be entitled to specify the price or prices (within the limits of the tender
offer) at which they should be tendered. Refer to the instructions on the
enclosed Letter of Transmittal, which must be filled out and returned to
Firstar.
-- The Letter of Transmittal must be received by Firstar by 5:00 p.m.,
New York City time, on Friday, May 16, 1997, unless this deadline is
extended.
If Firstar does not receive a complete, signed original Letter of
Transmittal by the deadline, Firstar will not tender any shares reflecting your
interest in the Fund credited to your individual account.
IMPORTANT: IF YOU DIRECT FIRSTAR TO TENDER SAVINGS PLAN SHARES
ATTRIBUTABLE TO YOUR INDIVIDUAL ACCOUNT AND THEY ARE REPURCHASED BY THE COMPANY,
ANY PROCEEDS WILL BE REINVESTED IN THE BALANCED FUND (VANGUARD WELLINGTON FUND)
AS SOON AS ADMINISTRATIVELY POSSIBLE AND SUCH INVESTMENT WILL BE CREDITED TO
YOUR INDIVIDUAL ACCOUNT.
IF YOU WISH TO HAVE ANY PROCEEDS OF THE SALE OF SHARES ATTRIBUTABLE TO YOUR
INDIVIDUAL ACCOUNT WHICH WERE REINVESTED IN THE BALANCED FUND (VANGUARD
WELLINGTON FUND) INVESTED IN OTHER INVESTMENT OPTIONS OFFERED UNDER THE SAVINGS
PLAN, PLEASE CALL FIRSTAR AT 1-800-236-3982.
-- Only after such proceeds are reinvested as described above will you
be able to instruct Firstar to invest any proceeds of the sale of shares
attributable to your individual account in other investment options offered
under the Savings Plan.
While there is no gain or loss recognized by participants in the Savings
Plan as a result of this tender offer, the tax treatment of future withdrawals
or distributions from the plan may be adversely impacted by a tender or sale of
shares in the Fund.
<PAGE> 2
Firstar will keep your decision confidential and will not disclose it to
any directors, officers or employees of Briggs & Stratton Corporation.
Neither Briggs & Stratton Corporation, its Board of Directors, Firstar as
trustee, the Dealer Manager nor any other party makes any recommendations to you
as to whether or not to tender shares or the price at which to tender. You must
make your own decision on this offer.
If you have any questions after reviewing the materials, contact:
Firstar at 1-800-236-3982 for information on the procedure for
tendering the shares attributable to your individual account, or
Georgeson & Company Inc., the Information Agent for the tender offer,
at 1-800-223-2064 for questions on the terms and conditions of the offer.
Sincerely,
BRIGGS & STRATTON CORPORATION
2
<PAGE> 3
QUESTIONS AND ANSWERS FOR SAVINGS PLAN PARTICIPANTS ABOUT THE BRIGGS & STRATTON
TENDER OFFER
Q. WHY IS THE COMPANY MAKING THIS TENDER OFFER TO PARTICIPANTS IN THE
SAVINGS PLAN?
A. As a participant in the Savings Plan, you may have a proportional interest
in the Fund. The contributions invested in the Fund represent a
proportional interest in the assets of the Fund. The Fund is invested in
Briggs & Stratton Corporation common stock, and your proportional interest
in the Fund is held in an individual account for you by Firstar (along
with the Savings Plan's other investment funds). The Savings Plan provides
that in the event of a tender offer, you may direct Firstar to tender the
number of shares of Company common stock that reflect your proportional
interest in the Fund.
Q. IF I DECIDE TO DIRECT FIRSTAR TO TENDER THE SHARES THAT REFLECT MY
PROPORTIONAL INTEREST IN THE FUND, WILL I BE ABLE TO RECEIVE THE PROCEEDS?
A. No. All proceeds from any Fund shares that are tendered and sold will be
automatically invested by Firstar in the Balanced Fund (Vanguard
Wellington Fund). The proceeds will be part of your individual account and
may not be distributed except in accordance with the applicable terms of
the Savings Plan. PROCEEDS FROM FUND SHARES THAT ARE TENDERED MAY NOT BE
REINVESTED IN THE COMPANY'S STOCK FUND.
Q. WILL I BE ABLE TO CHANGE THE INVESTMENT FUNDS IN WHICH THE PROCEEDS OF
FUND SHARES TENDERED ARE INVESTED?
A. Yes. Proceeds from the sale of Fund shares may be invested in other
investment options offered under the Savings Plans by contacting Firstar
at 1-800-236-3982 after the reinvestment is complete.
Q. WILL I RECOGNIZE A TAX GAIN OR LOSS, OR OTHER TAX EFFECTS IF I DIRECT
FIRSTAR TO TENDER SHARES?
A. For federal income tax purposes, no gain or loss will be recognized by
participants in the Savings Plan as a result of the tender or sale of
Shares held in the Savings Plan. However, certain tax benefits that may
otherwise be available in connection with the future withdrawal or
distribution of Shares from the Savings Plan may be adversely affected if
Shares are tendered and sold. Specifically, under current federal income
tax rules, if a participant receives certain kinds of distributions of
Shares in kind from certain contribution sources, the excess of the fair
market value of the Shares on the date of such withdrawal or distribution
over the cost to the Savings Plans of those Shares is excluded from the
value of the withdrawal or distribution for purposes of determining the
participant's federal income tax liability with respect to the withdrawal
or distribution. Any excess in market value over the cost will be taxed to
the extent realized when the Shares are sold, as long-term capital gain.
If you direct Firstar to tender Shares attributable to your individual
account in the Offer, you may adversely affect your ability to take
advantage of this tax benefit. If you direct Firstar not to tender any
Shares attributable to your individual account, the cost of Shares
attributable to your individual account will not be affected.
Q. IS THERE A FORM I HAVE TO RETURN?
A. Yes. Included in this mailing is a "Letter of Transmittal." You must
complete and return this form to direct Firstar to tender any shares.
Q. WHAT IS THE DEADLINE FOR RETURNING THE LETTER OF TRANSMITTAL?
A. The form must be received by Firstar by 5:00 p.m., New York City time, on
Friday, May 16, 1997, unless this deadline is extended. The Offer,
proration period and withdrawal rights, will expire at 5:00 p.m., New York
City time, on Tuesday, May 20, 1997, unless the Company extends the Offer.
Accordingly, in order for Firstar to make a timely tender of the Shares
attributable to your individual account under the Savings Plan, you must
complete and return the enclosed Letter of Transmittal in the return
envelope so that it is
3
<PAGE> 4
received by Firstar not later than 5:00 p.m., New York City time, on
Friday, May 16, 1997, unless extended.
Q. WHAT IF I HAVE QUESTIONS?
A. Contact Firstar at 1-800-236-3982 for information on the procedure for
tendering the shares reflecting your interest in the Fund. Contact
Georgeson & Company Inc., the Information Agent for the tender offer, at
1-800-223-2064 for questions on the terms and conditions of the offer.
4
<PAGE> 1
EXHIBIT (a)(7)
BRIGGS & STRATTON CORPORATION
Offer To Purchase For Cash Up To
5,875,000 Shares Of Its Common Stock
(Including the Associated Common Stock Purchase Rights)
At A Purchase Price Not In Excess of $51.00
Nor Less Than $43.00 Per Share
To Participants in the Briggs & Stratton Regional Plants Retirement and Savings
Plan:
Briggs & Stratton Corporation announced that the Company's Board of
Directors approved a plan to repurchase up to 5,875,000 shares of its common
stock.
In this repurchase plan, called a tender offer, shareholders have an
opportunity to sell any or all of their shares at prices not in excess of $51.00
nor less than $43.00 per share. After shares are tendered by shareholders, the
Company selects a price and buys back shares at such selected price (which will
be within that range) that have been tendered at or below that price.
Enclosed with this letter are all of the materials relating to this tender
offer, including a letter from CG Trust Company ("CG Trust"), the trustee of
your savings plan.
These materials contain important information about the tender offer and
should be carefully reviewed. When reviewing the information, please keep the
following points in mind:
As a Savings Plan participant, you have the right, under terms of the plan,
to decide whether or not to direct CG Trust to tender shares reflecting your
interest in the Briggs & Stratton Corporation Stock Fund or the PAYSOP Stock
Fund (collectively, the "Fund") credited to your individual account. Only CG
Trust as the trustee of the Savings Plan can actually tender the shares
attributable to your individual account.
If you decide to direct CG Trust to tender any or all of your shares, you
will be entitled to specify the price or prices (within the limits of the tender
offer) at which they should be tendered. Refer to the instructions on the
enclosed "Direction Form", which must be filled out and returned to CG Trust at
the address in the enclosed letter from CG Trust.
-- The Direction Form must be received by CG Trust by 5:00 p.m., New
York City time, on Friday, May 16, 1997, unless this deadline is extended.
-- Be sure to complete and return the Direction Form even if you
decide not to instruct CG Trust to tender any shares.
If CG Trust does not receive a complete, signed original Direction Form by
the deadline, CG Trust will not tender any shares in the Fund credited to your
individual account.
IMPORTANT: IF YOU DIRECT CG TRUST TO TENDER SAVINGS PLAN SHARES
ATTRIBUTABLE TO YOUR INDIVIDUAL ACCOUNT AND THEY ARE REPURCHASED BY THE COMPANY,
ANY PROCEEDS WILL BE REINVESTED IN THE FIXED INCOME FUND (CIGNA GUARANTEED
INCOME FUND) AS SOON AS ADMINISTRATIVELY POSSIBLE AND SUCH INVESTMENT WILL BE
CREDITED TO YOUR INDIVIDUAL ACCOUNT.
IF YOU WISH TO HAVE ANY PROCEEDS OF THE SALE OF SHARES ATTRIBUTABLE TO YOUR
INDIVIDUAL ACCOUNT WHICH WERE REINVESTED IN THE FIXED INCOME FUND (CIGNA
GUARANTEED INCOME FUND) INVESTED IN OTHER INVESTMENT OPTIONS OFFERED UNDER THE
SAVINGS PLAN, PLEASE CALL CG TRUST AT 1-800-253-2287.
-- Only after such proceeds are reinvested as described above will you
be able to instruct CG Trust to invest any proceeds of the sale of shares
attributable to your individual account in other investment options offered
under the Savings Plans.
<PAGE> 2
While there is no gain or loss recognized by participants in the Savings
Plans as a result of this tender offer, plan, the tax treatment of future
withdrawals or distributions from the plan may be adversely impacted by a tender
or sale of shares in the Fund (see the "Investment of Tender Proceeds" section
in the enclosed letter from CG Trust).
CG Trust will keep your decision confidential and will not disclose it to
any directors, officers or employees of Briggs & Stratton Corporation.
Neither Briggs & Stratton Corporation, its Board of Directors, CG Trust as
trustee, the Dealer Manager nor any other party makes any recommendations to you
as to whether or not to tender shares or the price at which to tender. You must
make your own decision on this offer.
If you have any questions after reviewing the materials, contact:
CG Trust at 1-800-253-2287 for information on the procedure for tendering
the shares attributable to your individual account, or
Georgeson & Company Inc., the Information Agent for the tender offer, at
1-800-223-2064 for questions on the terms and conditions of the offer.
Sincerely,
BRIGGS & STRATTON CORPORATION
2
<PAGE> 3
QUESTIONS AND ANSWERS FOR SAVINGS PLAN PARTICIPANTS ABOUT THE BRIGGS & STRATTON
TENDER OFFER
Q. WHY IS THE COMPANY MAKING THIS TENDER OFFER TO PARTICIPANTS IN THE
SAVINGS PLAN?
A. As a participant in the Savings Plan, you may have a proportional interest
in the Fund. The contributions invested in the Fund represent a
proportional interest in the assets of the Fund. The Fund is invested in
Briggs & Stratton Corporation common stock, and your proportional interest
in the Fund is held in an individual account for you by CG Trust (along
with the Savings Plan's other investment funds). The Savings Plan provides
that in the event of a tender offer, you may direct CG Trust to tender the
number of shares of Company common stock that reflect your proportional
interest in the Fund.
Q. IF I DECIDE TO DIRECT CG TRUST TO TENDER THE SHARES THAT REFLECT MY
PROPORTIONAL INTEREST IN THE FUND, WILL I BE ABLE TO RECEIVE THE PROCEEDS?
A. No. All proceeds from any Fund shares that are tendered and sold will be
automatically invested by CG Trust in the Fixed Income Fund (CIGNA
Guaranteed Income Fund). The proceeds will be part of your individual
account and may not be distributed except in accordance with the
applicable terms of the Savings Plan. PROCEEDS FROM FUND SHARES THAT ARE
TENDERED MAY NOT BE REINVESTED IN THE COMPANY STOCK FUND.
Q. WILL I BE ABLE TO CHANGE THE INVESTMENT FUNDS IN WHICH THE PROCEEDS OF
FUND SHARES TENDERED ARE INVESTED?
A. Yes. Proceeds from the sale of Fund shares may be invested in other
investment options offered under the Savings Plan by contacting CG Trust
at 1-800-253-2287 after the reinvesting is complete.
Q. IS THERE A FORM I HAVE TO RETURN?
A. Yes. Included in this mailing is a "Direction Form". Complete and return
this form even if you decide not to direct the tender of any shares.
Q. WHAT IS THE DEADLINE FOR RETURNING THE "DIRECTION FORM"?
A. The form must be received by CG Trust by 5:00 p.m., New York City time, on
Friday, May 16, 1997, unless this deadline is extended.
Q. WHAT IF I HAVE QUESTIONS?
A. Contact CG Trust at 1-800-253-2287 for information on the procedure for
tendering the shares reflecting your interest in the Fund. Contact
Georgeson & Company Inc., the Information Agent for the tender offer, at
1-800-223-2064 for questions on the terms and conditions of the offer.
3
<PAGE> 1
EXHIBIT (a)(8)
CG TRUST COMPANY
c/o Firstar Trust Company
Corporate Trust Services
Post Office Box 2077
Milwaukee, Wisconsin 53201
IMMEDIATE ATTENTION REQUIRED
April 22, 1997
Re: Briggs & Stratton Corporation Regional Plants Retirement and
Savings Plan
Dear Plan Participant:
Our records reflect that a portion of your individual account in the plan
described above (the "Savings Plan") is invested in the Briggs & Stratton
Corporation Stock Fund or the PAYSOP Stock Fund (collectively, the "Fund").
Enclosed are tender offer materials and a Direction Form that require your
immediate attention. These materials describe an offer to purchase 5,875,000
shares of common stock, par value $.01 (including the associated Common Stock
Purchase Rights) (the "Shares"), of Briggs & Stratton Corporation (the
"Company") at prices not in excess of $51.00 nor less than $43.00 per share. As
described below, you have the right to instruct CG Trust, as Trustee of the
Savings Plan, concerning whether and on what terms to tender Shares attributable
to your individual account under the Savings Plan.
YOU WILL NEED TO COMPLETE THE ENCLOSED DIRECTION FORM AND RETURN IT TO CG
TRUST IN THE ENCLOSED RETURN ENVELOPE SO THAT IT IS RECEIVED BY 5:00 P.M., NEW
YORK CITY TIME, ON FRIDAY, MAY 16, 1997, UNLESS EXTENDED. PLEASE COMPLETE AND
RETURN THE DIRECTION FORM EVEN IF YOU DECIDE NOT TO PARTICIPATE IN THE TENDER
OFFER DESCRIBED BELOW.
The remainder of this letter summarizes the transaction, your rights under
the Savings Plan and the procedures for completing the Direction Form. You
should also review the more detailed explanation provided in the other materials
including the enclosed Offer to Purchase dated April 22, 1997 (the "Offer to
Purchase") and the related Letter of Transmittal enclosed with this letter
(which, together with the Offer to Purchase, constitute the "Offer"). For
purposes of this letter, unless otherwise provided, the term "participant" means
an actual participant in the Savings Plan, the beneficiary of a deceased actual
participant and an alternate payee with respect to an actual participant
pursuant to a qualified domestic relations order.
BACKGROUND
Briggs & Stratton Corporation has made a tender offer to purchase up to
5,875,000 Shares, at prices not in excess of $51.00 nor less than $43.00 per
Share. The Offer to Purchase and the related Letter of Transmittal set forth the
objectives, terms and conditions of the Offer and are being provided to all of
the Company's shareholders.
The Company's Offer to Purchase extends to the Shares currently held by the
Savings Plan. Only CG Trust as trustee of the Savings Plan can tender these
Shares for sale. Nonetheless, as a Savings Plan participant, you have the right
to direct CG Trust whether or not to tender some or all of the Shares
attributable to your individual account in the Savings Plan. If you direct CG
Trust to tender any of the Shares attributable to your individual account, you
must also specify the price or prices at which the Shares should be tendered.
Please note that CG Trust is the holder of record of the Shares
attributable to your individual account under the Savings Plan. A tender of such
Shares can be made only by CG Trust as the holder of record. The Letter of
Transmittal is furnished to you for your information only and cannot be used by
you to tender Shares attributable to your individual account under the Savings
Plans.
1
<PAGE> 2
NONE OF CG TRUST, ITS AFFILIATES, THE COMPANY, ITS BOARD OF DIRECTORS, THE
DEALER MANAGER OR ANY OTHER PARTY MAKES ANY RECOMMENDATIONS AS TO WHETHER TO
DIRECT THE TENDER OF SHARES, THE PRICE AT WHICH TO TENDER, OR WHETHER TO REFRAIN
FROM DIRECTING THE TENDER OF SHARES. EACH PARTICIPANT MUST MAKE HIS OR HER OWN
DECISION ON THESE MATTERS.
CG Trust is directed to follow timely, completed Direction Forms of
participants with respect to the Offer. CG Trust is directed NOT to tender
Shares attributable to the individual accounts of participants from whom CG
Trust has not received timely, completed Direction Forms. Only in the event that
CG Trust determines that such directions violate the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), will CG Trust exercise discretion
with respect to the tender of Shares held by the Savings Plan.
CONFIDENTIALITY
To assure the confidentiality of your decision, CG Trust and Firstar Trust
Company will tabulate the Direction Forms. Neither CG Trust, its affiliates or
agents or Firstar Trust Company will make the results of your individual
direction available to the Company.
HOW THE OFFER WORKS
The details of the Offer are described in the enclosed materials, which you
should review carefully. However, in broad outline, the transaction will work as
follows with respect to Savings Plan participants.
The Company has offered to purchase up to 5,875,000 of its Shares at a
single per Share price not in excess of $51.00 nor less than $43.00.
If you want any of the Shares attributable to your individual account under
the Savings Plan sold on the terms and subject to the conditions of the Offer,
you need to instruct CG Trust by completing the enclosed Direction Form and
returning it in the enclosed return envelope.
You need to specify on the Direction Form the per Share price (in multiples
of $.125), which cannot be in excess of $51.00 nor less than $43.00, at which
you wish to tender the Shares attributable to your individual account under the
Savings Plan.
The Offer, proration period and withdrawal rights will expire at 5:00 p.m.,
New York City time, on Tuesday, May 20, 1997, unless the Company extends the
Offer. ACCORDINGLY, IN ORDER FOR CG TRUST TO MAKE A TIMELY TENDER OF THE SHARES
ATTRIBUTABLE TO YOUR INDIVIDUAL ACCOUNT UNDER THE SAVINGS PLAN, YOU MUST
COMPLETE AND RETURN THE ENCLOSED DIRECTION FORM IN THE RETURN ENVELOPE SO THAT
IT IS RECEIVED BY CG TRUST NOT LATER THAN 5:00 P.M., NEW YORK CITY TIME, ON
FRIDAY, MAY 16, 1997, UNLESS EXTENDED.
Please complete and return the direction form even if you decide not to
participate in the Offer. If CG Trust does not receive a completed, signed
original Direction Form from you by such deadline, pursuant to the terms of the
Trust Agreement relating to the Savings Plan, CG Trust will NOT tender any of
your Shares unless it determines that such Trust Agreement provision violates
ERISA.
After the above deadline for returning the Direction Form to CG Trust, CG
Trust and its affiliates or agents will complete the tabulation of all
directions and CG Trust, as trustee, will tender the appropriate number of
Shares. For purposes of this tabulation, CG Trust will calculate the number of
Shares attributable to your individual account based upon the number of Shares
held by the Briggs & Stratton Corporation Stock Fund as of the close of business
on April 17, 1997.
The Company will then determine the per Share purchase price (not in excess
of $51.00 nor less than $43.00) (the "Purchase Price"), at which the Company can
purchase 5,875,000 Shares.
Unless the Offer is terminated or amended in accordance with its terms, the
Company will then buy all of the Shares, up to 5,875,000, that were tendered at
or below the Purchase Price. If there is an excess of Shares tendered over the
exact number desired by the Company at the Purchase Price, Shares tendered
pursuant to the
2
<PAGE> 3
Offer may be subject to proration as set forth in Section 1 of the Offer to
Purchase. Participants who tender Shares at or below the Purchase Price will
receive the same Purchase Price for Shares accepted for purchase.
If you direct the tender of any Shares attributable to your individual
account at a price in excess of the Purchase Price as finally determined, those
Shares will not be purchased, and your individual account previously invested in
the Fund will remain unchanged.
PROCEDURE FOR DIRECTING CG TRUST
A Direction Form for making your direction is enclosed. You must complete,
sign and return the enclosed original Direction Form in the return envelope so
that it is received at the address listed on the enclosed return envelope not
later than 5:00 p.m., New York City time, on Friday, May 16, 1997, unless
extended. PLEASE COMPLETE AND RETURN THE DIRECTION FORM EVEN IF YOU DECIDE NOT
TO PARTICIPATE IN THE OFFER. If your Direction Form is not received by this
deadline, or if it is not fully or properly completed, the Shares attributable
to your individual account under the Savings Plan will not be tendered. Please
note that on the reverse side of the Direction Form the approximate number of
Shares attributable to your individual account as of April 17, 1997 is indicated
to the right of your address. As described above, the actual number of Shares
attributable to your individual account for purposes of the Offer may vary from
this amount.
To properly complete your Direction Form, you must do the following:
(1) On the face of the Direction Form, check Box 1 or 2. CHECK ONLY
ONE BOX:
CHECK BOX 1 if you do not want the Shares attributable to your
individual account tendered for sale at any price and simply want the
Savings Plan to continue holding such Shares.
CHECK BOX 2 in all other cases and complete the table immediately
below Box 2. Specify the percentage of Shares attributable to your
individual account that you want to tender at each price indicated.
You may direct the tender of Shares attributable to your individual
account at different prices. To do so, you must state the percentage of
Shares to be sold at each indicated price by filling in the percentage of
such Shares on the line immediately before the price. Leave a line blank if
you want no Shares reflecting your interest in the Fund tendered at that
price. The total percentage of Shares reflecting your interest in the Fund
tendered may not exceed 100%, but it may be less than or equal to 100%. If
this amount is less than 100%, you will be deemed to have instructed CG
Trust NOT to tender the balance of the Shares attributable to your
individual account under the Savings Plan.
(2) Date and sign the Direction Form in the space provided.
(3) Return the Direction Form in the enclosed return envelope so that
it is received by CG Trust at the address on the return envelope not later
than 5:00 p.m., New York City time, on Friday, May 16, 1997 unless
extended. Please complete and return the Direction Form even if you decide
not to participate in the Offer. NO FACSIMILE TRANSMITTALS OF THE DIRECTION
FORM WILL BE ACCEPTED.
Your direction will be deemed irrevocable unless withdrawn by 5:00 p.m.,
New York City time, on Friday, May 16, 1997, unless extended. In order to make
an effective withdrawal, you must submit a new Direction Form which may be
obtained by calling CG Trust at 1-800-253-2287. Your new Direction Form must
include your name, address and Social Security number. Upon receipt of a new,
completed and signed Direction Form, your previous direction will be deemed
cancelled. You may direct the re-tendering of any Shares attributable to your
individual account by obtaining an additional Direction Form from CG Trust and
repeating the previous instructions for directing tenders as set forth in this
letter.
INVESTMENT OF TENDER PROCEEDS
For any Shares attributable to your individual account under the Savings
Plan that are tendered and purchased by the Company, the Company will pay cash
to the Savings Plans. In accordance with the Trust Agreement, CG Trust will
invest the proceeds in the Fixed Income Fund (CIGNA Guaranteed Income Fund) as
3
<PAGE> 4
soon as administratively possible and will credit such investment to your
individual account. You may call CG Trust at 1-800-253-2287 after the
reinvestment is complete to have the proceeds of the sale of Shares which were
invested in the Fixed Income Fund (CIGNA Guaranteed Income Fund) invested in
other investment options offered under the Savings Plan.
INDIVIDUAL PARTICIPANTS IN THE SAVINGS PLAN WILL NOT RECEIVE ANY PORTION OF
THE TENDER PROCEEDS DIRECTLY. ALL SUCH PROCEEDS WILL REMAIN IN THE SAVINGS PLAN
AND MAY BE WITHDRAWN ONLY IN ACCORDANCE WITH THE TERMS OF THE SAVINGS PLAN.
TENDER PROCEEDS MAY NOT BE REINVESTED IN THE COMPANY STOCK FUND.
For federal income tax purposes, no gain or loss will be recognized by
participants in the Savings Plan as a result of the tender or sale of Shares
held in the Savings Plan. However, certain tax benefits that may otherwise be
available in connection with the future withdrawal or distribution of Shares
from the Savings Plan may be adversely affected if Shares are tendered and sold.
Specifically, under current federal income tax rules, if a participant receives
certain kinds of distributions of Shares in kind from certain contribution
sources, the excess of the fair market value of the Shares on the date of such
withdrawal or distribution over the cost to the Savings Plans of those Shares is
excluded from the value of the withdrawal or distribution for purposes of
determining the participant's federal income tax liability with respect to the
withdrawal or distribution. Any excess in market value over the cost will be
taxed to the extent realized when the Shares are sold, as long-term capital
gain. If you direct CG Trust to tender Shares attributable to your individual
account in the Offer, you may adversely affect your ability to take advantage of
this tax benefit. If you direct CG Trust not to tender any Shares attributable
to your individual account, the cost of Shares attributable to your individual
account will not be affected.
SHARES OUTSIDE THE SAVINGS PLAN
If you hold Shares directly, as a participant in the Briggs & Stratton
Employee Savings and Investment Plan or under the Briggs & Stratton Dividend
Reinvestment Plan, you will receive, under separate cover, tender offer
materials directly from the Company which can be used to tender such Shares.
Those tender offer materials may not be used to direct CG Trust to tender or not
tender the Shares attributable to your individual account under the Savings
Plan. The direction to tender or not tender Shares attributable to your
individual account under the Savings Plan may only be made in accordance with
the procedures in this letter.
FURTHER INFORMATION
If you require additional information concerning the terms and conditions
of the Offer, please call Georgeson & Company Inc., the Information Agent, at
1-800-223-2064. If you require additional information concerning the procedure
to tender Shares attributable to your individual account under the Savings
Plans, please contact CG Trust at 1-800-253-2287.
Sincerely,
CG TRUST COMPANY
4
<PAGE> 5
DIRECTION FORM
BRIGGS & STRATTON CORPORATION REGIONAL PLANTS RETIREMENT AND SAVINGS PLAN.
BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY THE ACCOMPANYING OFFER
TO PURCHASE AND ALL OTHER ENCLOSED MATERIALS.
INSTRUCTIONS
Carefully complete the detachable portion of this Direction Form below.
Then turn the form over and insert today's date and sign your name in the spaces
provided. Enclose the Direction Form in the included postage prepaid envelope
and mail it promptly. YOUR DIRECTION FORM MUST BE RECEIVED BY CG TRUST NOT LATER
THAN 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, MAY 16, 1997, UNLESS EXTENDED.
PLEASE COMPLETE AND RETURN THE DIRECTION FORM EVEN IF YOU DECIDE NOT TO
PARTICIPATE IN THE OFFER. Direction Forms that are not fully or properly
completed, dated and signed, or that are received after the deadline, will be
ignored and the Shares reflecting your interest in the Fund allocated to your
individual account will not be tendered. Note that CG Trust also has the right
to ignore any direction that it determines cannot be implemented without
violation of applicable law.
Neither the Company, its Board of Directors, CG Trust, the Dealer Manager,
nor any other party makes any recommendation to participants as to whether to
direct the tender of Shares, the price at which to tender, or to refrain from
directing the tender of Shares. Each participant must make his or her own
decision on these matters.
As of Thursday, April 17, 1997, the approximate number of Shares of Briggs
& Stratton Corporation common stock reflecting your interest in the Fund
allocated to your Savings Plan individual account is shown to the right of your
address.
(CHECK ONLY ONE BOX)
[ ] 1. Please refrain from tendering and continue to HOLD all Shares reflecting
my interest in the Fund allocated to my Savings Plan individual account.
[ ] 2. Please TENDER Shares reflecting my interest in the Fund allocated to my
Savings Plan individual account in the percentage indicated below for
each of the prices provided. (The total of the percentages may NOT
exceed 100%, but it may be less than or equal to 100%). A blank space
before a given price will be taken to mean that no Shares reflecting my
interest in the Fund are to be tendered at that price. FILL IN THE TABLE
BELOW ONLY IF YOU HAVE CHECKED BOX 2.
5
<PAGE> 6
PERCENTAGE OF SHARES DIRECTED TO BE TENDERED
(The total of all percentages must be less than or equal to 100%
and no percentage may be a fraction of a percent)
(If the total is less than 100%, you will be deemed to have directed CG
Trust NOT to tender the remaining percentage.)
<TABLE>
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
___% $43.000 ___% $44.500 ___% $46.000 ___% $47.500 ___% $49.000 ___% $50.500
___% $43.125 ___% $44.625 ___% $46.125 ___% $47.625 ___% $49.125 ___% $50.625
___% $43.250 ___% $44.750 ___% $46.250 ___% $47.750 ___% $49.250 ___% $50.750
___% $43.375 ___% $44.875 ___% $46.375 ___% $47.875 ___% $49.375 ___% $50.875
___% $43.500 ___% $45.000 ___% $46.500 ___% $48.000 ___% $49.500 ___% $51.000
___% $43.625 ___% $45.125 ___% $46.625 ___% $48.125 ___% $49.625
___% $43.750 ___% $45.250 ___% $46.750 ___% $48.250 ___% $49.750
___% $43.875 ___% $45.375 ___% $46.875 ___% $48.375 ___% $49.875
___% $44.000 ___% $45.500 ___% $47.000 ___% $48.500 ___% $50.000
___% $44.125 ___% $45.625 ___% $47.125 ___% $48.625 ___% $50.125
___% $44.250 ___% $45.750 ___% $47.250 ___% $48.750 ___% $50.250
___% $44.375 ___% $45.875 ___% $47.375 ___% $48.875 ___% $50.375
- --------------------------------------------------------------------------------------------
</TABLE>
The undersigned hereby directs CG Trust as Trustee of the Briggs & Stratton
Corporation Regional Plants Retirement and Savings Plan (the "Savings Plan"), to
tender to Briggs & Stratton Corporation (the "Company"), in accordance with the
Offer to Purchase, dated April 22, 1997, including the related Letter of
Transmittal, copies of which I have received and read, the indicated percentage
of shares of the Company's common stock, par value $.01 per share (the
"Shares"), reflecting my interest in the Briggs & Stratton Corporation Stock
Fund allocated to my Savings Plan individual account, or to hold such Shares, in
either case as provided on this form.
Signature
----------------------------
Please print name
Date
6
<PAGE> 1
EXHIBIT (a)(9)
NEWS RELEASE
BRIGGS & STRATTON ANNOUNCES SELF-TENDER FOR UP TO 5.875 MILLION SHARES, DECLARES
DIVIDEND AND REPORTS THIRD QUARTER RESULTS
Milwaukee, April 16, 1997/PR Newswire/--Briggs & Stratton Corporation
(NYSE:BGG), a Wisconsin Corporation, announced today that its board of directors
has authorized the company to repurchase its common stock pursuant to a "dutch
auction" self-tender offer. The self-tender will be for up to 5.875 million
shares of the company's common stock. The tender offer price is expected to
range from $43 to $51 per share in cash, subject to market and other customary
conditions. The offer is expected to commence Tuesday, April 22, 1997 and will
expire at 5:00 p.m., New York City time, on Tuesday, May 20, 1997, unless
extended. On April 15, 1997, Briggs & Stratton shares closed at $42 3/4.
The tender offer will be subject to various terms and conditions described
in offering materials to be distributed to shareholders next week. Under the
terms of the tender offer, Briggs & Stratton shareholders will be given the
opportunity to specify prices within the company's stated price range at which
they are willing to tender their shares. Upon receipt of tenders, Briggs &
Stratton will determine a final price that enables it to purchase up to the
stated amount of shares from those shareholders who agreed to sell at or below
the selected purchase price. All shares purchased will be at the determined
price. If more than 5.875 million shares are tendered at or below the purchase
price, there will be a proration. The offer will not be contingent upon any
minimum number of shares being tendered. Briggs & Stratton currently has
28,927,000 shares of common stock outstanding. The company indicated it intends
to enter into a new credit facility with Bank of America NT&SA as agent to
finance the tender offer and its seasonal working capital needs. The company
intends to reduce borrowings under this credit facility pursuant to an expected
$175 million offering of debt securities announced separately today.
Neither the company nor its board of directors makes any recommendation to
shareholders as to whether to tender or refrain from tendering their shares.
Each shareholder must make the decision whether to tender shares and, if so, how
many shares and at what price or prices shares should be tendered.
Frederick P. Stratton, Jr., Chairman and Chief Executive Officer of Briggs
& Stratton, said "We believe that the use of cash and borrowings to fund the
dutch auction will result in an efficient capital structure for the company and
is consistent with our long term goal of increasing shareholder value."
Credit Suisse First Boston will serve as the dealer manager for the offer.
Georgeson & Company Inc. will serve as the information agent.
Briggs & Stratton Corporation also announced that its board of directors
has authorized an increase in its regular quarterly dividend from Twenty-seven
cents ($0.27) to Twenty-eight ($0.28) per share. The dividend is payable June
27, 1997 to shareholders of record at the close of business on June 5, 1997.
RESULTS FOR THIRD QUARTER & NINE MONTHS FOR FISCAL 1997
Sales and net income for the third quarter were 3% higher than for last
year's third quarter. For the first nine months, sales were 4% lower and net
income 12% lower. Engine unit shipments were 2% higher for the quarter but 7%
lower for the nine months.
Thanks to an early spring in the Southeast, the lawn and garden equipment
selling season is off to a strong start. Retailers are reporting significant
sales increases. Equipment manufacturers did not reach full production levels
until the second half of the third quarter and will have to maintain peak levels
well into May to meet strong demand from retailers. If favorable weather
continues in the Southeast and spreads to the Midwest and Northeast, we should
have a good fourth quarter. We believe that unit shipments for the full fiscal
year will be up modestly
<PAGE> 2
despite being down 7% for the nine months. We will take a charge for the cost of
an early retirement window in the fourth quarter, so reported earnings for the
quarter and for the full year will be lower than they were last year.
F.P. Stratton, Jr.
Chairman and Chief Executive Officer
BRIGGS & STRATTON CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
PERIODS ENDED MARCH
------------------------------------------------------------
THIRD QUARTER NINE MONTHS
---------------------------- ----------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales............................. $475,955,000 $460,201,000 $937,350,000 $979,035,000
Income from Operations................ 76,272,000 74,027,000 96,966,000 109,647,000
Income before provision for income
taxes............................... 75,034,000 72,946,000 93,466,000 106,210,000
Net income............................ 46,514,000 45,226,000 57,946,000 65,850,000
Per Share Data --
Net income............................ $1.60 $1.57 $2.00 $2.28
Shares outstanding.................... 28,927,000 28,927,000 28,927,000 28,927,000
</TABLE>
Briggs & Stratton is the world's largest producer of air-cooled gasoline
engines for outdoor power equipment.
This release contains certain forward-looking statements that involve risks
and uncertainties that could cause actual results to differ materially from
those in the forward-looking statements. The forward-looking statements are
based on the Company's current views and assumptions and involve risks and
uncertainties that include, among other things, the effects of weather on the
purchasing patterns of the Company's customers and end use purchasers of the
Company's engines; the seasonal nature of the Company's business; actions of
competitors; changes in laws and regulations, including accounting standards;
employee relations; customer demand; prices of purchased raw materials and
parts; domestic economic conditions, including housing starts and changes in
consumer disposable income; and foreign economic conditions, including currency
rate fluctuations. Some or all of the factors are beyond the Company's control.
/CONTACT: Robert H. Eldridge, Executive Vice President and Chief Financial
Officer, Secretary-Treasurer, Briggs & Stratton Corporation 414-259-5333.
<PAGE> 1
EXHIBIT (A)(10)
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER
TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE AND THE
RELATED LETTER OF TRANSMITTAL WHICH ARE BEING MAILED TO SHAREHOLDERS OF BRIGGS &
STRATTON CORPORATION ON OR ABOUT APRIL 22, 1997. WHILE THE OFFER IS BEING MADE
TO ALL SHAREHOLDERS OF THE COMPANY, TENDERS WILL NOT BE ACCEPTED FROM OR ON
BEHALF OF THE SHAREHOLDERS IN ANY JURISDICTION IN WHICH THE ACCEPTANCE THEREOF
WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. IN THOSE
JURISDICTIONS WHOSE LAWS REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR
DEALER, THE OFFER SHALL BE DEEMED TO BE MADE ON BEHALF OF THE COMPANY BY CREDIT
SUISSE FIRST BOSTON CORPORATION, OR ONE OR MORE REGISTERED BROKERS OR DEALERS
LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
NOTICE OF OFFER TO PURCHASE FOR CASH
BY
BRIGGS & STRATTON CORPORATION
UP TO 5,875,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
AT A PURCHASE PRICE NOT IN EXCESS OF
$51.00 NOR LESS THAN $43.00 PER SHARE
Briggs & Stratton Corporation, a Wisconsin corporation (the "Company"),
invites shareholders to tender 5,875,000 shares (or such lesser number of shares
as are properly tendered) of its Common Stock, par value $.01 per share (the
"Shares") (including the associated Common Stock Purchase Rights), at prices not
in excess of $51.00 nor less than $43.00 per Share in cash, as specified by such
shareholders, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated April 22, 1997 and in the related Letter of Transmittal
(which together constitute the "Offer").
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON TUESDAY, MAY 20, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is not conditioned on any minimum number of Shares being
tendered, but is subject to certain other conditions set forth in the Offer to
Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED. THE COMPANY
HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO
TENDER ANY SHARES PURSUANT TO THE OFFER.
As promptly as practicable following the Expiration Date (as defined
below), the Company will purchase 5,875,000 Shares or such lesser number of
Shares as are properly tendered (and not withdrawn in accordance with Section 4
of the Offer to Purchase) prior to the Expiration Date at prices not in excess
of $51.00 nor less than $43.00 per Share in cash. The term "Expiration Date"
means 5:00 P.M., New York City time, on Tuesday, May 20, 1997, unless and until
the Company, in its sole discretion, shall have extended the period of time
during which the Offer will remain open, in which event the term "Expiration
Date" shall refer to the latest time and date at which the Offer, as so extended
by the Company, shall expire.
The Company will select the lowest purchase price (the "Purchase Price")
that will allow it to buy 5,875,000 Shares (or such lesser number of Shares as
are properly tendered and not withdrawn at prices not in
<PAGE> 2
excess of $51.00 nor less than $43.00 per Share). All Shares properly tendered
at prices at or below the Purchase Price and not withdrawn will be purchased at
the Purchase Price, subject to the terms and the conditions of the Offer,
including the proration and conditional tender provisions. For purposes of the
Offer, the Company will be deemed to have accepted for payment (and thereby
purchased) Shares properly tendered at or below the Purchase Price and not
withdrawn (subject only to proration and conditional tender provisions of the
Offer) only when, as and if the Company gives oral or written notice to the
Depositary (as defined below) of its acceptance of such Shares for payment
pursuant to the Offer. Payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of certificates for such shares (or a timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at a Book-Entry Transfer
Facility (as defined in the Offer to Purchase)), a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile thereof) and any
other documents required by the Letter of Transmittal.
The Company's Board of Directors believes that the Company's financial
condition and outlook and current market conditions, including recent trading
prices of the Shares, make this an attractive time to repurchase a portion of
the outstanding Shares. In the view of the Company's Board of Directors, the
Offer is an attractive use of the Company's financial resources and the use of
cash and borrowings to fund the Offer will result in an efficient capital
structure for the Company. Accordingly, the Offer is consistent with the
Company's long-term corporate goal of increasing shareholder value. The Offer
provides shareholders who are considering a sale of all or a portion of their
Shares the opportunity to determine the price or prices (not in excess of $51.00
nor less than $43.00 per Share) at which they are willing to sell their Shares
and, if any such Shares are purchased pursuant to the Offer, to sell those
Shares for cash without the usual transaction costs associated with open market
sales. In addition, the Offer may give shareholders the opportunity to sell
Shares at prices greater than market prices prevailing prior to announcement of
the Offer.
Upon the terms and subject to the conditions of the Offer, if more than
5,875,000 Shares have been properly tendered at prices at or below the Purchase
Price and not withdrawn prior to the Expiration Date, the Company will purchase
properly tendered Shares on the following basis: (a) first, all Shares properly
tendered and not withdrawn prior to the Expiration Date by any Odd Lot Holder
(as defined in the Offer to Purchase) who: (1) tenders all Shares beneficially
owned by such Odd Lot Holder at a price at or below the Purchase Price,
including by electing to accept the Purchase Price determined by the Company
(partial tenders will not qualify for this preference); and (2) completes the
box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery; and (b) second, after purchase of all of the
foregoing Shares, all Shares conditionally tendered, for which the condition was
satisfied, and all other Shares tendered properly and unconditionally at prices
at or below the Purchase Price and not withdrawn prior to the Expiration Date,
on a pro rata basis (with appropriate adjustments to avoid purchases of
fractional Shares) as described below; and (c) third, if necessary, Shares
conditionally tendered, for which the condition was not satisfied, at or below
the Purchase Price and not withdrawn prior to the Expiration Date, selected by
random lot. The Company also reserves the right, but will not be obligated, to
purchase all Shares duly tendered by any shareholder who tendered all Shares
owned, beneficially or of record, at or below the Purchase Price and who, as a
result of proration, would then own, beneficially or of record, an aggregate of
fewer than 100 Shares. If the Company exercises this right, it will increase the
number of Shares that it is offering to purchase by the number of Shares
purchased through the exercise of the right.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time to extend the period of time during which the Offer
is open and thereby delay acceptance for payment of, and payment for, any Shares
by giving oral or written notice of such extension to Firstar Trust Company (the
"Depositary") and making a public announcement thereof.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment by the Company
pursuant to the Offer, may also be withdrawn at any time after 12:00 Midnight,
New York City time, on Tuesday, June 17, 1997. For a withdrawal to be effective,
a notice of withdrawal must be in written, telegraphic or facsimile transmission
form and must be received in a timely manner by the Depositary at its address
set forth on the back cover of the Offer to Purchase. Any such notice of
withdrawal must specify the name of the tendering shareholder, the name of the
registered holder, if different from that of the person who tendered such
Shares, the number of Shares tendered and the number of Shares to be withdrawn.
If the certificates for Shares to be withdrawn have been delivered or otherwise
identified to the
<PAGE> 3
Depositary, then, prior to the release of such certificates, the tendering
shareholder must also submit the serial numbers shown on the particular
certificates for Shares to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution (as defined in the
Offer to Purchase) (except in the case of Shares tendered by an Eligible
Institution). If Shares have been tendered pursuant to the procedure for book-
entry tender set forth in the Offer to Purchase, the notice of withdrawal also
must specify the name and the number of the account at the applicable Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with the procedures of such facility.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY TENDERS ARE MADE. The
information required to be disclosed by Rule 13e-4(d)(1) under the Securities
Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is
incorporated herein by reference. The Offer to Purchase and the related Letter
of Transmittal are being mailed to record holders of Shares and are being
furnished to brokers, banks and similar persons whose names or the names of
whose nominees appear on the Company's shareholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
Additional copies of the Offer to Purchase and the Letter of Transmittal
may be obtained from the Depositary, the Information Agent or the Dealer Manager
and will be furnished promptly at the Company's expense.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free (800) 223-2064
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON
Eleven East Madison Avenue
New York, NY 10010
Call Toll-Free (800) 881-8320
April 22, 1997
<PAGE> 1
EXHIBIT (a)(11)
BRIGGS & STRATTON LOGO BRIGGS & STRATTON CORPORATION
- --------------------------------------------------------------------------------
April 22, 1997
To Our Shareholders:
Briggs & Stratton Corporation is offering to purchase up to 5,875,000
shares of its common stock (the "Shares"), or approximately 20% of the currently
outstanding Shares, from existing shareholders. The price will not be in excess
of $51.00 nor less than $43.00 per Share. Briggs & Stratton is conducting the
tender offer through a procedure known as a "Dutch Auction." This allows you to
select the price or prices within the specified range at which you are willing
to sell your Shares to Briggs & Stratton.
On April 15, 1997, the last trading day prior to the announcement of the
offer, the closing price per share for Briggs & Stratton common stock on the New
York Stock Exchange (the "NYSE") was $42.75, and on April 21, 1997, the last
trading day prior to the commencement of the offer, the closing price per share
on the NYSE was $47.25. Any shareholder whose Shares are purchased in the offer
will receive the total purchase price in cash and will not incur the usual
transaction costs associated with open market sales.
The offer is explained in detail in the Offer to Purchase and Letter of
Transmittal. We encourage you to read these materials carefully before making
any decision with respect to the offer. If you desire to tender your Shares, the
instructions on how to tender Shares are also explained in detail in the
accompanying materials.
Neither Briggs & Stratton nor its Board of Directors makes any
recommendation to any shareholder as to whether to tender or refrain from
tendering Shares. Each shareholder must make the decision whether to tender
Shares and, if so, how many Shares and at what price or prices Shares should be
tendered. Briggs & Stratton has been advised that none of its directors or
executive officers intends to tender any Shares pursuant to the offer.
Sincerely,
Frederick P. Stratton, Jr. John S. Shiely
Chairman and Chief Executive Officer President and Chief Operating Officer
<PAGE> 1
EXHIBIT (a)(12)
- --------------------------------------------------------------------------------
GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9
IRS INSTRUCTIONS
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.)
Purpose of Form. - A person who is required to file an information return with
the Internal Revenue Service (the IRS) must obtain your correct taxpayer
identification number (TIN) to report income paid to you, real-estate
transactions, mortgage interest you paid, the acquisition or abandonment of
secured property, or contributions you made to an individual retirement account
(IRA). Use Form W-9 to furnish your correct TIN to the requester (the person
asking you to furnish your TIN), and, when applicable, (1) to certify that the
TIN you are furnishing is correct (or that you are waiting for a number to be
issued), (2) to certify that you are not subject to backup withholding, and (3)
to claim exemption from backup withholding if you are an exempt payee.
Furnishing your correct TIN and making the appropriate certifications will
prevent certain payments from being subject to backup withholding.
Note: IF A REQUESTER GIVES YOU A FORM OTHER THAN A W-9 TO REQUEST YOUR TIN, YOU
MUST USE THE REQUESTER'S FORM.
How to Obtain a TIN. - If you do not have a TIN, apply for one immediately. To
apply, get FORM SS-5, Application for a Social Security Card (SSN) (for
individuals), from your local office of the Social Security Administration, or
FORM SS-4, Application for Employer Identification Number (EIN) (for businesses
and all other entities), from your local IRS office.
To complete Form W-9, if you do not have a TIN, write "Applied for" in the
space for the TIN in Part 1, sign and date the form, and give it to the
requester. Generally, you will then have 60 days to obtain a TIN and furnish it
to the requester. If the requester does not receive your TIN within 60 days,
backup withholding, if applicable, will begin and continue until you furnish
your TIN to the requester. For reportable interest or dividend payments, the
payer must exercise one of the following options concerning backup withholding
during this 60-day period. Under option (1), a payer must backup withhold on any
withdrawals you make from your account after 7 business days after the requester
receives this form back from you. Under option (2), the payer must backup
withhold on any reportable interest or dividend payments made to your account,
regardless of whether you make any withdrawals. The backup withholding under
option (2) must begin no later than 7 business days after the requester receives
this form back. Under option (2), the payer is required to refund the amounts
withheld if your certified TIN is received within the 60-day period and you were
not subject to backup withholding during the period.
Note: WRITING "APPLIED FOR" ON THE FORM MEANS THAT YOU HAVE ALREADY APPLIED FOR
A TIN OR THAT YOU INTEND TO APPLY FOR ONE IN THE NEAR FUTURE.
As soon as you receive your TIN, complete another Form W-9, include your TIN,
sign and date this form, and give it to the requester.
What is Backup Withholding? - Persons making certain payments to you after 1992
are required to withhold and pay to the IRS 31% of such payments under certain
conditions. This is called "backup withholding." Payments that could be subject
to backup withholding include interest, dividends, broker and barter exchange
transactions, rents, royalties, nonemployee compensation, and certain payments
from fishing boat operators, but do not include real estate transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
(1) You do not furnish your TIN to the requester, or
(2) The IRS notifies the requester that you furnished an incorrect TIN, or
(3) You are notified by the IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax return
(for reportable interest and dividends only), or
(4) You fail to certify to the requester that you are not subject to backup
withholding under (3) above (for reportable interest and dividend accounts
opened after 1983 only), or
(5) You fail to certify your TIN. This applies only to reportable interest,
dividend, broker, or barter exchange accounts opened after 1983, or broker
accounts considered inactive in 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies. Certain payees and payments
are exempt from backup withholding and information reporting. See PAYEES AND
PAYMENTS EXEMPT FROM BACKUP WITHHOLDING, below, and EXEMPT PAYEES AND PAYMENTS
under SPECIFIC INSTRUCTIONS, on page 2, if you are an exempt payee.
Payees and Payments Exempt From Backup Withholding. - The following is a list of
payees exempt from backup withholding and for which no information reporting is
required. For interest and dividends, all listed payees are exempt except item
(9). For broker transactions, payees listed in (1) through (13) and a person
registered under the Investment Advisers Act of 1940 who regularly acts as a
broker are exempt. Payments subject to reporting under sections 6041 and 6041A
are generally exempt from backup withholding only if made to payees described in
items (1) through (7), except that a corporation that provides medical and
health care services or bills and collects payments for such services is not
exempt from backup withholding or information reporting. Only payees described
in items (2) through (6) are exempt from backup withholding for barter exchange
transactions, patronage dividends, and payments by certain fishing boat
operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporation Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends generally not subject to backup
withholding also include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in trade or business in the U.S. and that
have at least one nonresidential partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
Note: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR MORE
AND IS PAID IN THE COURSE OF THE PAYER'S TRADE OR BUSINESS AND YOU HAVE NOT
PROVIDED YOUR CORRECT TIN TO THE PAYER.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045,
6049, 6050A, and 6050N, and their regulations.
<PAGE> 2
PENALTIES
Failure To Furnish TIN. - If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
Civil Penalty for False Information With Respect to Withholding. - If you make a
false statement with no reasonable basis that results in no backup withholding,
you are subject to a $500 penalty.
Criminal Penalty for Falsifying Information. -Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
Misuse of TINs. - If the requestor discloses or uses TINs in violation of
federal law, the requestor may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
Name. - If you are an individual, you must generally provide the name shown on
your social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security Administration
of the name change, please enter your first name, the last name shown on your
social security card and your new last name.
If you are a sole proprietor, you must furnish your individual name and either
your SSN or EIN. You may also enter your business name or "doing business as"
name on the business name line. Enter your name(s) as shown on your social
security card and/or as it was used to apply for your EIN on Form SS-4.
Signing the Certification. -
(1) Interest, Dividend, and Barter Exchange Accounts Opened Before 1984 and
Broker Accounts Considered Active During 1983. - You are required to furnish
your correct TIN, but you are not required to sign the certification.
(2) Interest, Dividend, Broker and Barter Exchange Accounts Opened After 1983
and Broker Accounts Considered Inactive During 1983. - You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item (2) in the certification before signing the form.
(3) Real Estate Transactions. - You must sign the certification. You may cross
out item (2) of the certification.
(4) Other Payments. - You are required to furnish your correct TIN, but you are
not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
(5) Mortgage Interest Paid by You, Acquisition or Abandonment of Secured
Property, or IRA Contributions. - You are required to furnish your correct TIN,
but you are not required to sign the certification.
(6) Exempt Payees and Payments. - If you are exempt from backup withholding, you
should complete this form to avoid possible erroneous backup withholding. Enter
your correct TIN in Part I, write "EXEMPT" in the block in Part II, sign and
date the form. If you are a nonresident alien or foreign entity not subject to
backup withholding, give the requester a completed FORM W-8. Certificate of
Foreign Status.
(7) TIN "Applied For". - Follow the instructions under HOW TO OBTAIN A TIN, on
page 1, check the box in Part II of the Substitute Form W-9 and sign and date
the form.
Signature. - For a joint account, only the person whose TIN is shown in Part I
should sign the form.
Privacy Act Notice. - Section 6109 requires you to furnish your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, or contributions you made to an
IRA. The IRS uses the numbers for identification purposes and to help verify the
accuracy of your tax return. You must provide your TIN whether or not you are
required to file a tax return. Payers must generally withhold 31% of taxable
interest, dividends, and certain other payments to a payee who does not furnish
a TIN to a payer. Certain penalties may also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
GIVE THE NAME
FOR THIS TYPE AND SOCIAL SECURITY
OF ACCOUNT: NUMBER OF:
- --------------------------------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more individuals The actual owner of the account
(joint account) or, if combined funds, the first
individual on the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust (grantor is
also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under state law
5. Sole proprietorship The owner(3)
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
GIVE THE NAME AND
FOR THIS TYPE EMPLOYER IDENTIFICATION
OF ACCOUNT: NUMBER OF:
- --------------------------------------------------------------------
<S> <C>
6. Sole proprietorship The owner(3)
7. A valid trust, estate or Legal entity(4)
pension trust
8. Corporate The corporation
9. a. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt organization
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the Department The public entity
of Agriculture in the name of
a public entity (such as a
state or local government,
school district, or prison)
that receives agricultural
program payments.
- --------------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the individual's name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title).
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE
CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE> 1
EXHIBIT (b)
================================================================================
$250,000,000
MULTICURRENCY CREDIT AGREEMENT
DATED AS OF APRIL 18, 1997
AMONG
BRIGGS & STRATTON CORPORATION
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS AGENT,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGED BY
BANCAMERICA SECURITIES, INC.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Certain Defined Terms . . . . . . . . . . . . . . . . . 1
1.02 Other Interpretive Provisions . . . . . . . . . . . . . 18
1.03 Accounting Principles . . . . . . . . . . . . . . . . . 19
1.04 Currency Equivalents Generally . . . . . . . . . . . . 20
ARTICLE II
THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.01 Amounts and Terms of Commitments. . . . . . . . . . . . 20
2.02 Loan Accounts . . . . . . . . . . . . . . . . . . . . . 20
2.03 Procedure for Committed Borrowing . . . . . . . . . . . 21
2.04 Conversion and Continuation Elections for Committed
Borrowings . . . . . . . . . . . . . . . . . . . . . . 22
2.05 Utilization of Commitments in Offshore Currencies . . . 23
2.06 Bid Borrowings . . . . . . . . . . . . . . . . . . . . 25
2.07 Procedure for Bid Borrowings . . . . . . . . . . . . . 25
2.08 Voluntary Termination or Reduction of Commitments . . . 28
2.09 Optional Prepayments. . . . . . . . . . . . . . . . . . 29
2.10 Currency Exchange Fluctuations . . . . . . . . . . . . 29
2.11 Mandatory Prepayments of Loans . . . . . . . . . . . . 29
2.12 Repayment . . . . . . . . . . . . . . . . . . . . . . . 30
(a) The Revolving Credit . . . . . . . . . . . . . 30
(b) Bid Loans . . . . . . . . . . . . . . . . . . . 30
2.13 Interest. . . . . . . . . . . . . . . . . . . . . . . . 30
2.14 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Arrangement, Agency Fees . . . . . . . . . . . 31
(b) Facility Fee . . . . . . . . . . . . . . . . . 31
2.15 Computation of Fees and Interest . . . . . . . . . . . 31
2.16 Payments by the Company . . . . . . . . . . . . . . . . 31
2.17 Payments by the Banks to the Agent . . . . . . . . . . 32
2.18 Sharing of Payments, Etc. . . . . . . . . . . . . . . . 33
ARTICLE III
THE LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . 33
3.01 The Letter of Credit Subfacility. . . . . . . . . . . . 33
3.02 Issuance, Amendment and Renewal of Letters of Credit. . 35
3.03 Risk Participations, Drawings and Reimbursements . . . 37
-i-
<PAGE> 3
3.04 Repayment of Participations . . . . . . . . . . . . . . 38
3.05 Role of the Issuing Bank . . . . . . . . . . . . . . . 39
3.06 Obligations Absolute . . . . . . . . . . . . . . . . . 39
3.07 Letter of Credit Fees . . . . . . . . . . . . . . . . . 40
3.08 Uniform Customs and Practice . . . . . . . . . . . . . 41
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . 41
4.01 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.02 Illegality . . . . . . . . . . . . . . . . . . . . . . 42
4.03 Increased Costs and Reduction of Return . . . . . . . . 43
4.04 Funding Losses . . . . . . . . . . . . . . . . . . . . 43
4.05 Inability to Determine Rates . . . . . . . . . . . . . 44
4.06 Reserves on Offshore Rate Loans . . . . . . . . . . . . 44
4.07 Certificates of Banks . . . . . . . . . . . . . . . . . 45
4.08 Substitution of Banks . . . . . . . . . . . . . . . . . 45
4.09 Survival . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE V
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 45
5.01 Conditions of Initial Credit Extensions . . . . . . . . 45
(a) Credit Agreement and Notes . . . . . . . . . . 45
(b) Resolutions; Incumbency . . . . . . . . . . . . 45
(c) Organization Documents; Good Standing . . . . . 46
(d) Legal Opinions . . . . . . . . . . . . . . . . 46
(e) Payment of Fees . . . . . . . . . . . . . . . . 46
(f) Certificate . . . . . . . . . . . . . . . . . . 46
(g) Other Documents . . . . . . . . . . . . . . . . 46
5.02 Conditions to All Credit Extensions . . . . . . . . . . 46
(a) Notice of Borrowing or Issuance . . . . . . . . 47
(b) Continuation of Representations and
Warranties . . . . . . . . . . . . . . . . . . 47
(c) No Existing Default . . . . . . . . . . . . . . 47
ARTICLE VI
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 47
6.01 Corporate Existence and Power . . . . . . . . . . . . . 47
6.02 Corporate Authorization; No Contravention . . . . . . . 48
6.03 Governmental Authorization . . . . . . . . . . . . . . 48
6.04 Binding Effect . . . . . . . . . . . . . . . . . . . . 48
6.05 Litigation . . . . . . . . . . . . . . . . . . . . . . 48
6.06 No Default . . . . . . . . . . . . . . . . . . . . . . 48
6.07 ERISA Compliance . . . . . . . . . . . . . . . . . . . 48
-ii-
<PAGE> 4
6.08 Use of Proceeds; Margin Regulations . . . . . . . . . . 49
6.09 Title to Properties . . . . . . . . . . . . . . . . . . 49
6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.11 Financial Condition . . . . . . . . . . . . . . . . . . 50
6.12 Environmental Matters . . . . . . . . . . . . . . . . . 50
6.13 Regulated Entities . . . . . . . . . . . . . . . . . . 50
6.14 Copyrights, Patents, Trademarks and Licenses, etc.. . . 50
6.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . 51
6.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . 51
6.17 Full Disclosure . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VII
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 51
7.01 Financial Statements . . . . . . . . . . . . . . . . . 51
7.02 Certificates; Other Information . . . . . . . . . . . . 52
7.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . 52
7.04 Preservation of Corporate Existence, Etc. . . . . . . . 53
7.05 Maintenance of Property . . . . . . . . . . . . . . . . 53
7.06 Insurance . . . . . . . . . . . . . . . . . . . . . . . 54
7.07 Payment of Obligations . . . . . . . . . . . . . . . . 54
7.08 Compliance with Laws . . . . . . . . . . . . . . . . . 54
7.09 Compliance with ERISA . . . . . . . . . . . . . . . . 54
7.10 Inspection of Property and Books and Records . . . . . 54
7.11 Environmental Laws . . . . . . . . . . . . . . . . . . 55
7.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . 55
7.13 Guarantors . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE VIII
NEGATIVE AND FINANCIAL COVENANTS . . . . . . . . . . . . . . . . 55
8.01 Limitation on Liens . . . . . . . . . . . . . . . . . . 55
8.02 Disposition of Assets . . . . . . . . . . . . . . . . . 57
8.03 Consolidations and Mergers . . . . . . . . . . . . . . . 58
8.04 Loans and Investments . . . . . . . . . . . . . . . . . 58
8.05 Limitation on Indebtedness . . . . . . . . . . . . . . . 59
8.06 Transactions with Affiliates . . . . . . . . . . . . . . 60
8.07 Contingent Obligations . . . . . . . . . . . . . . . . . 60
8.08 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.09 Change in Business . . . . . . . . . . . . . . . . . . . 60
8.10 Accounting Changes . . . . . . . . . . . . . . . . . . . 60
8.11 Financial Covenants . . . . . . . . . . . . . . . . . . 60
(a) Interest Coverage Ratio . . . . . . . . . . . . 60
(b) Leverage Ratio . . . . . . . . . . . . . . . . 61
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ARTICLE IX
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 61
9.01 Event of Default . . . . . . . . . . . . . . . . . . . . 61
(a) Non-Payment . . . . . . . . . . . . . . . . . . . 61
(b) Representation or Warranty . . . . . . . . . . . . 61
(c) Specific Defaults. . . . . . . . . . . . . . . . . 61
(d) Other Defaults . . . . . . . . . . . . . . . . . . 61
(e) Cross-Default . . . . . . . . . . . . . . . . . . 61
(f) Insolvency; Voluntary Proceedings . . . . . . . . 62
(g) Involuntary Proceedings . . . . . . . . . . . . . 62
(h) ERISA . . . . . . . . . . . . . . . . . . . . . . 62
(i) Monetary Judgments . . . . . . . . . . . . . . . . 62
(j) Change of Control. . . . . . . . . . . . . . . . . 62
9.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . 63
9.03 Rights Not Exclusive . . . . . . . . . . . . . . . . . . 63
ARTICLE X
THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.01 Appointment and Authorization; "Agent" . . . . . . . . . 64
10.02 Delegation of Duties . . . . . . . . . . . . . . . . . . 64
10.03 Liability of Agent . . . . . . . . . . . . . . . . . . . 64
10.04 Reliance by Agent . . . . . . . . . . . . . . . . . . . 64
10.05 Notice of Default . . . . . . . . . . . . . . . . . . . 65
10.06 Credit Decision . . . . . . . . . . . . . . . . . . . . 65
10.07 Indemnification of Agent . . . . . . . . . . . . . . . . 66
10.08 Agent in Individual Capacity . . . . . . . . . . . . . . 66
10.09 Successor Agent . . . . . . . . . . . . . . . . . . . . 66
10.10 Withholding Tax. . . . . . . . . . . . . . . . . . . . . 67
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.01 Amendments and Waivers . . . . . . . . . . . . . . . . . 68
11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . 69
11.03 No Waiver; Cumulative Remedies . . . . . . . . . . . . . 69
11.04 Costs and Expenses . . . . . . . . . . . . . . . . . . . 70
11.05 Company Indemnification . . . . . . . . . . . . . . . . 70
11.06 Payments Set Aside . . . . . . . . . . . . . . . . . . . 71
11.07 Successors and Assigns . . . . . . . . . . . . . . . . . 71
11.08 Assignments, Participations, etc. . . . . . . . . . . . 71
11.09 Confidentiality . . . . . . . . . . . . . . . . . . . . 72
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11.10 Set-off . . . . . . . . . . . . . . . . . . . . . . . . 73
11.11 Notification of Addresses, Lending Offices, Etc. . . . . 73
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . 73
11.13 Severability . . . . . . . . . . . . . . . . . . . . . . 74
11.14 No Third Parties Benefited . . . . . . . . . . . . . . . 74
11.15 Governing Law and Jurisdiction . . . . . . . . . . . . . 74
11.16 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . 74
11.17 Judgment . . . . . . . . . . . . . . . . . . . . . . . . 75
11.18 Entire Agreement . . . . . . . . . . . . . . . . . . . . 75
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MULTICURRENCY CREDIT AGREEMENT
This MULTICURRENCY CREDIT AGREEMENT is entered into as of April 18, 1997,
among BRIGGS & STRATTON CORPORATION, a Wisconsin corporation (the "Company"),
the several financial institutions from time to time party to this Agreement
(collectively, the "Banks"; individually, a "Bank"), and Bank of America
National Trust and Savings Association, as agent for the Banks.
WHEREAS, the Banks have agreed to make available to the Company a revolving
multicurrency credit facility with a letter of credit subfacility upon the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings:
"Absolute Rate" has the meaning specified in subsection 2.07(c).
"Absolute Rate Auction" means a solicitation of Competitive Bids setting
forth Absolute Rates pursuant to Section 2.07.
"Absolute Rate Bid Loan" means a Bid Loan that bears interest at a rate
determined with reference to the Absolute Rate.
"Acquisition" means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary) provided that the Company or the Subsidiary is the
surviving entity.
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, membership interests, by contract,
or otherwise.
<PAGE> 8
"Agent" means BofA in its capacity as agent for the Banks hereunder, and
any successor agent arising under Section 10.09.
"Agent-Related Persons" means, at any time, the Agent at such time,
together with its Affiliates (including, in the case of BofA, the Arranger), and
the officers, directors, employees, agents and attorneys-in-fact of such Persons
and Affiliates.
"Agent's Payment Office" means (a) in respect of payments in Dollars, the
address for payments set forth on Schedule 11.02 or such other address as the
Agent may from time to time specify in accordance with Section 11.02, and (b) in
the case of payments in any Offshore Currency, such address as the Agent may
from time to time specify in accordance with Section 11.02.
"Agreed Alternative Currency" has the meaning specified in subsection
2.05(e).
"Agreement" means this Multicurrency Credit Agreement, as the same may be
amended, supplemented, restated or otherwise modified from time to time.
"Agreement Currency" has the meaning specified in Section 11.17.
"Applicable Currency" means, as to any particular payment, Loan or Letter
of Credit, Dollars or the Offshore Currency in which it is denominated or is
payable.
"Applicable Credit Rating" shall mean the rating level assigned by S&P or
Moody's , as the case may be, from time to time on the long-term senior debt of
the Company which ranks on a parity, as to payment and security, with the
Obligations.
"Applicable Margin" shall mean on any date the applicable percentage set
forth below based upon the Level then in existence:
With Respect With Respect
Level to Offshore Rate to the Facility
----- Committed Loans Fee
--------------- --------------------
I .170% .080%
II .200% .100%
III .250% .125%
IV .300% .150%
V .425% .200%
Until the earlier of (x) the date upon which each of S&P and Moody's have
assigned an Applicable Credit Rating (such date, the "Rating Reset Date") and
(y) the date upon which the Company has completed its repurchase (after the
Closing Date) of at least three million shares of its common stock
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<PAGE> 9
(such date, the "Repurchase Reset Date"), the Applicable Margin shall be deemed
to be Level I. In the event that the Rating Reset Date has not occurred on or
prior to the Repurchase Reset Date, the Applicable Margin on and after the
Repurchase Reset Date shall be deemed to be Level III; provided, however, that
in the event that the Rating Reset Date still has not occurred within 60 days
after the Closing Date and the Repurchase Reset Date has occurred, then the
Applicable Margin shall be deemed to be Level IV. Notwithstanding the
foregoing, the Applicable Margin then in effect shall be adjusted, if necessary,
(i) on the Rating Reset Date, and thereafter shall be adjusted, as applicable
from time to time, contemporaneously with any change in the Applicable Credit
Rating, and (ii) no reduction in the Applicable Margin shall be effected if a
Default or an Event of Default shall have occurred and be continuing on the
date when such change would otherwise occur, it being understood that on the
third Business Day immediately succeeding the day on which such Default or Event
of Default is either waived or cured (assuming no other Default or Event of
Default shall be then pending), the Applicable Margin shall be reduced (on a
prospective basis) in accordance with the then Applicable Credit Rating.
"Arranger" means BancAmerica Securities, Inc., a Delaware corporation.
"Assignee" has the meaning specified in subsection 11.08(a).
"Assignment and Acceptance" has the meaning specified in subsection
11.08(a).
"Attorney Costs" means and includes all reasonable out-of-pocket fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and disbursements of internal
counsel.
"Bank" has the meaning specified in the introductory clause hereto.
"Banking Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in New York City, Chicago or San Francisco are authorized
or required by law to close and (a) with respect to disbursements and payments
in Dollars, a day on which dealings are carried on in the applicable offshore
Dollar interbank market, and (b) with respect to any disbursements and payments
in and calculations pertaining to any Offshore Currency Loan, a day on which
commercial banks are open for foreign exchange business in London, England, and
on which dealings in the relevant Offshore Currency are carried on in the
applicable offshore foreign exchange interbank market in which disbursement of
or payment in such Offshore Currency will be made or received hereunder.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101, et seq.).
"Base Rate" means, for any day, the higher of:
(a) one-half of one percent (0.50%) per annum above the latest
Federal Funds Rate and (b) the rate of interest in effect for such day as
publicly announced from time to time by
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BofA in San Francisco, California, as its "reference rate." (The "reference
rate" is a rate set by BofA based upon various factors including BofA's costs
and desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above, or
below such announced rate.)
Any change in the reference rate announced by BofA shall take effect at the
opening of business on the day specified in the public announcement of such
change.
"Base Rate Committed Loan" means a Loan that bears interest based on the
Base Rate.
"Bid Borrowing" means a Borrowing hereunder consisting of one or more Bid
Loans made to the Company on the same day by one or more Banks.
"Bid Loan" means a Loan by a Bank to the Company under Section 2.06, which
may be a LIBOR Bid Loan or an Absolute Rate Bid Loan.
"Bid Loan Lender" means, in respect of any Bid Loan, the Bank making such
Bid Loan to the Company.
"Bid Loan Note" has the meaning specified in Section 2.02.
"BofA" means Bank of America National Trust and Savings Association, a
national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans of the same
Type and in the same Applicable Currency made to the Company on the same day by
the Banks under Article II, and may be a Committed Borrowing or a Bid Borrowing
and, other than in the case of Base Rate Committed Loans, having the same
Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs under Section
2.03.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in New York City, Chicago or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means a Banking Day.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Lease" has the meaning specified in the definition of "Capital
Lease Obligations."
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"Capital Lease Obligations" means the principal component of all monetary
obligations of the Company or any of its Subsidiaries under any leasing or
similar arrangement which, in accordance with GAAP, is classified as a capital
lease ("Capital Lease").
"Cash Collateralize" means to pledge and deposit with or deliver to the
Agent, for the benefit of the Agent, the Issuing Bank and the Banks, as
collateral for the L/C Obligations, cash or deposit account balances pursuant to
documentation in form and substance reasonably satisfactory to the Agent and the
Issuing Bank (which documents are hereby consented to by the Banks). Derivatives
of such term shall have corresponding meanings.
"Change in Control" means (a) the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 20% or more of the outstanding shares of voting stock of the
Company, or (b) during any period of twelve consecutive calendar months,
individuals who at the beginning of such period constituted the Company's board
of directors (together with any new directors whose election by the Company's
board of directors or whose nomination for election by the Company's
stockholders was approved by a vote of at least a majority of the directors then
still in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reasons other than death or disability to constitute a majority of the
directors then in office.
"Closing Date" means the date on which all conditions precedent set forth
in Section 5.01 are satisfied or waived by all Banks (or, in the case of
subsection 5.01(e), waived by the Person entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986, and regulations promulgated
thereunder, in each case, as amended from time to time.
"Commitment", as to each Bank, has the meaning specified in Section 2.01.
"Committed Borrowing" means a Borrowing hereunder consisting of Committed
Loans made on the same day by the Banks ratably according to their respective
Pro Rata Shares and, in the case of Offshore Rate Committed Loans, having the
same Interest Periods.
"Committed Loan" means a Loan by a Bank to the Company under Section 2.01,
and may be an Offshore Rate Committed Loan or a Base Rate Committed Loan (each,
a "Type" of Committed Loan).
"Committed Loan Note" has the meaning specified in Section 2.02.
"Competitive Bid" means an offer by a Bank to make a Bid Loan in accordance
with subsection 2.07(b).
"Competitive Bid Request" has the meaning specified in subsection 2.07(a).
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<PAGE> 12
"Compliance Certificate" means a certificate substantially in the form of
Exhibit C.
"Computation Date" has the meaning specified in subsection 2.05(a).
"Consolidated Interest Expense" means, for any period, the sum of total
interest expense (including that attributable to Capital Leases in accordance
with GAAP) of the Company and its Subsidiaries on a consolidated basis with
respect to all outstanding Indebtedness of the Company and its Subsidiaries,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, all as determined on a consolidated basis for the Company and its
consolidated Subsidiaries in accordance with GAAP.
"Consolidated Net Income" means, for any period, the aggregate of the net
income of the Company and its Subsidiaries for such period, determined in
accordance with GAAP on a consolidated basis, provided that (i) the net income
of any other Person which is not a Subsidiary of the Company shall be included
in the Consolidated Net Income of the Company only to the extent of the amount
of cash dividends or distributions paid to the Company or to a consolidated
Subsidiary of the Company and (ii) the net income of any other Person acquired
in a pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded from the Consolidated Net Income of the Company.
There shall be excluded in computing Consolidated Net Income for the Company the
excess (or the deficit), if any, of (i) any gain which must be treated as an
extraordinary item under GAAP or any gain realized upon the sale or other
disposition of any real property or equipment that is not sold in the ordinary
course of business or of any capital stock owned by the Company or its
Subsidiaries over (ii) any loss which must be treated as an extraordinary item
under GAAP or any loss realized upon the sale or other disposition of any real
property or equipment that is not sold in the ordinary course of business or of
any capital stock owned by the Company or its Subsidiaries.
"Contingent Obligation" means, as to any Person, any direct or indirect
liability of that Person, whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof (each, a "Guaranty Obligation"); (b) with respect to any Surety
Instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; or (c) to purchase
any materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless
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<PAGE> 13
of whether delivery of such materials, supplies or other property is ever made
or tendered, or such services are ever performed or tendered. The amount of
any Contingent Obligation shall, in the case of Guaranty Obligations, be deemed
equal to the stated or determinable amount of the primary obligation in respect
of which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect
thereof; provided that if any Guaranty Obligation (a) is limited to an amount
less than the obligations guaranteed or supported the amount of the
corresponding Contingent Obligation shall be equal to the lesser of the amount
determined pursuant to the initial clause of this sentence and the amount to
which such guaranty is so limited or (b) is limited to recourse against a
particular asset or assets of such Person the amount of the corresponding
Contingent Obligation shall be equal to the lesser of the amount determined
pursuant to the initial clause of this sentence and the fair market value of
such asset or assets at the date for determination of the amount of the
Contingent Obligation. In the case of other Contingent Obligations, such
Contingent Obligations shall be equal to the maximum reasonably anticipated
liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under Section 2.04,
the Company (a) converts Committed Loans of one Type to another Type, or (b)
continues as Committed Loans of the same Type, but with a new Interest Period,
Committed Loans having Interest Periods expiring on such date.
"Credit Extension" means and includes (a) the making of any Loans hereunder
and (b) the Issuance of any Letters of Credit hereunder.
"Credit Termination Date" means the earlier to occur of:
(a) April 18, 2002;
(b) May 15, 1997, if the Company shall not have satisfied the
conditions contained in Section 5.01 on or prior to such date; and
(c) the date on which the Commitments terminate in accordance with
the provisions of this Agreement.
"Default" means any event or circumstance which, with the giving of notice
pursuant to this Agreement, the expiration of any cure period specified herein,
or both, would (if not cured or otherwise remedied during such cure period)
constitute an Event of Default.
"Disposition" has the meaning specified in Section 8.02.
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<PAGE> 14
"Dollar Equivalent" means, at any time, (a) as to any amount denominated in
Dollars, the amount thereof at such time and (b) as to any amount denominated in
an Offshore Currency, the equivalent amount in Dollars as determined by the
Agent at such time on the basis of the Spot Rate for the purchase of Dollars
with such Offshore Currency on the most recent Computation Date provided for in
subsection 2.05(a).
"Dollars", "dollars" and "$" each mean lawful money of the United States.
"EBIT" means, for any period, for the Company and its Subsidiaries on a
consolidated basis, determined in accordance with GAAP, the sum of (a)
Consolidated Net Income (or loss) for such period plus (b) all amounts treated
as expenses for interest to the extent included in the determination of such
Consolidated Net Income (or loss), plus (c) all accrued taxes on or measured by
income to the extent included in the determination of such Consolidated Net
Income (or loss).
"Effective Amount" means (i) with respect to any Committed Loans on any
date, the aggregate outstanding principal Dollar Equivalent amount thereof after
giving effect to any Committed Borrowings and prepayments or repayments of
Committed Loans occurring on such date; and (ii) with respect to any outstanding
L/C Obligations on any date, the Dollar Equivalent amount of such L/C
Obligations on such date after giving effect to any Issuances of Letters of
Credit occurring on such date and any other changes in the aggregate Dollar
Equivalent amount of the L/C Obligations as of such date, including as a result
of any reimbursements of outstanding unpaid drawings under any Letters of Credit
or any reductions in the maximum amount available for drawing under Letters of
Credit taking effect on such date.
"Eligible Assignee" means (a) a commercial bank or financial institution
organized under the laws of the United States, or any state thereof, and having
a combined capital and surplus of at least $200,000,000; (b) a commercial bank
or financial institution organized under the laws of any other country which is
a member of the Organization for Economic Cooperation and Development (the
"OECD"), or a political subdivision of any such country, and having a combined
capital and surplus of at least $200,000,000, provided that such bank or
financial institution is acting through a branch or agency located in the United
States; and (c) a Person that is primarily engaged in the business of commercial
banking and that is (i) a Subsidiary of a Bank, (ii) a Subsidiary of a Person of
which a Bank is a Subsidiary, or (iii) a Person of which a Bank is a Subsidiary.
"Emerging Market Entity" means a Person (other than an individual or a
Governmental Authority) formed under the laws of an Emerging Market Territory
which is not an Emerging Market Subsidiary.
"Emerging Market Subsidiary" means a Subsidiary of the Company formed under
the laws of an Emerging Market Territory.
"Emerging Market Territory" means (i) China, the Czech Republic, India,
the United Mexican States and Russia and (ii) any other territory requested by
the Company to be an Emerging
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<PAGE> 15
Market Territory and approved by the Agent (such approval to be promptly
communicated to the Banks).
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with the Company within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization the liability with respect to which has not been satisfied;
(d) the filing of a notice of intent to terminate, the treatment of a Plan
amendment as a termination under Section 4041 or 4041A of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Company or
any ERISA Affiliate.
"Eurodollar Reserve Percentage" has the meaning specified in the definition
of "Offshore Rate."
"Event of Default" means any of the events or circumstances specified in
Section 9.01.
"Exchange Act" means the Securities Exchange Act of 1934, and regulations
promulgated thereunder, in each case, as amended from time to time.
"Facility Fee" has the meaning specified in subsection 2.14(b).
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"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Business Day, the rate for such day will be the arithmetic mean
as determined by the Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by
each of three leading brokers of Federal funds transactions in New York City
selected by the Agent.
"Fee Letter" has the meaning specified in subsection 2.14(a).
"FRB" means the Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions.
"FX Trading Office" means the Foreign Exchange Trading Center of the Agent,
or such other of the Agent's offices as the Agent may designate from time to
time.
"Further Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar charges
(including, without limitation, net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account of
amounts payable or paid pursuant to Section 4.01.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of (a) in the case of
computations pursuant to Section 8.11, the date of this Agreement and (b) in all
other cases, the applicable date.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
"Honor Date" has the meaning specified in subsection 3.03(b).
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"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business on ordinary terms); (c)
all non-contingent reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to property
acquired by the Person (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or
sale of such property); (f) all principal obligations with respect to Capital
Leases; (g) all indebtedness referred to in clauses (a) through (f) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness;
and (h) all Guaranty Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (a) through (g) above. In the event
any of the foregoing Indebtedness is limited to recourse against a particular
asset or assets of such Person, the amount of the corresponding Indebtedness
shall be equal to the lesser of the amount of such Indebtedness and the fair
market value of such asset or assets at the date for determination of the amount
of such Indebtedness. In addition, the amount of any Indebtedness which is also
a Contingent Obligation shall be determined as provided in the definition of
"Contingent Obligation."
"Indemnified Liabilities" has the meaning specified in Section 11.05.
"Indemnified Person" has the meaning specified in Section 11.05.
"Independent Auditor" has the meaning specified in subsection 7.01(a).
"Insolvency Proceeding" means, with respect to any Person, (a) any case,
action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors, or (b)
any general assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
"Interest Coverage Ratio" means the ratio of (a) EBIT to (b) Consolidated
Interest Expense.
"Interest Payment Date" means, as to any Loan other than a Base Rate
Committed Loan, the last day of each Interest Period applicable to such Loan
and, as to any Base Rate Committed Loan, the last Business Day of each calendar
quarter and each date such Base Rate Committed Loan is converted into another
Type of Loan, provided, however, that if any Interest Period for an Offshore
Rate Loan or an Absolute Rate Bid Loan exceeds three months, the date that falls
three months after
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the beginning of such Interest Period and after each Interest Payment Date
thereafter is also an Interest Payment Date.
"Interest Period" means, (a) as to any Offshore Rate Loan, the period
commencing on the Borrowing Date such Loan is disbursed, or (in the case of any
Offshore Rate Committed Loan) on the Conversion/Continuation Date on which the
Loan is converted into or continued as an Offshore Rate Committed Loan, and
ending on the date one, two, three or six months thereafter as selected by the
Company in its Notice of Borrowing, Notice of Conversion/Continuation or
Competitive Bid Request, as the case may be; and (b) as to any Absolute Rate Bid
Loan, a period of not less than 7 days and not more than 183 days as selected by
the Company in the applicable Competitive Bid Request;
provided that:
(i) if any Interest Period would otherwise end on a day that is not
a Business Day, that Interest Period shall be extended to the following
Business Day unless, in the case of an Offshore Rate Loan, the result of
such extension would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the preceding
Business Day;
(ii) any Interest Period pertaining to an Offshore Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of the calendar
month at the end of such Interest Period; and
(iii) no Interest Period for any Loan shall extend beyond the Credit
Termination Date.
"Investments" has the meaning specified in Section 8.04.
"Invitation for Competitive Bids" means a solicitation for Competitive
Bids, substantially in the form of Exhibit F.
"IRS" means the Internal Revenue Service, and any Governmental Authority
succeeding to any of its principal functions under the Code.
"Issuance Date" has the meaning specified in subsection 3.01(a).
"Issue" means, with respect to any Letter of Credit, to issue or to extend
the expiry of, or to renew or increase the amount of, such Letter of Credit; and
the terms "Issued," "Issuing" and "Issuance" have corresponding meanings.
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"Issuing Bank" means, with respect to any Letter of Credit, BofA or any
Bank which at the request of the Company (and the consent of the Agent) agrees,
in such Bank's sole discretion, to become an Issuing Bank for purposes of
Issuing Letters of Credit pursuant to Article III.
"Joint Venture" means a single-purpose corporation, partnership, limited
liability company, joint venture or other similar legal arrangement (whether
created by contract or conducted through a separate legal entity) now or
hereafter formed by the Company or any of its Subsidiaries with another Person
in order to conduct a common venture or enterprise with such Person.
"Judgment Currency" has the meaning specified in Section 11.17.
"L/C Advance" means each Bank's participation in any L/C Borrowing in
accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for amendment of
outstanding standby or commercial documentary letters of credit as shall at any
time be in use at the Issuing Bank, as the Issuing Bank shall request.
"L/C Application" means an application form for issuances of standby or
commercial documentary letters of credit as shall at any time be in use at the
Issuing Bank, as the Issuing Bank shall request.
"L/C Borrowing" means an extension of credit resulting from a drawing under
any Letter of Credit which shall not have been reimbursed on the date when made
nor converted into a Committed Borrowing of Committed Loans under subsection
3.03(d).
"L/C Commitment" means the commitment of the Issuing Bank to Issue, and the
commitment of the Banks severally to participate in, Letters of Credit from time
to time Issued or outstanding under Article III in an aggregate Dollar
Equivalent amount not to exceed on any date $50,000,000, as the same may be
reduced as a result of a reduction in the L/C Commitment pursuant to Section
2.08; provided that the L/C Commitment is a part of the combined Commitments,
rather than a separate, independent commitment.
"L/C Obligations" means, at any time, the sum of (a) the aggregate undrawn
Dollar Equivalent amount of all Letters of Credit then outstanding, plus (b) the
Dollar Equivalent amount of all unreimbursed drawings under all Letters of
Credit, including all outstanding L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C Applications,
the L/C Amendment Applications and any other document relating to any Letter of
Credit, including any of the Issuing Bank's standard form documents for letter
of credit issuances.
"Lending Office" means, as to any Bank, the office or offices of such Bank
specified as its "Lending Office" or "Domestic Lending Office" or "Offshore
Lending Office", as the case may be,
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on Schedule 11.02, or such other office or offices as such Bank may from time
to time notify the Company and the Agent.
"Letters of Credit" means any letters of credit (whether standby letters of
credit or commercial documentary letters of credit) Issued by the Issuing Bank
pursuant to Article III.
"Level" means, and includes, Level I, Level II, Level III, Level IV and
Level V, whichever is in effect at the relevant time; provided, however, that in
the event that the Applicable Credit Ratings assigned by S&P and Moody's at any
time are in different Levels, and the differential is (x) one Level, then the
Level shall be deemed to be the Level of the higher Applicable Credit Rating or
(y) two or more Levels, then the Level shall be deemed be the Level directly
below the Level of the higher Applicable Credit Rating.
"Level I" shall exist at any time the Applicable Credit Rating of S&P is
equal to or greater than A- and the Applicable Credit Rating of Moody's is equal
to or greater than A3.
"Level II" shall exist at any time the Applicable Credit Rating of S&P is
equal to BBB+ and the Applicable Credit Rating of Moody's is equal to Baa1.
"Level III" shall exist at any time the Applicable Credit Rating of S&P is
equal to BBB and the Applicable Credit Rating of Moody's is equal to Baa2.
"Level IV" shall exist at any time the Applicable Credit Rating of S&P is
equal to BBB- and the Applicable Credit Rating of Moody's is equal to Baa3.
"Level V" shall exist at any time the Applicable Credit Rating of S&P is
less than BBB- and the Applicable Credit Rating of Moody's is less than Baa3.
"LIBOR" has the meaning specified in the definition of "Offshore Rate."
"LIBOR Auction" means a solicitation of Competitive Bids setting forth a
LIBOR Bid Margin pursuant to Section 2.07.
"LIBOR Bid Loan" means any Bid Loan that bears interest at a rate based
upon LIBOR.
"LIBOR Bid Margin" has the meaning specified in subsection 2.07(c)(ii)(C).
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by, conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such lien relates
as debtor, under the Uniform Commercial Code or any comparable law) and any
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<PAGE> 21
contingent or other agreement to provide any of the foregoing, but, in any such
case, not including the interest of a lessor under an operating lease.
"Loan" means an extension of credit by a Bank to the Company under Article
II, and may be a Committed Loan or a Bid Loan.
"Loan Documents" means this Agreement, any Notes, the Fee Letter, the
L/C-Related Documents and all other documents, agreements or guaranties
delivered to the Agent or any Bank by the Company and/or its Subsidiaries in
connection herewith.
"Margin Stock" means "margin stock" as such term is defined in Regulation
G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Company or the Company and its
Subsidiaries taken as a whole; (b) a material impairment of the ability of the
Company to perform its obligations under any Loan Document and to avoid any
Event of Default; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability against the Company of any of the Loan
Documents.
"Material Subsidiary" means, at any time, any Subsidiary of the Company the
total assets of which constitute 10% or more of the total consolidated assets of
the Company and its Subsidiaries, in each case, determined in accordance with
GAAP.
"Minimum Tranche" means, in respect of Loans comprising part of the same
Borrowing, or to be converted or continued under Section 2.04, (a) in the case
of Base Rate Committed Loans, $5,000,000 or any multiple of $1,000,000 in excess
thereof, and (b) in the case of Offshore Rate Committed Loans, the Dollar
Equivalent amount of $10,000,000 or any multiple of 1,000,000 units of the
Applicable Currency in excess thereof.
"Moody's" means Moody's Investors Service, Inc., and any successor thereto.
"Multiemployer Plan" means a "multiemployer plan", within the meaning of
Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes,
is making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.
"Notes" means the Committed Loan Notes and the Bid Loan Notes.
"Notice of Borrowing" means a notice in substantially the form of Exhibit
A.
"Notice of Conversion/Continuation" means a notice in substantially the
form of Exhibit B.
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"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Company to any
Bank, the Agent, or any Indemnified Person, whether direct or indirect
(including those acquired by assignment pursuant to subsection 11.08(a)),
absolute or contingent, due or to become due, now existing or hereafter arising.
"Offshore Currency" means, at any time, German deutsche marks, British
pounds sterling and French francs, and any Agreed Alternative Currency.
"Offshore Currency Loan" means any Offshore Rate Committed Loan denominated
in an Offshore Currency.
"Offshore Currency Loan Sublimit" means, as to all Offshore Currencies in
the aggregate, $50,000,000.
"Offshore Rate" means, for any Interest Period, with respect to Offshore
Rate Committed Loans comprising part of the same Borrowing, the rate of interest
per annum (rounded upward to the next 1/16th of 1%) determined by the Agent as
follows:
Offshore Rate = LIBOR
--------------------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded
upward to the next 1/100th of 1%) in effect on such day (whether or not
applicable to any Bank) under regulations issued from time to time by the
FRB for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) with respect
to Eurocurrency funding (currently referred to as "Eurocurrency
liabilities"); and
"LIBOR" means the rate of interest per annum determined by the Agent
to be the rate of interest per annum at which deposits, in the Applicable
Currency in the approximate amount of the Loan to be made or continued as,
or converted into, an Offshore Rate Loan by the Agent and having a maturity
comparable to such Interest Period, would be offered to major banks in the
London interbank market at their request at approximately 11:00 a.m.
(London time) two Banking Days prior to the commencement of such Interest
Period rounded upwards to the next 1/16th of 1%.
The Offshore Rate shall be adjusted automatically as to all Offshore
Rate Committed Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Offshore Rate Committed Loan" means any Committed Loan that bears interest
based on the Offshore Rate.
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"Offshore Rate Loan" means any LIBOR Bid Loan or any Offshore Rate
Committed Loan.
"Organization Documents" means, for any corporation, the certificate or
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the board of
directors (or any committee thereof) of such corporation.
"originating Bank" has the meaning specified in subsection 11.08(d).
"Other Taxes" means any present or future stamp, court or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, this Agreement or
any other Loan Documents.
"Overnight Rate" means, for any day, the rate of interest per annum at
which overnight deposits in the Applicable Currency, in an amount approximately
equal to the amount with respect to which such rate is being determined, would
be offered for such day by BofA's London Branch to major banks in the London or
other applicable offshore interbank market.
"Participant" has the meaning specified in subsection 11.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental
Authority succeeding to any of its principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA (other than a Multiemployer Plan) which the Company
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five (5) plan years.
"Permitted Liens" has the meaning specified in Section 8.01.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which the Company sponsors or maintains or to which the Company makes, is
making, or is obligated to make contributions (other than a Multiemployer Plan)
and includes any Pension Plan.
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Bank's Commitment divided by the combined Commitments of all Banks.
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"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.
"Required Banks" means (a) at any time prior to the Credit Termination
Date, Banks then holding at least 51% of the then aggregate unpaid principal
amount of the Loans, or, if no Loans are outstanding, Banks then having at least
51% of the aggregate amount of the Commitments and (b) at all other times, Banks
then holding at least 51% of the then aggregate unpaid principal amount of the
Credit Extensions.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Responsible Officer" means the chief executive officer, president or any
vice president of the Company, or any other officer having substantially the
same authority and responsibility; or, with respect to compliance with financial
covenants, the chief financial officer or the treasurer of the Company, or any
other officer having substantially the same authority and responsibility.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill
Companies, and any successor thereto.
"Same Day Funds" means (a) with respect to disbursements and payments in
Dollars, immediately available funds, and (b) with respect to disbursements and
payments in an Offshore Currency, same day or other funds as may be reasonably
determined by the Agent to be customary in the place of disbursement or payment
for the settlement of international banking transactions in the relevant
Offshore Currency.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Spot Rate" for a currency means the rate quoted by the Agent as the spot
rate for the purchase by the Agent of such currency with another currency
through its FX Trading Office at approximately 11:00 a.m. (Chicago time) on the
date two Banking Days prior to the date as of which the foreign exchange
computation is made.
"Subsidiary" of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than 50% of the voting stock, membership interests or other equity interests (in
the case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Company.
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"Surety Instruments" means all letters of credit (including standby and
commercial), banker's acceptances, bank guaranties, shipside bonds, surety
bonds, performance bonds and similar instruments.
"Taxes" means any and all present or future taxes, levies, assessments,
imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
Agent, respectively, taxes imposed on or measured by its net income by the
jurisdiction (or any political subdivision thereof) under the laws of which such
Bank or the Agent, as the case may be, is organized or maintains a lending
office.
"Total Capitalization" means, at any time, the sum at such time of (a) the
Company's total stockholders' equity plus (b) Total Debt.
"Total Debt" means, at any time, the sum of the current and long-term
indebtedness obligations for money borrowed, drawn and unreimbursed letters of
credit, drawn and unreimbursed surety bonds, the amount of mandatory redeemable
preferred stock of the Company, Capital Lease Obligations and, without
duplication, Contingent Obligations in respect of any of the foregoing, in each
case, of the Company and its Subsidiaries on a consolidated basis.
"Type" has the meaning specified in the definition of "Committed Loan."
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"United States" and "U.S." each means the United States of America.
"Wholly-Owned Subsidiary" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of each
class having ordinary voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any determination is being made, is
owned, beneficially and of record, by the Company, or by one or more of the
other Wholly-Owned Subsidiaries, or both.
1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
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(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including"; the
words "to" and "until" each mean "to but excluding", and the word "through"
means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms. Unless otherwise expressly
provided, any reference to any action of the Agent or the Banks by way of
consent, approval or waiver shall be deemed modified by the phrase "in its/their
sole discretion".
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Company
and the other parties, and are the products of all parties. Accordingly, it
shall not be construed against the Banks or the Agent merely because of the
Agent's or Banks' involvement in their preparation.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer
to such fiscal periods of the Company.
1.04 Currency Equivalents Generally. For all purposes of this Agreement
(but not for purposes of the preparation of any financial statements delivered
pursuant hereto), the equivalent in any Offshore Currency or other currency of
an amount in Dollars, and the equivalent in Dollars of an amount in any Offshore
Currency or other currency, shall be determined at the Spot Rate.
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ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on the
terms and conditions set forth herein, to make loans on a revolving credit basis
to the Company (each such loan, a "Committed Loan") from time to time on any
Business Day during the period from the Closing Date to, but not including, the
Credit Termination Date, in an aggregate principal Dollar Equivalent amount not
to exceed at any time outstanding the amount set forth opposite the Bank's name
in Schedule 2.01 under the heading "Commitment" (such amount as the same may be
reduced pursuant to Section 2.08 or as a result of one or more assignments
pursuant to Section 11.08, the Bank's "Commitment"); provided, however, that,
after giving effect to any Committed Borrowing of Committed Loans, the aggregate
principal Dollar Equivalent amount of all outstanding Committed Loans, together
with the aggregate principal amount of all Bid Loans outstanding and L/C
Obligations, shall not exceed the combined Commitments; and provided further,
that after giving effect to any Committed Borrowing of Offshore Currency Loans,
the aggregate principal Dollar Equivalent amount of all outstanding Offshore
Currency Loans shall not exceed the Offshore Currency Loan Sublimit. Within the
limits of each Bank's Commitment, and subject to the other terms and conditions
hereof, the Company may borrow under this Section 2.01, prepay pursuant to
Section 2.09 and reborrow pursuant to this Section 2.01.
2.02 Loan Accounts. (a) The Loans made by each Bank shall be evidenced by
one or more loan accounts or records maintained by such Bank in the ordinary
course of business. The loan accounts or records maintained by the Agent and
each Bank shall be prima facie evidence of the amount of the Loans made by the
Banks to the Company and the interest and payments thereon. Any failure so to
record or any error in doing so shall not, however, limit or otherwise affect
the obligation of the Company hereunder to pay any amount owing with respect to
the Loans.
(b) Upon the request of any Bank made through the Agent, the
Committed Loans made by such Bank may be evidenced by one or more notes in
substantially the form of Exhibit I hereto ("Committed Loan Notes") and the Bid
Loans made by such Bank may be evidenced by one or more notes in substantially
the form of Exhibit J hereto ("Bid Loan Notes"), instead of or in addition to
loan accounts. Each such Bank shall endorse on the schedules annexed to its
Note(s) the date, amount and maturity of each Loan made by it and the amount of
each payment of principal made by the Company with respect thereto. Each such
Bank is irrevocably authorized by the Company to endorse its Note(s) and each
Bank's record shall be deemed prima facie correct; provided, however, that the
failure of a Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of the
Company hereunder or under any such Note to such Bank to pay principal or
interest.
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2.03 Procedure for Committed Borrowing.
(a) Each Committed Borrowing shall be made upon the Company's
irrevocable written notice delivered to the Agent in the form of a Notice of
Borrowing (which notice must be received by the Agent prior to (i) 10:30 a.m.
(Chicago time) four Business Days prior to the requested Borrowing Date, in the
case of Offshore Currency Loans; (ii) 11:30 a.m. (Chicago time) three Business
Days prior to the requested Borrowing Date, in the case of Offshore Rate Loans
denominated in Dollars; and (iii) 10:30 a.m. (Chicago time) on the requested
Borrowing Date, in the case of Base Rate Committed Loans, in any such case,
specifying:
(A) the amount of the Committed Borrowing, which shall be
in an aggregate amount not less than the Minimum Tranche;
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) the Type of Loans comprising the Committed Borrowing;
(D) the duration of the Interest Period applicable to any
Offshore Rate Loans included in such notice. If the Notice of
Borrowing fails to specify the duration of the Interest Period for any
Committed Borrowing comprised of Offshore Rate Loans, such Interest
Period shall be one month; and
(E) in the case of a Committed Borrowing comprised of
Offshore Currency Loans, the Applicable Currency;
provided, however, that if so requested by the Agent, all Committed Borrowings
during the first 60 days following the Closing Date shall have the same
Interest Period and shall be, at the Borrower's option, Base Rate Committed
Loans or Offshore Rate Committed Loans in Dollars for Interest Periods no
longer than one month.
(b) Upon receipt of the Notice of Borrowing, the Agent will
promptly notify each Bank thereof and of the amount of such Bank's Pro Rata
Share of the Committed Borrowing. In the case of a Committed Borrowing
comprised of Offshore Currency Loans, such notice will provide the approximate
amount of each Bank's Pro Rata Share of the Committed Borrowing, and the Agent
will, upon the determination of the Dollar Equivalent amount of the Committed
Borrowing as specified in the Notice of Borrowing, promptly notify each Bank of
the exact Dollar Equivalent amount of such Bank's Pro Rata Share of the
Committed Borrowing. The Dollar Equivalent amount of any Borrowing in an
Offshore Currency will be determined by the Agent for such Committed Borrowing
on the Computation Date therefor in accordance with subsection 2.05(a).
(c) Each Bank will make the amount of its Pro Rata Share of each
Committed Borrowing available to the Agent for the account of the Company at the
Agent's Payment Office on the Borrowing Date requested by the Company in Same
Day Funds and in the requested currency (i) in the case of a Committed Borrowing
comprised of Loans in Dollars, by 12:00 noon (Chicago
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time) and (ii) in the case of a Committed Borrowing comprised of Offshore
Currency Loans, by such time as the Agent may specify. The proceeds of all
such Committed Loans will then be made available to the Company by the Agent at
such office by crediting the account of the Company on the books of BofA with
the aggregate of the amounts made available to the Agent by the Banks and in
like funds as received by the Agent.
(d) After giving effect to any Committed Borrowing, unless the
Agent shall otherwise consent, there may not be more than nine (9) different
Interest Periods in effect in the aggregate for all Loans.
2.04 Conversion and Continuation Elections for Committed Borrowings.
(a) The Company may, upon irrevocable written notice to the Agent
in accordance with subsection 2.04(b):
(i) elect, as of any Business Day, in the case of Base Rate
Committed Loans, or as of the last day of the applicable Interest Period,
in the case of any other Type of Committed Loans denominated in Dollars, to
convert any such Committed Loans (or any part thereof in an amount not less
than the Minimum Tranche) into Committed Loans in Dollars of any other
Type; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any Committed Loans having Interest Periods expiring on
such day (or any part thereof in an amount not less than the Minimum
Tranche);
provided, that if at any time the aggregate Dollar Equivalent amount of
Offshore Currency Loans in respect of any Committed Borrowing is reduced, by
payment, prepayment, or conversion of part thereof to be less than $5,000,000,
such Offshore Currency Loans shall automatically convert into Base Rate
Committed Loans, and on and after such date the right of the Company to
continue such Committed Loans as, and convert such Committed Loans into,
Offshore Currency Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation
to be received by the Agent not later than (i) 11:30 a.m. (Chicago time) at
least three Business Days in advance of the Conversion/Continuation Date, if the
Committed Loans are to be converted into or continued as Offshore Rate Committed
Loans denominated in Dollars; (ii) 10:30 a.m. (Chicago time) at least four
Business Days in advance of the continuation date, if the Committed Loans are to
be continued as Offshore Currency Loans; and (iii) 10:30 a.m. (Chicago time) on
the Conversion/Continuation Date, if the Committed Loans are to be converted
into Base Rate Committed Loans, specifying:
(A) the proposed Conversion/Continuation Date;
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(B) the aggregate amount of Committed Loans to be
converted or continued;
(C) the Type of Committed Loans resulting from the
proposed conversion or continuation; and
(D) other than in the case of conversions into Base Rate
Committed Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Committed Loans in Dollars, the Company has failed to timely
select a new Interest Period to be applicable to such Offshore Rate Committed
Loans or if any Default or Event of Default then exists, unless, in either case,
the Company has elected to and does repay such Committed Loans on or prior to
the expiration date of such Interest Period, the Company shall be deemed to have
elected to convert such Offshore Rate Committed Loans into Base Rate Committed
Loans effective as of the expiration date of such Interest Period. If the
Company has failed to select a new Interest Period to be applicable to Offshore
Currency Loans prior to the fourth Business Day in advance of the expiration
date of the current Interest Period applicable thereto as provided in subsection
2.04(b), or if any Default or Event of Default shall then exist, the Company
shall be deemed to have elected to continue such Offshore Currency Loans on the
basis of a one month Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuation, or, if no timely notice is provided by the
Company, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Committed Loans
with respect to which the notice was given held by each Bank.
(e) Unless the Required Banks otherwise consent, during the
existence of a Default or Event of Default, the Company may not elect to have
(i) a Committed Loan in Dollars converted into or continued as an Offshore Rate
Committed Loan or (ii) an Offshore Currency Loan continued on the basis of an
Interest Period exceeding one month.
(f) After giving effect to any conversion or continuation of
Committed Loans, unless the Agent shall otherwise consent, there may not be more
than nine (9) different Interest Periods in effect in the aggregate for all
Loans.
2.05 Utilization of Commitments in Offshore Currencies.
(a) The Agent will determine the Dollar Equivalent amount with
respect to any (i) Committed Borrowing comprised of Offshore Currency Loans as
of the requested Borrowing Date, (ii) outstanding Offshore Currency Loans and
L/C Obligations denominated in a currency other than Dollars as of the last
Banking Day of each month and (iii) outstanding Offshore Currency Loans and L/C
Obligations denominated in a currency other than Dollars as of any
redenomination
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date pursuant to this Section 2.05 or Section 4.05 (each such date under clauses
(i) through (iii) a "Computation Date").
(b) In the case of a proposed Borrowing comprised of Offshore
Currency Loans, the Banks shall be under no obligation to make Offshore Currency
Loans in the requested Offshore Currency as part of such Committed Borrowing if
the Agent has received notice from any of the Banks by 5:00 p.m. (Chicago time)
four Business Days prior to the day of such Borrowing that such Bank cannot
provide Committed Loans in the requested Offshore Currency, in which event the
Agent will give notice to the Company no later than 12:00 noon (Chicago time) on
the third Business Day prior to the requested date of such Committed Borrowing
that the Committed Borrowing in the requested Offshore Currency is not then
available, and notice thereof also will be given promptly by the Agent to the
Banks. If the Agent shall have so notified the Company that any such Committed
Borrowing in a requested Offshore Currency is not then available, the Company
may, by notice to the Agent not later than 5:00 p.m. (Chicago time) two
Business Days prior to the requested date of such Committed Borrowing, withdraw
the Notice of Borrowing relating to such requested Committed Borrowing. If the
Company does so withdraw such Notice of Borrowing, the Committed Borrowing
requested therein shall not occur and the Agent will promptly so notify each
Bank. If the Company does not so withdraw such Notice of Borrowing, the Agent
will promptly so notify each Bank and such Notice of Borrowing shall be deemed
to be a Notice of Borrowing that requests a Committed Borrowing comprised of
Base Rate Committed Loans in an aggregate amount equal to the amount of the
originally requested Borrowing as expressed in Dollars in the Notice of
Borrowing; and in such notice by the Agent to each Bank the Agent will state
such aggregate amount of such Committed Borrowing in Dollars and such Bank's Pro
Rata Share thereof.
(c) In the case of a proposed continuation of Offshore Currency
Loans for an additional Interest Period pursuant to Section 2.04, the Banks
shall be under no obligation to continue such Offshore Currency Loans if the
Agent has received notice from any of the Banks by 5:00 p.m. (Chicago time)
four Business Days prior to the day of such continuation that such Bank cannot
continue to provide Committed Loans in the relevant Offshore Currency, in which
event the Agent will give notice to the Company not later than 12:00 noon
(Chicago time) on the third Business Day prior to the requested date of such
continuation that the continuation of such Offshore Currency Loans in the
relevant Offshore Currency is not then available, and notice thereof also will
be given promptly by the Agent to the Banks. If the Agent shall have so
notified the Company that any such continuation of Offshore Currency Loans is
not then available, any Notice of Continuation/Conversion with respect thereto
shall be deemed withdrawn and such Offshore Currency Loans shall be
redenominated into Base Rate Committed Loans in Dollars with effect from the
last day of the Interest Period with respect to any such Offshore Currency
Loans. The Agent will promptly notify the Company and the Banks of any such
redenomination and in such notice by the Agent to each Bank the Agent will state
the aggregate Dollar Equivalent amount of the redenominated Offshore Currency
Loans as of the Computation Date with respect thereto and such Bank's Pro Rata
Share thereof.
(d) Notwithstanding anything herein to the contrary, during the
existence of a Default or an Event of Default, upon the request of the Required
Banks, all or any part of any
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outstanding Offshore Currency Loans shall be redenominated and converted into
Base Rate Committed Loans in Dollars with effect from the last day of the
Interest Period with respect to any such Offshore Currency Loans. The Agent
will promptly notify the Company of any such redenomination and conversion
request.
(e) The Company shall be entitled to request that Committed Loans
hereunder also be permitted to be made in any other lawful currency (other than
Dollars), in addition to the currencies specified in the definition of "Offshore
Currency" herein, that in the opinion of the Required Banks is at such time
freely traded in the offshore interbank foreign exchange markets and is freely
transferable and freely convertible into Dollars (an "Agreed Alternative
Currency"). The Company shall deliver to the Agent any request for designation
of an Agreed Alternative Currency in accordance with Section 11.02, to be
received by the Agent not later than 12:00 noon (Chicago time) at least 10
Business Days in advance of the date of any Committed Borrowing hereunder
proposed to be made in such Agreed Alternative Currency. Upon receipt of any
such request the Agent will promptly notify the Banks thereof, and each Bank
will use its best efforts to respond to such request within two Business Days of
receipt thereof. Each Bank may grant or accept such request in its sole
discretion. The Agent will promptly notify the Company of the acceptance or
rejection of any such request.
2.06 Bid Borrowings. In addition to Committed Borrowings pursuant to
Section 2.03, each Bank severally agrees that the Company may, as set forth in
Section 2.07, from time to time request the Banks prior to the Credit
Termination Date to submit offers to make Bid Loans in Dollars to the Company;
provided, however, that the Banks may, but shall have no obligation to, submit
such offers and the Company may, but shall have no obligation to, accept any
such offers; and provided, further, that at no time shall (a) the outstanding
aggregate principal amount of all Bid Loans made by all Banks, plus the
outstanding aggregate principal Dollar Equivalent amount of all Committed Loans
made by all Banks together with L/C Obligations exceed the combined Commitments;
or (b) the number of Interest Periods for Bid Loans then outstanding plus the
number of Interest Periods for Committed Loans then outstanding exceed nine (9)
in the aggregate.
2.07 Procedure for Bid Borrowings. (a) When the Company wishes to
request the Banks to submit offers to make Bid Loans hereunder, it shall
transmit to the Agent by telephone call followed promptly by facsimile
transmission a notice in substantially the form of Exhibit G (a "Competitive Bid
Request") so as to be received no later than 12:00 noon (Chicago time) (x) four
Business Days prior to the date of a proposed Bid Borrowing in the case of a
LIBOR Auction, or (y) one Business Day prior to the date of a proposed Bid
Borrowing in the case of an Absolute Rate Auction, specifying:
(i) the date of such Bid Borrowing, which shall be a Business Day;
(ii) the aggregate amount of such Bid Borrowing, which shall be a
minimum amount of $5,000,000 or in multiples of $1,000,000 in excess
thereof;
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(iii) whether the Competitive Bids requested are to be for LIBOR Bid
Loans or Absolute Rate Bid Loans or both; and
(iv) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of "Interest Period" herein.
Subject to subsection 2.07(c), the Company may not request Competitive Bids for
more than three (3) Interest Periods in a single Competitive Bid Request and
may not request Competitive Bids more than once in any period of five (5)
Business Days.
(b) Upon receipt of a Competitive Bid Request, the Agent will
promptly send to the Banks by facsimile transmission an Invitation for
Competitive Bids, which shall constitute an invitation by the Company to each
Bank to submit Competitive Bids offering to make the Bid Loans to which such
Competitive Bid Request relates in accordance with this Section 2.07.
(c) (i) Each Bank may at its discretion submit a Competitive Bid
containing an offer or offers to make Bid Loans in response to any Invitation
for Competitive Bids. Each Competitive Bid must comply with the requirements of
this subsection 2.07(c) and must be submitted to the Agent by facsimile
transmission at the Agent's office for notices set forth on the signature pages
hereto not later than (1) 8:30 a.m. (Chicago time) three Business Days prior to
the proposed date of Borrowing, in the case of a LIBOR Auction or (2) 8:30 a.m.
(Chicago time) on the proposed date of Borrowing, in the case of an Absolute
Rate Auction; provided that Competitive Bids submitted by the Agent (or any
Affiliate of the Agent) in the capacity of a Bank may be submitted, and may only
be submitted, if the Agent or such Affiliate notifies the Company of the terms
of the offer or offers contained therein not later than (A) 8:15 a.m. (Chicago
time) three Business Days prior to the proposed date of Borrowing, in the case
of a LIBOR Auction or (B) 8:15 a.m. (Chicago time) on the proposed date of
Borrowing, in the case of an Absolute Rate Auction.
(ii) Each Competitive Bid shall be in substantially the form of
Exhibit H, specifying therein:
(A) the proposed date of Borrowing;
(B) the principal amount of each Bid Loan for which such
Competitive Bid is being made, which principal amount (x) may be equal
to, greater than or less than the Commitment of the quoting Bank, (y)
must be $5,000,000 or in multiples of $1,000,000 in excess thereof,
and (z) may not exceed the principal amount of Bid Loans for which
Competitive Bids were requested;
(C) in case the Company elects a LIBOR Auction, the margin
above or below LIBOR (the "LIBOR Bid Margin") offered for each such Bid
Loan, expressed in multiples of 1/1000th of one (1) percent to be added to
or subtracted from the applicable LIBOR and the Interest Period applicable
thereto;
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(D) in case the Company elects an Absolute Rate Auction, the
rate of interest per annum expressed in multiples of 1/1000th of one
(1) percent (the "Absolute Rate") offered for each such Bid Loan; and
(E) the identity of the quoting Bank.
A Competitive Bid may contain up to three separate offers by the quoting
Bank with respect to each Interest Period specified in the related
Invitation for Competitive Bids.
(iii) Any Competitive Bid shall be disregarded if it:
(A) is not substantially in conformity with Exhibit H or does
not specify all of the information required by subsection (c)(ii) of
this Section;
(B) contains qualifying, conditional or similar language
(except with respect to the aggregate amount of Bid Loans that may be
accepted);
(C) proposes terms other than or in addition to those set forth
in the applicable Invitation for Competitive Bids; or
(D) arrives after the time set forth in subsection (c)(i).
(d) Promptly on receipt and not later than 9:00 a.m. (Chicago time)
three Business Days prior to the proposed date of Borrowing in the case of a
LIBOR Auction, or 9:00 a.m. (Chicago time) on the proposed date of Borrowing, in
the case of an Absolute Rate Auction, the Agent will notify the Company of the
terms (i) of any Competitive Bid submitted by a Bank that is in accordance with
subsection 2.07(c), and (ii) of any Competitive Bid that amends, modifies or is
otherwise inconsistent with a previous Competitive Bid submitted by such Bank
with respect to the same Competitive Bid Request. Any such subsequent
Competitive Bid shall be disregarded by the Agent unless such subsequent
Competitive Bid is submitted solely to correct a manifest error in such former
Competitive Bid and only if received within the times set forth in subsection
2.07(c)(i). The Agent's notice to the Company shall specify (1) the aggregate
principal amount of Bid Loans for which offers have been received for each
Interest Period specified in the related Competitive Bid Request; and (2) the
respective principal amounts and LIBOR Bid Margins or Absolute Rates, as the
case may be, so offered. Subject only to the provisions of Sections 4.02, 4.05
and 5.02 hereof and the provisions of this subsection (d), any Competitive Bid
shall be irrevocable except with the written consent of the Agent given on the
written instructions of the Company.
(e) Not later than 9:30 a.m. (Chicago time) three Business Days
prior to the proposed date of Borrowing, in the case of a LIBOR Auction, or 9:30
a.m. (Chicago time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction, the Company shall notify the Agent of its acceptance or
non-acceptance of the offers so notified to it pursuant to subsection 2.07(d).
The Company shall be under no obligation to accept any offer and may choose to
reject all offers. In the case of acceptance, such notice shall specify the
aggregate principal amount of offers
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for each Interest Period that is accepted. The Company may accept any
Competitive Bid in whole or in part; provided that:
(i) the aggregate principal amount of each Bid Borrowing may not
exceed the applicable amount set forth in the related Competitive Bid
Request;
(ii) the principal amount of each Bid Borrowing must be $5,000,000 or
in any multiple of $1,000,000 in excess thereof;
(iii) acceptance of offers may only be made on the basis of ascending
LIBOR Bid Margins or Absolute Rates within each Interest Period, as the
case may be; and
(iv) the Company may not accept any offer that is described in
subsection 2.07(c)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(f) If offers are made by two or more Banks with the same LIBOR Bid
Margins or Absolute Rates, as the case may be, for a greater aggregate principal
amount than the amount in respect of which such offers are accepted for the
related Interest Period, the principal amount of Bid Loans in respect of which
such offers are accepted shall be allocated by the Company among such Banks as
nearly as possible (in such multiples, not less than $1,000,000, as the Company
may deem appropriate) in proportion to the aggregate principal amounts of such
offers. Determination by the Company or the Agent of the amounts of Bid Loans
to be allocated among such Banks shall be conclusive in the absence of manifest
error.
(g) (i) The Agent will promptly notify each Bank having submitted a
Competitive Bid if its offer has been accepted and, if its offer has been
accepted, of the amount of the Bid Loan or Bid Loans to be made by it on the
date of the Bid Borrowing.
(ii) Each Bank, which has received notice pursuant to subsection
2.07(g)(i) that its Competitive Bid has been accepted, shall make the
amounts of such Bid Loans in funds immediately available to the Agent for
the account of the Company at the Agent's Payment Office, by 2:00 p.m.
(Chicago time) on such date of Bid Borrowing.
(iii) Promptly following each Bid Borrowing, the Agent shall notify
each Bank of the ranges of bids submitted and the highest and lowest Bids
accepted for each Interest Period requested by the Company and the
aggregate amount borrowed pursuant to such Bid Borrowing.
(iv) From time to time, the Company and the Banks shall furnish such
information to the Agent as the Agent may request relating to the making of
Bid Loans, including the amounts, interest rates, dates of borrowings and
maturities thereof, for purposes of the allocation of amounts received from
the Company for payment of all amounts owing hereunder.
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(h) If, on or prior to the proposed date of Borrowing, the
Commitments have not been terminated and if, on such proposed date of Borrowing
all applicable conditions to funding referenced in Sections 4.02, 4.05 and 5.02
hereof are satisfied, the Banks whose offers the Company has accepted will fund
each Bid Loan so accepted. Nothing in this Section 2.07 shall be construed as a
right of first offer in favor of the Banks or to otherwise limit the ability of
the Company to request and accept credit facilities from any Person (including
any of the Banks), provided that no Default or Event of Default would otherwise
arise or exist as a result of the Company executing, delivering or performing
under such credit facilities.
2.08 Voluntary Termination or Reduction of Commitments. The Company may,
upon not less than five Business Days' prior notice to the Agent, terminate the
Commitments, or permanently reduce the Commitments by an aggregate minimum
Dollar Equivalent amount of $5,000,000 or any Dollar Equivalent multiple of
$1,000,000 in excess thereof; unless, after giving effect thereto and to any
prepayments of Committed Loans made on the effective date thereof, the then
outstanding principal Dollar Equivalent amount of the Committed Loans, together
with the aggregate principal amount of all Bid Loans outstanding and L/C
Obligations, would exceed the amount of the combined Commitments then in effect.
Once reduced in accordance with this Section 2.08, the Commitments may not be
increased. Any reduction of the Commitments shall be applied to each Bank
according to its Pro Rata Share. All accrued Facility Fees to, but not
including the effective date of any reduction or termination of Commitments,
shall be paid on the effective date of such reduction or termination.
2.09 Optional Prepayments. (a) Subject to Section 4.04, the Company may,
at any time or from time to time, upon irrevocable notice to the Agent as
described below, ratably prepay Committed Loans in whole or in part, in minimum
Dollar Equivalent amounts of $5,000,000 or any Dollar Equivalent multiple of
$1,000,000 in excess thereof or such other amount necessary to repay any
Offshore Currency Loan in full. The Company shall deliver a notice of
prepayment in accordance with Section 11.02 to be received by the Agent not
later than 10:30 a.m. (Chicago time) (a) at least three Business Days in advance
of the prepayment date if the Committed Loans to be prepaid are Offshore
Currency Loans, (b) at least two Business Days in advance of the prepayment date
if the Committed Loans to be prepaid are Offshore Rate Committed Loans in
Dollars, and (iii) on the date of the prepayment date if the Committed Loans to
be prepaid are Base Rate Committed Loans. Such notice of prepayment shall
specify the date and amount of such prepayment and whether such prepayment is of
Base Rate Committed Loans or Offshore Rate Committed Loans, or any combination
thereof, and the Applicable Currency. Such notice shall not thereafter be
revocable by the Company and the Agent will promptly notify each Bank thereof
and of such Bank's Pro Rata Share of such prepayment. If such notice is given by
the Company, the Company shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein,
together with accrued interest to each such date on the amount prepaid and any
amounts required pursuant to Section 4.04.
(b) Bid Loans may not be voluntarily prepaid.
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2.10 Currency Exchange Fluctuations. Subject to Section 4.04, if on any
Computation Date the Agent shall have determined that the aggregate Dollar
Equivalent principal amount of all Committed Loans, together with the aggregate
principal amount of all Bid Loans outstanding and L/C Obligations, then
outstanding exceeds the combined Commitments of the Banks by more than
$1,000,000, due to a change in applicable rates of exchange between Dollars and
Offshore Currencies, then the Agent shall give notice to the Company that a
prepayment is required under this Section 2.10, and the Company agrees thereupon
to make prepayments of Committed Loans within one Business Day of such notice
such that, after giving effect to such prepayment the aggregate Dollar
Equivalent amount of all Committed Loans, Bid Loans and L/C Obligations does not
exceed the combined Commitments.
2.11 Mandatory Prepayments of Loans. Subject to Section 4.04, if on any
date the Dollar Equivalent of all Committed Loans then outstanding, together
with the aggregate principal amount of all Bid Loans outstanding plus all L/C
Obligations, exceeds the aggregate Commitments (other than as a result of
currency exchange fluctuations), the Company shall immediately, and without
notice or demand, prepay the outstanding principal amount of the Committed Loans
in an amount equal to the lesser of such excess and the amount of the
outstanding Committed Loans and, if any excess shall still remain, shall Cash
Collateralize the L/C Obligations to the extent of such remaining excess.
2.12 Repayment.
(a) The Revolving Credit. The Company shall repay to the Banks on
the Credit Termination Date the aggregate principal amount of Committed Loans
outstanding on such date.
(b) Bid Loans. The Company shall repay each Bid Loan on the last
day of the relevant Interest Period.
2.13 Interest.
(a) Each Committed Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Offshore Rate plus the Applicable Margin or the Base Rate, as the
case may be (and subject to the Company's right to convert to other Types of
Loans under Section 2.04). Each Bid Loan shall bear interest on the outstanding
principal amount thereof from the relevant Borrowing Date at a rate per annum
equal to LIBOR plus the LIBOR Bid Margin, or at the Absolute Rate, as the case
may be.
(b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any
prepayment of Committed Loans under Section 2.09, 2.10 or 2.11 for the portion
of the Committed Loans so prepaid and upon payment (including prepayment) in
full thereof and, during the existence of any Event of Default, interest shall
also be paid on demand of the Agent at the request or with the consent of the
Required Banks.
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(c) Notwithstanding subsections 2.13(a) and 3.03(d), while any
Event of Default exists, for the period commencing after the Company's receipt
of notice from the Agent at the request, or with the consent, of the Required
Banks or after acceleration, the Company shall pay interest (after as well as
before entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Loans and other Obligations, at a rate per
annum which is determined by adding 2% per annum to the Applicable Margin then
in effect for such Loans and, in the case of Obligations not subject to an
Applicable Margin, at a rate per annum equal to the Base Rate plus 2%; provided,
however, that, on and after the expiration of any Interest Period applicable to
any Offshore Rate Loan outstanding on the date of occurrence of such Event of
Default for the period commencing after the Company's receipt of notice from the
Agent at the request, or with the consent, of the Required Banks or
acceleration, the principal amount of such Loan shall, during the continuation
of such Event of Default or after acceleration, bear interest at a rate per
annum equal to the Base Rate plus 2%.
(d) Anything herein to the contrary notwithstanding, the
Obligations of the Company to any Bank hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Bank would be contrary to
the provisions of any law applicable to such Bank limiting the highest rate of
interest that may be lawfully contracted for, charged or received by such Bank,
and in such event the Company shall pay such Bank interest at the highest rate
permitted by applicable law.
2.14 Fees.
(a) Arrangement, Agency Fees. The Company shall pay an
arrangement fee to the Arranger for the Arranger's own account, and shall pay an
agency fee and Bid Loan fee to the Agent for the Agent's own account, as
required by the letter agreement ("Fee Letter") between the Company and the
Arranger and Agent dated March 21, 1996.
(b) Facility Fee. The Company shall pay to the Agent for the
account of each Bank a facility fee (the "Facility Fee") in a per annum amount
equal to the Applicable Margin for the Facility Fee times the daily average
Commitment of such Bank (regardless of usage) from the Closing Date to the
Credit Termination Date and shall be due and payable quarterly in arrears on the
last Business Day of each March, June, September and December, commencing on
June 30, 1997, through the Credit Termination Date, with the final payment to be
made on the Credit Termination Date; provided that, in connection with any
reduction or termination of Commitments under Section 2.08, the accrued Facility
Fee calculated for the period ending on such date shall also be paid on the date
of such reduction or termination, with the following quarterly payment being
calculated on the basis of the period from such reduction or termination date to
such quarterly payment date. The Facility Fee provided in this subsection shall
accrue until the Credit Termination Date, including at any time during which
one or more conditions in Article V are not met.
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2.15 Computation of Fees and Interest.
(a) All computations of interest for Base Rate Committed Loans,
Absolute Rate Bid Loans and fees other than the Facility Fee shall be made on
the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed. All computations of interest for Offshore Rate Loans, LIBOR Bid Loans
and the Facility Fee shall be made on the basis of a 360-day year and actual
days elapsed (which results in more interest being paid than if computed on the
basis of a 365-day year). Interest and fees shall accrue during each period
during which interest or such fees are computed from, and including, the first
day thereof to, but excluding, the last day thereof.
(b) Each determination of an interest rate or a Dollar Equivalent
amount by the Agent shall be rebuttably presumptive evidence thereof in the
absence of manifest error. The Agent will, at the request of the Company or any
Bank, deliver to the Company or the Bank, as the case may be, a statement
showing the quotations used by the Agent in determining any interest rate or
Dollar Equivalent amount.
2.16 Payments by the Company.
(a) All payments to be made by the Company shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Company shall be made to the Agent for the account
of the Banks at the Agent's Payment Office, and, with respect to principal of,
interest on, and any other amounts relating to, any Offshore Currency Loan,
shall be made in the Offshore Currency in which such Loan is denominated or
payable, and, with respect to all other amounts payable hereunder, shall be made
in Dollars. Such payments shall be made in Same Day Funds, and (i) in the case
of Offshore Currency payments, no later than such time on the dates specified
herein as may be determined by the Agent to be necessary for such payment to be
credited on such date in accordance with normal banking procedures in the place
of payment, and (ii) in the case of any Dollar payments, no later than 12:00
noon (Chicago time) on the date specified herein. The Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such principal, interest, fees or other amounts,
in like funds as received. Any payment which is received by the Agent later
than 12:00 noon (Chicago time), or later than the time specified by the Agent as
provided in clause (i) above (in the case of Offshore Currency payments), shall
be deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Company prior to the
date on which any payment is due to the Banks that the Company will not make
such payment in full as and when required, the Agent may assume that the Company
has made such payment in full to the Agent on such date in Same Day Funds and
the Agent may (but shall not be so required), in reliance upon such
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assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Company has not made such
payment in full to the Agent, each Bank shall repay to the Agent on demand such
amount distributed to such Bank, together with interest thereon at the Federal
Funds Rate or, in the case of a payment in an Offshore Currency, the Overnight
Rate, for each day from the date such amount is distributed to such Bank until
the date repaid.
2.17 Payments by the Banks to the Agent.
(a) Unless the Agent receives notice from a Bank on or prior to
the Closing Date or, with respect to any Committed Borrowing after the Closing
Date, at least one Business Day prior to the date of such Committed Borrowing,
that such Bank will not make available as and when required hereunder to the
Agent for the account of the Company the amount of that Bank's Pro Rata Share of
the Committed Borrowing, the Agent may assume that each Bank has made such
amount available to the Agent in Same Day Funds on the Borrowing Date and the
Agent may (but shall not be so required), in reliance upon such assumption, make
available to the Company on such date a corresponding amount. If and to the
extent any Bank shall not have made its full amount available to the Agent in
Same Day Funds and the Agent in such circumstances has made available to the
Company such amount, that Bank shall on the Business Day following such
Borrowing Date make such amount available to the Agent, together with interest
at the Federal Funds Rate or, in the case of any Committed Borrowing consisting
of Offshore Currency Loans, the Overnight Rate, for each day during such period.
A notice of the Agent submitted to any Bank with respect to amounts owing under
this subsection 2.17(a) shall be conclusive, absent manifest error. If such
amount is so made available, such payment to the Agent shall constitute such
Bank's Loan on the date of Committed Borrowing for all purposes of this
Agreement. If such amount is not made available to the Agent on the Business
Day following the Borrowing Date, the Agent will notify the Company of such
failure to fund and, upon demand by the Agent, the Company shall pay such amount
to the Agent for the Agent's account, together with interest thereon for each
day elapsed since the date of such Committed Borrowing, at a rate per annum
equal to the interest rate applicable at the time to the Committed Loans
comprising such Committed Borrowing.
(b) The failure of any Bank to make any Committed Loan on any
Borrowing Date shall not relieve any other Bank of any obligation hereunder to
make a Committed Loan on such Borrowing Date, but no Bank shall be responsible
for the failure of any other Bank to make the Committed Loan to be made by such
other Bank on any Borrowing Date.
2.18 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Committed Loans made
by it any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder), such Bank shall immediately (a) notify the Agent of
such fact, and (b) purchase from the other Banks such participations in the
Committed Loans made by them as shall be necessary to cause such purchasing Bank
to share the excess payment pro rata with each of them; provided, however, that
if all or any portion of such excess payment is thereafter recovered from the
purchasing Bank, such purchase shall to that extent be rescinded and each other
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Bank shall repay to the purchasing Bank the purchase price paid therefor,
together with an amount equal to such paying Bank's ratable share (according to
the proportion of (i) the amount of such paying Bank's required repayment to
(ii) the total amount so recovered from the purchasing Bank) of any interest or
other amount paid or payable by the purchasing Bank in respect of the total
amount so recovered. The Company agrees that any Bank so purchasing a
participation from another Bank may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 11.10) with respect to such participation as fully as if such Bank
were the direct creditor of the Company in the amount of such participation.
The Agent will keep records (which shall be conclusive and binding in the
absence of manifest error) of participations purchased under this Section 2.18
and will in each case notify the Banks following any such purchases or
repayments.
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Subfacility.
(a) On the terms and conditions set forth herein (i) the Issuing
Bank agrees, (A) from time to time on any Business Day during the period from
the Closing Date to, but not including, the Credit Termination Date to issue
Letters of Credit for the account of the Company, and to amend or renew Letters
of Credit previously issued by it, in accordance with subsections 3.02(c) and
3.02(d), and (B) to honor drafts under the Letters of Credit; and (ii) the Banks
severally agree to participate in Letters of Credit Issued for the account of
the Company; provided that the Issuing Bank shall not be obligated to Issue, and
no Bank shall be obligated to participate in, any Letter of Credit if as of the
date of Issuance of such Letter of Credit (the "Issuance Date"): (A) the
Effective Amount of all L/C Obligations plus the Effective Amount of all
Committed Loans plus the principal amount of all outstanding Bid Loans exceeds
the aggregate Commitments; (B) the participation of any Bank in the Effective
Amount of all L/C Obligations plus the Effective Amount of the Committed Loans
of such Bank exceeds such Bank's Commitment or (C) the Effective Amount of all
L/C Obligations exceeds the L/C Commitment. Within the foregoing limits, and
subject to the other terms and conditions hereof, the Company's ability to
obtain Letters of Credit shall be fully revolving, and, accordingly, the Company
may, during the foregoing period, obtain Letters of Credit to replace Letters of
Credit which have expired or which have been drawn upon and reimbursed.
(b) The Issuing Bank shall be under no obligation to Issue any
Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain
the Issuing Bank from Issuing such Letter of Credit, or any Requirement of
Law applicable to the Issuing Bank or any request or directive (whether or
not having the force of law) from any Governmental Authority with
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jurisdiction over the Issuing Bank shall prohibit, or request that the
Issuing Bank refrain from, the Issuance of letters of credit generally or
such Letter of Credit in particular or shall impose upon the Issuing Bank
with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the Issuing Bank is not otherwise compensated
hereunder) not in effect on the date of this Agreement, or shall impose
upon the Issuing Bank any unreimbursed loss, cost or expense which was not
applicable on the date of this Agreement and which the Issuing Bank in good
faith deems material to it and for which the Issuing Bank is not
compensated hereunder.
(ii) the Issuing Bank has received written notice from any Bank, the
Agent or the Company, on or prior to the Business Day prior to the
requested date of Issuance of such Letter of Credit, that one or more of
the applicable conditions contained in Article V is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is (A) more
than 360 days after the date of Issuance, unless the Required Banks and the
Issuing Bank have approved such expiry date in writing, or (B) after the
Credit Termination Date;
(iv) any requested Letter of Credit is not in a form reasonably
acceptable to the Issuing Bank, or the Issuance of a Letter of Credit shall
violate any applicable policies of the Issuing Bank;
(v) any standby Letter of Credit is for the purpose of supporting
the issuance of any letter of credit by any other Person; or
(vi) such Letter of Credit is in a face amount less than $5,000,000
(or such lesser amount acceptable to the Agent and the Issuing Bank), or to
be denominated in a currency other than an Applicable Currency.
3.02 Issuance, Amendment and Renewal of Letters of Credit.
(a) Each Letter of Credit shall be issued upon the irrevocable
written request of the Company received by the Issuing Bank (with a copy sent by
the Company to the Agent) at least three Business Days (or such shorter time as
the Issuing Bank may agree in a particular instance in its sole discretion)
prior to the proposed date of issuance. Each such request for issuance of a
Letter of Credit shall be by facsimile or electronic transmission, confirmed
immediately in an original writing, in the form of an L/C Application, and shall
specify in form and detail satisfactory to the Issuing Bank: (i) the proposed
date of issuance of the Letter of Credit (which shall be a Business Day); (ii)
the face amount and Applicable Currency of the Letter of Credit; (iii) the
expiry date of the Letter of Credit; (iv) the name and address of the
beneficiary thereof; (v) the documents to be presented by the beneficiary of the
Letter of Credit in case of any drawing thereunder; (vi) the full text of any
certificate to be presented by the beneficiary in case of any drawing
thereunder; and (vii) such other matters as the Issuing Bank may reasonably
require.
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(b) If the Agent is not the Issuing Bank, by 12:00 noon (Chicago
time) on the Business Day next preceding the requested date of issuance of a
Letter of Credit, the Issuing Bank will confirm with the Agent (by telephone or
in writing) that the Agent has received a copy of the L/C Application or L/C
Amendment Application from the Company and, if not, the Issuing Bank will
provide the Agent with a copy thereof. Unless the Issuing Bank has received
notice on or before the Business Day immediately preceding the date the Issuing
Bank is to issue a requested Letter of Credit from the Agent (i) directing the
Issuing Bank not to issue such Letter of Credit because such issuance is not
then permitted under subsection 3.01(a)(ii) as a result of the limitations set
forth in clauses (A), (B) or (C) thereof or subsection 3.01(b)(ii); or (ii) that
one or more conditions specified in Article V are not then satisfied; then,
subject to the terms and conditions hereof, the Issuing Bank shall, on the
requested date, issue a Letter of Credit for the account of the Company in
accordance with the Issuing Bank's usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Credit Termination Date, the Issuing Bank will, upon the written
request of the Company received by the Issuing Bank (with a copy sent by the
Company to the Agent) at least two Business Days (or such shorter time as the
Issuing Bank may agree in a particular instance in its sole discretion) prior to
the proposed date of amendment, amend any Letter of Credit issued by it. Each
such request for amendment of a Letter of Credit shall be made by facsimile,
confirmed immediately in an original writing, made in the form of an L/C
Amendment Application and shall specify in form and detail satisfactory to the
Issuing Bank: (i) the Letter of Credit to be amended; (ii) the proposed date of
amendment of the Letter of Credit (which shall be a Business Day); (iii) the
nature of the proposed amendment; and (iv) such other matters as the Issuing
Bank may reasonably require. The Issuing Bank shall be under no obligation to
amend any Letter of Credit if: (A) the Issuing Bank would have no obligation at
such time to issue such Letter of Credit in its amended form under the terms of
this Agreement; or (B) the beneficiary of any such Letter of Credit does not
accept the proposed amendment to the Letter of Credit.
(d) The Issuing Bank and the Banks agree that, while a Letter of
Credit is outstanding and prior to the Credit Termination Date, at the option of
the Company and upon the written request of the Company received by the Issuing
Bank (with a copy sent by the Company to the Agent) at least two Business Days
(or such shorter time as the Issuing Bank may agree in a particular instance in
its sole discretion) prior to the proposed date of notification of renewal, the
Issuing Bank shall be entitled to authorize the automatic renewal of any Letter
of Credit issued by it; provided that the Issuing Bank shall not be entitled to
authorize such automatic renewal if, at least one Business Day prior to the
proposed date of notification of renewal, it shall have received notice from the
Agent (i) directing the Issuing Bank not to renew such Letter of Credit because
such renewal is not then permitted under subsection 3.01(a)(ii) as a result of
the limitations set forth in clauses (A), (B) and (C) thereof or subsection
3.01(b)(ii); or (ii) that one or more conditions specified in Article V are not
then satisfied. Each such request for renewal of a Letter of Credit shall be
made by facsimile transmission, confirmed immediately in an original writing, in
the form of an L/C Amendment Application, and shall specify in form and detail
satisfactory to the Issuing Bank: (I) the Letter of Credit to be renewed; (II)
the proposed date of notification of renewal of the Letter of Credit (which
shall be a Business Day); (III) the revised expiry date of the Letter of Credit;
and
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(IV) such other matters as the Issuing Bank may require. The Issuing Bank shall
be under no obligation to renew, and no Bank shall be obligated to participate
in, any Letter of Credit if: (A) the Issuing Bank would have no obligation at
such time to issue or amend, and no Bank would be obligated to participate in,
such Letter of Credit in its renewed form under the terms of this Agreement; or
(B) the beneficiary of any such Letter of Credit does not accept the proposed
renewal of the Letter of Credit. If any outstanding Letter of Credit shall
provide that it shall be automatically renewed unless the beneficiary thereof
receives notice from the Issuing Bank that such Letter of Credit shall not be
renewed, and if at the time of renewal the Issuing Bank would be required to
authorize the automatic renewal of such Letter of Credit in accordance with this
subsection 3.02(d) upon the request of the Company but the Issuing Bank shall
not have received any L/C Amendment Application from the Company with respect to
such renewal or other written direction by the Company with respect thereto, the
Issuing Bank shall nonetheless renew such Letter of Credit, and the Company and
the Banks hereby authorize such renewal, and, accordingly, the Issuing Bank
shall be deemed to have received an L/C Amendment Application from the Company
requesting such renewal.
(e) The Issuing Bank may, at its election (or as required by the
Agent at the direction of the Required Banks), deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than the Credit Termination Date.
(f) This Agreement shall control in the event of any conflict with
any L/C-Related Document (other than any Letter of Credit). In addition, unless
the Company and the Issuing Bank shall otherwise expressly agree in writing, any
purported grant of a Lien (or any requirement to do so) contained in any L/C
Related Document shall be ineffective and null and void.
(g) The Issuing Bank will also deliver to the Agent, concurrently or
promptly following its delivery of a Letter of Credit, or amendment to or
renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and
complete copy of each such Letter of Credit or amendment to or renewal of a
Letter of Credit.
(h) Within five Business Days after the end of each month, the Agent
will send to each Bank a statement reflecting the outstanding Letters of Credit
as of the end of such month.
3.03 Risk Participations, Drawings and Reimbursements.
(a) Immediately upon the Issuance of each Letter of Credit, each
Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Issuing Bank a participation in such Letter of Credit and each
drawing thereunder in an amount equal to the product of (i) the Pro Rata Share
of such Bank, times (ii) the maximum amount available to be drawn under such
Letter of Credit and the amount of such drawing, respectively. For purposes of
Section 2.01, each Issuance of a Letter of Credit shall be deemed to utilize the
Commitment of each
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Bank by an amount equal to the amount of such participation for so long as any
related L/C Obligations shall be outstanding.
(b) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Bank will promptly
notify the Company and the Agent. Provided that it shall have received such
notice, the Company shall reimburse the Issuing Bank prior to 12:00 noon
(Chicago time) on each date that any amount is paid by the Issuing Bank under
any Letter of Credit (each such date, an "Honor Date") in an amount equal to the
amount so paid by the Issuing Bank. In the event the Company fails to reimburse
the Issuing Bank for the full amount of any drawing under any Letter of Credit
by 12:00 noon (Chicago time) on the Honor Date, the Issuing Bank will promptly
notify the Agent and the Agent will promptly notify each Bank thereof, and the
Company shall be deemed to have requested that Base Rate Committed Loans be made
by the Banks to be disbursed on the Honor Date under such Letter of Credit,
subject to the amount of the unutilized portion of the Commitment and subject to
the conditions set forth in Section 5.02 other than any notice requirements.
Any notice given by the Issuing Bank or the Agent pursuant to this subsection
3.03(b) may be oral if immediately confirmed in writing (including by facsimile
transmission); provided that the lack of such an immediate confirmation shall
not affect the conclusiveness or binding effect of such notice.
(c) Each Bank shall upon any notice pursuant to subsection 3.03(b)
make available to the Agent for the account of the relevant Issuing Bank an
amount in immediately available funds equal to its Pro Rata Share of the amount
of the drawing, whereupon the participating Banks shall (subject to subsection
3.03(d)) each be deemed to have made a Committed Loan consisting of a Base Rate
Committed Loan to the Company in that amount. If any Bank so notified fails to
make available to the Agent for the account of the Issuing Bank the amount of
such Bank's Pro Rata Share of such amount by no later than 2:00 p.m. (Chicago
time) on the Honor Date, then interest shall accrue on such Bank's obligation to
make such payment, from the Honor Date to the date such Bank makes such payment,
at a rate per annum equal to the Federal Funds Rate in effect from time to time
during such period. The Agent will promptly give notice of the occurrence of
the Honor Date, but failure of the Agent to give any such notice on the Honor
Date or in sufficient time to enable any Bank to effect such payment on such
date shall not relieve such Bank from its obligations under this Section 3.03.
(d) With respect to any unreimbursed drawing that is not converted
into Committed Loans consisting of Base Rate Committed Loans to the Company in
whole or in part as contemplated by subsection 3.03(b), because of the Company's
failure to satisfy the conditions set forth in Section 5.02 other than any
notice requirements or for any other reason, the Company shall be deemed to have
incurred from the Issuing Bank an L/C Borrowing in the amount of such drawing,
which L/C Borrowing shall be due and payable on demand (together with interest)
and shall bear interest at a rate per annum equal to the Base Rate plus 2% per
annum, and each Bank's payment to the Issuing Bank pursuant to subsection
3.03(c) shall be deemed payment in respect of its participation in such L/C
Borrowing and shall constitute an L/C Advance from such Bank in satisfaction of
its participation obligation under this Section 3.03.
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(e) Each Bank's obligation in accordance with this Agreement to make
the Committed Loans or L/C Advances, as contemplated by this Section 3.03, as a
result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to the Issuing Bank and shall not be affected
by any circumstance, including (i) any set-off, counterclaim, recoupment,
defense or other right which such Bank may have against the Issuing Bank, the
Company or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default, an Event of Default or a Material Adverse Effect; or
(iii) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing; provided, however, that each Bank's obligation
to make Committed Loans (but not L/C Advances) under this Section 3.03 is
subject to the conditions set forth in Section 5.02.
3.04 Repayment of Participations.
(a) Upon (and only upon) receipt by the Agent for the account of
the Issuing Bank of immediately available funds from the Company (i) in
reimbursement of any payment made by the Issuing Bank under the Letter of Credit
with respect to which any Bank has paid the Agent for the account of the Issuing
Bank for such Bank's participation in the Letter of Credit pursuant to Section
3.03 or (ii) in payment of interest thereon, the Agent will pay to each Bank, in
the same funds as those received by the Agent for the account of the Issuing
Bank, the amount of such Bank's Pro Rata Share of such funds, and the Issuing
Bank shall receive the amount of the Pro Rata Share of such funds of any Bank
that did not so pay the Agent for the account of the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any time to
return to the Company, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by the
Company to the Agent for the account of the Issuing Bank pursuant to subsection
3.04(a) in reimbursement of a payment made under the Letter of Credit or
interest or fee thereon, each Bank shall, on demand of the Agent, forthwith
return to the Agent or the Issuing Bank the amount of its Pro Rata Share of any
amounts so returned by the Agent or the Issuing Bank plus interest thereon from
the date such demand is made to the date such amounts are returned by such Bank
to the Agent or the Issuing Bank, at a rate per annum equal to the Federal Funds
Rate in effect from time to time.
3.05 Role of the Issuing Bank.
(a) Each Bank and the Company agree that, in paying any drawing
under a Letter of Credit, the Issuing Bank shall not have any responsibility to
obtain any document (other than any sight draft and certificates expressly
required by the Letter of Credit) or to ascertain or inquire as to the validity
or the authority of the Person executing or delivering any such document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of the Issuing Bank shall be liable to
any Bank for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Banks (including the Required Banks, as
applicable); (ii) any action taken or omitted in the absence of gross negligence
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or willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) The Company hereby assumes all risks of the acts or omissions of
any beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
preclude the Company's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. No
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of the Issuing Bank, shall be liable or responsible for any of the
matters described in clauses (a) through (g) of Section 3.06; provided, however,
anything in such clauses to the contrary notwithstanding, that the Company may
have a claim against the Issuing Bank, and the Issuing Bank may be liable to the
Company, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Company which the Company
proves were caused by the Issuing Bank's willful misconduct or gross negligence
or the Issuing Bank's wrongful dishonor of any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing: (i) the Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) the Issuing Bank shall not be responsible
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.
3.06 Obligations Absolute. The obligations of the Company under this
Agreement and any L/C-Related Document to reimburse the Issuing Bank for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing
under a Letter of Credit converted into Committed Loans, shall be unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C- Related Document under all circumstances,
including the following:
(a) any lack of validity or enforceability of this Agreement or any
L/C-Related Document;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of the Company in respect of
any Letter of Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C-Related Documents;
(c) the existence of any claim, set-off, defense or other right that
the Company may have at any time against any beneficiary or any transferee
of any Letter of Credit (or any Person for whom any such beneficiary or any
such transferee may be acting), the Issuing Bank or any other Person,
whether in connection with this Agreement, the transactions contemplated
hereby or by the L/C-Related Documents or any unrelated transaction;
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(d) any draft, demand, certificate or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Letter of Credit;
(e) any payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of any Letter of Credit; or any payment made by the
Issuing Bank under any Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to
any beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any Insolvency Proceeding;
(f) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
other guarantee, for all or any of the obligations of the Company in
respect of any Letter of Credit; or
(g) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Company or a guarantor.
3.07 Letter of Credit Fees.
(a) The Company shall pay to the Agent for the account of each of
the Banks a letter of credit fee, in Dollars, with respect to the Letters of
Credit equal to the Applicable Margin for Offshore Rate Committed Loans, per
annum, times the average daily maximum Dollar Equivalent amount available to be
drawn on the outstanding Letters of Credit, computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter based upon Letters of
Credit outstanding for that quarter as calculated by the Agent. Such letter of
credit fees shall be due and payable quarterly in arrears on the last Business
Day of each calendar quarter during which Letters of Credit are outstanding,
commencing on the first such quarterly date to occur after the Closing Date,
through the Credit Termination Date (or such later date upon which the
outstanding Letters of Credit shall expire), with the final payment to be made
on the Credit Termination Date (or such later expiration date).
(b) The Company shall pay to the Issuing Bank a letter of credit
fronting fee, in Dollars, for each Letter of Credit Issued by the Issuing Bank
equal to one-eighth of one percent (1/8%) of the Dollar Equivalent face amount
(or increased face amount, as the case may be) of such Letter of Credit. Such
Letter of Credit fronting fee shall be due and payable on each date of Issuance
of a Letter of Credit.
(c) The Company shall pay to the Issuing Bank from time to time on
demand the Issuing Bank's normal issuance, presentation, amendment negotiation,
and other processing fees,
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and other standard costs and charges, of the Issuing Bank relating to letters
of credit as from time to time in effect.
3.08 Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit shall (unless otherwise
expressly provided in the Letters of Credit) apply to the Letters of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes.
(a) Any and all payments by the Company to each Bank or the Agent
under this Agreement and any other Loan Document shall be made free and clear
of, and without deduction or withholding for, any Taxes. In addition, the
Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or withhold
any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank or the Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section
4.01), such Bank or the Agent, as the case may be, receives and retains an
amount equal to the sum it would have received and retained had no such
deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
(iv) the Company shall also pay to each Bank or the Agent for
the account of such Bank, at the time interest is paid, Further Taxes in
the amount that the respective Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each Bank and
the Agent for the full amount of (i) Taxes, (ii) Other Taxes, and (iii) Further
Taxes in the amount that the respective Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed, and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly
or legally asserted.
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Payment under this indemnification shall be made within 30 days after the date
the Bank or the Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the Company of
Taxes, Other Taxes or Further Taxes, the Company shall furnish to each Bank or
the Agent the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to such Bank or the Agent.
(e) If the Company is required to pay any amount to any Bank or the
Agent pursuant to subsection (b) or (c) of this Section 4.01, then such Bank
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Company which may thereafter accrue, if such change in
the sole judgment of such Bank is not otherwise disadvantageous to such Bank.
4.02 Illegality.
(a) If any Bank determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Bank or its applicable Lending Office to make Offshore Rate Loans
(including Offshore Rate Loans in any Applicable Currency), then, on notice
thereof by the Bank to the Company through the Agent, any obligation of that
Bank to make Offshore Rate Loans (including in respect of any LIBOR Bid Loan as
to which the Company has accepted such Bank's, but as to which the Borrowing
Date has not arrived) shall be suspended until the Bank notifies the Agent and
the Company that the circumstances giving rise to such determination no longer
exist, at which time such Bank shall notify the Agent and the Company and such
Bank's obligation to make Offshore Rate Loans shall be reinstated.
(b) If a Bank determines that it is unlawful to maintain any
Offshore Rate Loan, the Company shall, upon its receipt of notice of such fact
and demand from such Bank (with a copy to the Agent), prepay in full such
Offshore Rate Loans of that Bank then outstanding, together with interest
accrued thereon and amounts required under Section 4.04, either on the last day
of the Interest Period thereof, if the Bank may lawfully continue to maintain
such Offshore Rate Loans to such day, or immediately, if the Bank may not
lawfully continue to maintain such Offshore Rate Loan. If the Company is
required to so prepay any Offshore Rate Committed Loan, then concurrently with
such prepayment, the Company shall (without regard to whether the conditions
specified in Section 5.02 have been satisfied) borrow from the affected Bank, in
the amount of such repayment, a Base Rate Committed Loan.
(c) Before giving any notice to the Agent under this Section 4.02,
the affected Bank shall designate a different Lending Office with respect to its
Offshore Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Bank, be
illegal or otherwise disadvantageous to the Bank.
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4.03 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i) the introduction
of or any change (other than any change by way of imposition of or increase in
reserve requirements included in the calculation of the Offshore Rate) in the
interpretation of any law or regulation after the date of this Agreement or (ii)
the compliance by that Bank with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force of law) after
the date of this Agreement, there shall be any increase in the cost to such Bank
of agreeing to make or making, funding or maintaining any Offshore Rate Loans or
participating in Letters of Credit, or, in the case of the Issuing Bank, any
increase in the cost to the Issuing Bank of agreeing to issue, issuing or
maintaining any Letter of Credit or of agreeing to make or making, funding or
maintaining any unpaid drawing under any Letter of Credit, then the Company
shall be liable for, and shall from time to time, upon demand in compliance with
Section 4.07 (with a copy of such demand to be sent to the Agent), pay to the
Agent for the account of such Bank, additional amounts as are sufficient to
compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation, in any such case, after the date of this
Agreement affects or would affect the amount of capital required or expected to
be maintained by the Bank or any corporation controlling the Bank and (taking
into consideration such Bank's or such corporation's policies with respect to
capital adequacy and such Bank's desired return on capital) determines that the
amount of such capital is increased as a consequence of its Commitment, loans,
credits or obligations under this Agreement, then, upon demand in compliance
with Section 4.07 of such Bank to the Company through the Agent, the Company
shall pay to the Bank, from time to time as specified by the Bank, additional
amounts sufficient to compensate the Bank for such increase.
4.04 Funding Losses. The Company shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Company to make on a timely basis any
payment of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or convert a
Loan after the Company has given (or is deemed to have given) a competitive
Bid Request, a Notice of Borrowing or a Notice of Conversion/ Continuation
except as set forth in subsection 2.05(b) or (c) ;
(c) the failure of the Company to make any prepayment of any
Committed Loan in accordance with any notice delivered under Section 2.09;
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(d) the prepayment (including pursuant to Section 2.09 or 2.11) or
other payment (including after acceleration thereof) of an Offshore Rate
Loan or Absolute Rate Bid Loan on a day that is not the last day of the
relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any Offshore
Rate Committed Loan to a Base Rate Committed Loan on a day that is not the
last day of the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained or from charges
relating to any Offshore Currency Loans. For purposes of calculating amounts
payable by the Company to the Banks under this Section 4.04 and under subsection
4.03(a), each Offshore Rate Loan made by a Bank (and each related reserve,
special deposit or similar requirement) shall be conclusively deemed to have
been funded at the LIBOR used in determining the Offshore Rate for such Offshore
Rate Loan by a matching deposit or other borrowing in the interbank market for a
comparable amount and for a comparable period, whether or not such Offshore Rate
Loan is in fact so funded.
4.05 Inability to Determine Rates. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the Offshore
Rate for any requested Interest Period with respect to a proposed Offshore Rate
Loan, or that the Offshore Rate applicable pursuant to subsection 2.13(a) for
any requested Interest Period with respect to a proposed Offshore Rate Loan does
not adequately and fairly reflect the cost to the Banks of funding such Loan,
the Agent will promptly so notify the Company and each Bank. Thereafter, the
obligation of the Banks to make or maintain Offshore Rate Loans hereunder shall
be suspended until the Agent upon the instruction of the Required Banks revokes
such notice in writing. Upon receipt of such notice, the Company may revoke any
Notice of Borrowing or Notice of Conversion/Continuation then submitted by it.
If the Company does not revoke such Notice, the Banks shall make, convert or
continue the Loans, as proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Loans shall be made,
converted or continued as Base Rate Committed Loans instead of Offshore Rate
Loans. In the case of any Offshore Currency Loans, the Borrowing or
continuation shall be in an aggregate amount equal to the Dollar Equivalent
amount of the originally requested Borrowing or continuation in the Offshore
Currency, and to that end any outstanding Offshore Currency Loans which are the
subject of any continuation shall be redenominated and converted into Base Rate
Committed Loans in Dollars with effect from the last day of the Interest Period
with respect to any such Offshore Currency Loans.
4.06 Reserves on Offshore Rate Loans. The Company shall pay to each Bank,
in respect of any Offshore Currency Loans, additional costs arising under any
applicable regulations of the central bank or other relevant Governmental
Authority in the country in which the Offshore Currency of such Offshore Rate
Loan circulates on the unpaid principal amount of each Offshore Rate Loan equal
to the actual costs of such reserves allocated to such Loan by the Bank (as
determined by the Bank in good faith, which determination shall be conclusive),
payable on each date on which interest is payable on such Loan, provided the
Company shall have received at least
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15 days' prior written notice (with a copy to the Agent) of such additional
interest from the Bank. If a Bank fails to give notice 15 days prior to the
relevant Interest Payment Date, such additional interest shall be payable 15
days from receipt of such notice.
4.07 Certificates of Banks. Any Bank or any Bank's participant claiming
reimbursement or compensation under this Article IV shall deliver to the Company
(with a copy to the Agent) a certificate setting forth in reasonable detail the
amount payable to the Bank hereunder and such certificate shall be conclusive
and binding on the Company in the absence of manifest error. Notwithstanding
anything to the contrary contained in this Agreement, no amounts shall be
payable by the Company pursuant to Section 4.03, 4.04 or 4.06 with respect to
any period commencing more than 180 days before the delivery of the certificate
contemplated by this Section 4.07 unless such amounts are claimed as a result of
the retroactive effect of any newly enacted or adopted law, rule or regulation
and such certificate is delivered within 180 days after such enactment or
adoption.
4.08 Substitution of Banks. Upon the receipt by the Company from any Bank
(an "Affected Bank") of a claim for compensation under Section 4.03, the Company
may: (i) request the Affected Bank to use commercially reasonable efforts to
obtain a replacement bank or financial institution satisfactory to the Company
to acquire and assume all or a ratable part of all of such Affected Bank's
Loans, Commitment and participations in Letters of Credit (a "Replacement
Bank"); (ii) request one more of the other Banks to acquire and assume all or
part of such Affected Bank's Loans, Commitment and participations in Letters of
Credit; or (iii) designate a Replacement Bank. Any such designation of a
Replacement Bank under clause (i) or (iii) shall be subject to the prior written
consent of the Agent (which consent shall not be unreasonably withheld), and any
such substitution shall in any event be effective upon satisfaction of the
conditions set forth in Section 11.08.
4.09 Survival. The agreements and obligations of the Company in this
Article IV shall survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions of Initial Credit Extensions. The obligation of each Bank
to make its initial Credit Extension hereunder, and to receive through the Agent
the initial Competitive Bid Request, is subject to the condition that the Agent
shall have received on or before the date of the initial Credit Extension all of
the following, in form and substance reasonably satisfactory to the Agent, and
in sufficient copies for each Bank, in each case on or before May 15, 1997:
(a) Credit Agreement and Notes. This Agreement and the Notes
executed by each party thereto;
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(b) Resolutions; Incumbency.
(i) copies of the resolutions of the board of directors of
the Company authorizing the transactions contemplated hereby,
certified by the Secretary or an Assistant Secretary of the Company;
and
(ii) a certificate of the Secretary or Assistant Secretary of
the Company certifying the names and true signatures of the officers
of the Company authorized to execute, deliver and perform, as
applicable, this Agreement and all other Loan Documents;
(c) Organization Documents; Good Standing. Each of the following
documents:
(i) the articles or certificate of incorporation and the
bylaws of the Company as in effect on the date hereof, certified by
the Secretary or Assistant Secretary of the Company as of such date;
and
(ii) a good standing certificate for the Company from the
Secretary of State of the State of Wisconsin, its state of
incorporation and Kentucky, Missouri, Alabama, Georgia and Michigan,
together with bring-down certificates by facsimile from such
jurisdictions, dated the date hereof;
(d) Legal Opinions. An opinion of each of (i) Mayer, Brown & Platt,
counsel to the Company, substantially in the form of Exhibit D-1, and (ii)
Thomas R. Savage, Esq., general counsel of the Company, substantially in
the form of Exhibit D-2, addressed to the Agent and the Banks;
(e) Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees to the extent then due and payable on the Closing
Date;
(f) Certificate. A certificate signed by a Responsible Officer on
behalf of the Company, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article
VI are true and correct on and as of such date, as though made on and
as of such date;
(ii) no Default or Event of Default exists or would result
after giving effect to the initial Credit Extension; and
(iii) there has occurred since June 30, 1996, no event or
circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect; and
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(g) Other Documents. Such other approvals, opinions, documents or
materials as the Agent or any Bank may reasonably request.
5.02 Conditions to All Credit Extensions. The obligation of each Bank to
make any Committed Loan to be made by it (including its initial Committed Loan),
the obligation of the Issuing Bank to issue, and of each Bank to participate in,
any Letter of Credit and the obligation of any Bank to make any Bid Loan as to
which the Company has accepted the relevant Competitive Bid (including its
initial Bid Loan), are subject to the satisfaction of the following conditions
precedent on the relevant Borrowing Date or Issuance Date:
(a) Notice of Borrowing or Issuance. The Agent shall have received
(with, in the case of the initial Committed Loan only, a copy for each
Bank) a Notice of Borrowing or in the case of any Issuance of any Letter of
Credit, the Agent and the Issuing Bank shall have received an L/C
Application or L/C Amendment Application, as required under Section 3.02;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article VI (other than Section 6.11(b))
shall be true and correct on and as of such Borrowing Date or Issuance Date
with the same effect as if made on and as of such Borrowing Date or
Issuance Date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and
correct as of such earlier date); and
(c) No Existing Default. No Default or Event of Default shall exist
or shall result after giving effect to such Borrowing or Issuance.
Each Notice of Borrowing, Notice of Competitive Bid Request and L/C Application
or L/C Amendment Application submitted by the Company hereunder shall constitute
a representation and warranty by the Company hereunder, as of the date of each
such notice and as of each Borrowing Date or Issuance Date, that the conditions
in subsection 5.02(a), (b) and (c) are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank that:
6.01 Corporate Existence and Power. The Company and each of its
Subsidiaries:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
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(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its
business and to execute, deliver, and perform its obligations under the
Loan Documents;
(c) is duly qualified as a foreign corporation and is licensed and
in good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification or license, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect; and
(d) is in compliance in all material respect with all Requirements
of Law.
6.02 Corporate Authorization; No Contravention. The execution, delivery
and performance by the Company of this Agreement and each other Loan Document
have been duly authorized by all necessary corporate action, and do not and will
not:
(a) contravene the terms of any of the Company's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any material
Contractual Obligation to which the Company or any of its Subsidiaries is a
party or any order, injunction, writ or decree of any Governmental
Authority to which the Company or any of its Subsidiaries or its property
is subject; or
(c) violate any Requirement of Law applicable to the Company or any
of its Subsidiaries.
6.03 Governmental Authorization. No material approval, consent,
exemption, authorization, or other action by, or material notice to, or material
filing with, any Governmental Authority is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, the
Company of the Agreement or any other Loan Document.
6.04 Binding Effect. This Agreement and each other Loan Document
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability.
6.05 Litigation. To the best of the Company's knowledge, no litigation
(including, without limitation, derivative actions), arbitration proceedings or
governmental or regulatory proceedings are pending or threatened against the
Company or any of its Subsidiaries that would, if adversely determined, be
reasonably likely to have a Material Adverse Effect, except as set forth in
Schedule 6.05. Other than any liability incident to such litigation or
proceedings, the Company does not have any material contingent liabilities not
provided for or disclosed in the financial statements referred to in Section
6.11(a).
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6.06 No Default. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Company. As of the Closing Date,
neither the Company nor any Subsidiary is in default under or with respect to
any Contractual Obligation in any respect which, individually or together with
all such defaults, could reasonably be expected to have a Material Adverse
Effect, or that would, if such default had occurred after the Closing Date,
create an Event of Default under subsection 9.01(e).
6.07 ERISA Compliance. Except as specifically disclosed in Schedule 6.07:
(a) Each Plan is in compliance with the applicable provisions of
ERISA, the Code and other federal or state law except where the failure to do so
or to so comply could not reasonably be expected to have a Material Adverse
Effect. Each Plan which is intended to qualify under Section 401(a) of the Code
has received a favorable determination letter from the IRS and, to the best
knowledge of the Company, nothing has occurred which would cause the loss of
such qualification. The Company and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect.
(c) (1) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Company nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Company nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
neither the Company nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
6.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for the purposes set forth in and permitted by Section 7.12.
Neither the Company nor any Subsidiary is generally engaged in the business of
purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock.
6.09 Title to Properties. The Company and each Subsidiary have good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of the Company and its Subsidiaries is subject to no Liens, other than
Permitted Liens.
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6.10 Taxes. The Company and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Company or
any Subsidiary that would, if made, have a Material Adverse Effect.
6.11 Financial Condition.
(a) The audited consolidated financial statements of the Company
and its Subsidiaries for the fiscal year ended June 30, 1996 and the unaudited
consolidated financial statements of the Company and its Subsidiaries for the
six month period ended December 29, 1996, and in each case the related
consolidated statements of income or operations, shareholders' equity and cash
flows for the period ended on that date:
(i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise
expressly noted therein (subject to ordinary, good faith year end
audit adjustments);
(ii) fairly present the financial condition of the Company
and its Subsidiaries as of the date thereof and results of
operations for the period covered thereby; and
(iii) except as specifically disclosed in Schedule 6.11,
show all material indebtedness and other liabilities, direct or
contingent, of the Company and its consolidated Subsidiaries as of
the date thereof, including liabilities for taxes, material
commitments and Contingent Obligations.
(b) Since June 30, 1996, there has been no Material Adverse
Effect.
6.12 Environmental Matters. The Company conducts in the ordinary course
of business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof the Company has reasonably concluded that, except as specifically
disclosed in Schedule 6.12, such Environmental Laws and Environmental Claims
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
6.13 Regulated Entities. None of the Company, any Person controlling the
Company, or any Subsidiary, is an "Investment Company" within the meaning of the
Investment Company Act of 1940. The Company is not subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
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6.14 Copyrights, Patents, Trademarks and Licenses, etc. The Company or
its Subsidiaries own or are licensed or otherwise have the right to use all of
the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Company, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Company or any
Subsidiary infringes upon any rights held by any other Person. Except as
specifically disclosed in Schedule 6.14, no claim or litigation regarding any of
the foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Company, proposed, which, in either case,
could reasonably be expected to have a Material Adverse Effect.
6.15 Subsidiaries. As of the date of this Agreement, the Company has no
Subsidiaries other than those specifically disclosed in part (a) of Schedule
6.15. The Company has no Material Subsidiaries other than those specifically
disclosed in part (b) of Schedule 6.15 or as disclosed pursuant to subsection
7.02(d) (including their jurisdictions of incorporation). As of the date of
this Agreement, the Company has no equity investments in any other corporation
or entity other than those specifically disclosed in part (c) of Schedule 6.15.
6.16 Insurance. The properties of the Company and its Subsidiaries are
insured as required by Section 7.06.
6.17 Full Disclosure. None of the representations or warranties made by
the Company in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of the
Company or any Subsidiary in connection with the Loan Documents (including the
offering and disclosure materials delivered by or on behalf of the Company to
the Banks prior to the Closing Date), contains any untrue statement of a
material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or delivered.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid, unless the Required Banks waive compliance
in writing:
7.01 Financial Statements. The Company shall deliver to the Agent and
each Bank:
(a) as soon as available, but not later than 100 days after the end
of each fiscal year (commencing with fiscal year ending June 29, 1997), a
copy of the audited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year and the related
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consolidated statements of income or operations, shareholders' equity and
cash flows for such year, setting forth in each case in comparative form
the figures for the previous fiscal year, and accompanied by the opinion of
Arthur Andersen LLP or another nationally-recognized independent public
accounting firm ("Independent Auditor") which report shall state that such
consolidated financial statements present fairly the financial position for
the periods indicated in conformity with GAAP applied on a consistent
basis. Such opinion shall not be qualified or limited, in either case,
because of a restricted or limited examination by the Independent Auditor
of any material portion of the Company's or any Subsidiary's records; and
(b) as soon as available, but not later than 50 days after the end
of each of the first three fiscal quarters of each fiscal year (commencing
with the fiscal quarter ending March 30, 1997), a copy of the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of the
end of such quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on the first
day and ending on the last day of such quarter, and certified by a
Responsible Officer as fairly presenting, in accordance with GAAP (subject
to ordinary, good faith year-end audit adjustments and the absence of notes
thereto), the financial position and the results of operations of the
Company and the Subsidiaries.
7.02 Certificates; Other Information. The Company shall furnish to the
Agent and each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.01(a), a certificate of the Independent Auditor
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default with respect to Sections 8.01,
8.02, 8.03, 8.04, 8.05, 8.07, 8.10, and 8.11, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.01(a) and (b), a Compliance Certificate
executed by a Responsible Officer;
(c) promptly, but not later than five days after the date of filing
with the SEC, copies of all financial statements and reports that the
Company sends to its shareholders, and copies of all financial statements
and regular, periodical or special reports (including Forms 10-K, 10-Q (in
each case excluding exhibits and schedules thereto unless requested by the
Agent or a Bank) and 8-K) that the Company or any Subsidiary may make to,
or file with, the SEC;
(d) promptly after the creation or acquisition of any Material
Subsidiary, the name of such Material Subsidiary, a description of its
business, its net worth and the value of its assets; and
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(e) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the
Agent, at the request of any Bank, may from time to time request.
7.03 Notices. The Company shall promptly notify the Agent:
(a) upon any Responsible Officer becoming aware of the occurrence
of any Default or Event of Default;
(b) of any matter that has resulted, or may, in the judgment of the
Company, reasonably be expected to result in a Material Adverse Effect,
including (i) breach or non-performance of, or any default under, a
Contractual Obligation of the Company or any Subsidiary; (ii) any dispute,
litigation, investigation, proceeding or suspension between the Company or
any Subsidiary and any Governmental Authority; or (iii) the commencement
of, or any material development in, any litigation or proceeding affecting
the Company or any Subsidiary, including pursuant to any applicable
Environmental Laws;
(c) upon any Responsible Officer becoming aware of the occurrence
of any ERISA Event (but in no event more than 10 days after such ERISA
Event), and deliver to the Agent and each Bank a copy of any notice with
respect to such ERISA Event that is filed with a Governmental Authority and
any notice delivered by a Governmental Authority to the Company or any
ERISA Affiliate with respect to such ERISA Event;
(d) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated Subsidiaries;
and
(e) promptly after the president, chief financial officer, chief
executive officer, treasurer or general counsel of the Company obtains
knowledge thereof, notice of any change in the Applicable Credit Rating
assigned by S&P or Moody's.
Each notice under this Section 7.03 shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under subsection 7.03(a) shall describe the provisions of this Agreement or
other Loan Document that have been breached or violated.
7.04 Preservation of Corporate Existence, Etc. The Company shall, and
shall cause each Material Subsidiary to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation except as otherwise permitted by this Agreement;
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(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises
necessary or desirable in the normal conduct of its business except in
connection with transactions permitted by Section 8.03 and sales of assets
permitted by Section 8.02 and except for any of the foregoing the
expiration or termination of which could not reasonably be expected to have
a Material Adverse Effect;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.
7.05 Maintenance of Property. The Company shall maintain, and shall cause
each Subsidiary to maintain, and preserve all its material property which is
used in its business in good working order and condition, ordinary wear and tear
excepted, except where the failure to so maintain or preserve could not
reasonably be expected to have a Material Adverse Effect.
7.06 Insurance. The Company shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons; provided that the
Company and its Subsidiaries may self-insure against such risks and in such
amounts as is usually self-insured by companies engaged in similar businesses
and owning similar properties in the same general areas in which the Company and
its Subsidiaries operate.
7.07 Payment of Obligations. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such
Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; and
(c) all Indebtedness, as and when due and payable, but subject to
any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.
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7.08 Compliance with Laws. The Company shall comply, and shall cause
each Subsidiary to comply, with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business, except where the failure
to so comply could not reasonably be expected to cause a Material Adverse
Effect.
7.09 Compliance with ERISA. The Company shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
7.10 Inspection of Property and Books and Records. The Company shall
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP, or
applicable accounting procedures related to foreign Material Subsidiaries,
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Company and such Subsidiary. The
Company shall permit, and shall cause each Subsidiary to permit, representatives
and independent contractors of the Agent and representatives of any Bank to
visit and inspect any of their respective properties, to examine their
respective corporate, financial and operating records, and make copies thereof
or abstracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective directors, officers, and, in the presence of the
Company if the Company shall so request, independent public accountants, all at
the expense of the Company and at such reasonable times during normal business
hours and as often as may be reasonably desired, upon reasonable advance notice
to the Company; provided, however, when an Event of Default exists the Agent or
any Bank may do any of the foregoing at the expense of the Company at any time
during normal business hours and without advance notice.
7.11 Environmental Laws. The Company shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws, except where the failure to do so or to
so comply could not reasonably be expected to have a Material Adverse Effect.
7.12 Use of Proceeds. The Company shall use the proceeds of the Loans for
general corporate purposes including the repurchase of the Company's common
stock and for commercial paper back-up, but in any event not (a) in
contravention of any Requirement of Law or (b) (i) to purchase or carry Margin
Stock, (ii) to repay or otherwise refinance indebtedness of the Company or
others incurred to purchase or carry Margin Stock, (iii) to extend credit for
the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any other transaction that is subject to Section 13 or 14 of the
Exchange Act.
7.13 Guarantors. In the event any Person shall hereafter become a U.S.
domestic Material Subsidiary, the Company shall promptly cause such Material
Subsidiary to execute and deliver to the Agent (on behalf of the Banks) a
guaranty of the Obligations of the Company substantially in form of Exhibit K
and otherwise in form and substance satisfactory to the Agent.
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ARTICLE VIII
NEGATIVE AND FINANCIAL COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid, unless the Required Banks waive compliance
in writing:
8.01 Limitation on Liens. The Company shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("Permitted
Liens"):
(a) any Lien existing on property of the Company or any Subsidiary
on the Closing Date and set forth in Schedule 8.01 securing Indebtedness
outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to
the extent that non-payment thereof is permitted by Section 7.07; provided
that no notice of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary
course of business which are not delinquent for more than 90 days or remain
payable without penalty or which are being contested in good faith and by
appropriate proceedings, which proceedings have the effect of preventing
the forfeiture or sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
social security legislation;
(f) Liens on the property of the Company or any Subsidiary securing
(i) the non-delinquent performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, (ii) contingent obligations
on surety and appeal bonds, and (iii) other non-delinquent obligations of a
like nature; in each case, incurred in the ordinary course of business and
treating as non-delinquent any delinquency which is being contested in good
faith and by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property subject thereto;
(g) Liens consisting of judgment or judicial attachment liens with
respect to judgments that do not constitute an Event of Default and in the
aggregate do not exceed $10,000,000;
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(h) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, are not substantial in amount, and
which do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the businesses of
the Company and its Subsidiaries;
(i) Liens on assets of corporations which become Subsidiaries after
the date of this Agreement; provided, however, that such Liens existed at
the time the respective corporations became Subsidiaries and were not
created in anticipation thereof;
(j) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; provided that (i) such deposit account is
not a dedicated cash collateral account and is not subject to restrictions
against access by the Company in excess of those set forth by regulations
promulgated by the FRB, and (ii) such deposit account is not intended by
the Company or any Subsidiary to provide collateral to the depository
institution;
(k) Liens securing reimbursement obligations incurred in the
ordinary course of business for letters of credit, which Liens encumber
only goods, or documents of title covering goods, which are purchased in
transactions for which such letters of credit are issued;
(l) any extension, renewal or substitution of or for any of the
foregoing Liens; provided that (i) the Indebtedness or other obligation or
liability secured by the applicable Lien shall not exceed the Indebtedness
or other obligation or liability existing immediately prior to such
extension, renewal or substitution and (ii) the Lien securing such
Indebtedness or other obligation or liability shall be limited to the
property which, immediately prior to such extension, renewal or
substitution, secured such Indebtedness or other obligation or liability;
(m) other Liens (other than pursuant to subsection 8.01(n)) securing
Indebtedness or other obligations not at any time exceeding an amount equal
to $20,000,000; and
(n) Liens on assets of an Emerging Market Subsidiary securing
Indebtedness incurred by such Emerging Market Subsidiary.
8.02 Disposition of Assets. The Company shall not, and shall not suffer
or permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of (collectively, a "Disposition")
(whether in one or a series of transactions) any property (including accounts
and notes receivable, with or without recourse) or enter into any agreement to
do any of the foregoing, except:
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(a) Dispositions of inventory, or used, worn-out, obsolete or
surplus equipment and other assets, all in the ordinary course of business;
(b) Dispositions of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to
the purchase price of such replacement equipment;
(c) Dispositions of assets received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement
of delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(d) Dispositions of assets between and among the Company and its
Wholly-Owned Subsidiaries and the Disposition of assets from any other
Subsidiary to the Company or a Wholly-Owned Subsidiary of the Company;
provided that (i) at the time of any such Disposition, no Default or Event
of Default shall exist or shall result after giving effect to such
Disposition and (ii) the aggregate Dollar value of the assets subject to a
Disposition from the Company to a Wholly-Owned Subsidiary shall not exceed
(when aggregated with all Dispositions effected pursuant to subsection
8.02(e)) in any fiscal year 10% of the total consolidated assets of the
Company and its Subsidiaries, determined in accordance with GAAP, as of the
beginning of such fiscal year; and
(e) Dispositions not otherwise permitted hereunder which are made
for fair market value; provided that (i) at the time of any such
Disposition, no Default or Event of Default shall exist or shall result
after giving effect to such Disposition and (ii) the aggregate sales price
of all assets so sold by the Company and its Subsidiaries, together, shall
not exceed (when aggregated with all Dispositions effected pursuant to
subsection 8.02(d)) in any fiscal year 10% of the total consolidated assets
of the Company and its Subsidiaries, determined in accordance with GAAP, as
of the beginning of such fiscal year.
8.03 Consolidations and Mergers. The Company shall not, and shall not
suffer or permit any Subsidiary to, merge with or consolidate into any Person,
except:
(a) the Company or any Subsidiary may merge with or consolidate
into any Person, provided that (i) at the time of such merger or
consolidation, no Default or Event of Default shall exist or result after
giving effect to the consummation of such merger or consolidation and (ii)
the Company or such Subsidiary shall be the continuing or surviving
corporation;
(b) any Subsidiary may merge with or consolidate into the Company,
provided that the Company shall be the continuing or surviving corporation,
or with any one or more Subsidiaries, provided that if any transaction
shall be between a Subsidiary and a Wholly-Owned Subsidiary, the
Wholly-Owned Subsidiary shall be the continuing or surviving corporation;
and
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(c) any Subsidiary may sell all or substantially all of its assets
(upon voluntary liquidation or otherwise), to the Company or another
Wholly-Owned Subsidiary or as otherwise permitted by Section 8.02.
Any Disposition of assets which would be permitted by Section 8.02 may also be
accomplished via a merger or consolidation of a Subsidiary and such merger or
consolidation shall be permitted pursuant to this Section 8.03.
8.04 Loans and Investments. The Company shall not purchase or acquire, or
suffer or permit any Subsidiary to purchase or acquire, or make any commitment
therefor, any capital stock, equity interest, or any obligations or other
securities of, or any interest in, any Person (other than the Company), or make
or commit to make any Acquisitions, or make or commit to make any advance, loan,
extension of credit or capital contribution to or any other investment in, any
Person (other than the Company) including any Affiliate of the Company
(together, "Investments"), except for:
(a) Investments held by the Company or its Subsidiary in the form
of cash equivalents or short term marketable securities;
(b) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in the
ordinary course of business;
(c) extensions of credit by the Company to any of its Wholly-Owned
Subsidiaries or by any of its Subsidiaries to the Company or one of its
Wholly-Owned Subsidiaries, provided, however, that the aggregate amount of
such credit extended by the Company to Wholly-Owned Subsidiaries that are
Emerging Market Subsidiaries shall not exceed (determined without regard to
any write-downs or write-offs thereof and when aggregated with all
Investments effected pursuant to subsection 8.04(j), all Indebtedness
incurred pursuant to subsection 8.05(g) and all Contingent Obligations
incurred pursuant to subsection 8.07(e)(y)) (x) at any time prior to April
18, 1998, $60,000,000 and (y) at any time thereafter, $100,000,000;
(d) advances to employees for moving, relocation and travel
expenses, drawing accounts and similar expenditures and loans to employees
in the ordinary course of business;
(e) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, suppliers and customers arising in
the ordinary course of business;
(f) Investments of the Company and its Subsidiaries in existence as
of the Closing Date and set forth on Schedule 8.04;
(g) any extension or renewal of any of the foregoing;
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(h) Investments incurred in order to consummate an Acquisition of
any Person principally engaged in a business substantially similar to the
business of the Company taken as a whole and reasonable extensions thereof;
provided that (i) such Acquisition is undertaken in accordance with all
applicable Requirements of Law, (ii) the prior, effective written consent
or approval to such Acquisition by the board of directors or equivalent
governing body of the Person being acquired is obtained; and (iii) no
Default or Event of Default shall have occurred or be continuing both
before and after giving effect to such Acquisition;
(i) other Investments (other than pursuant to subsection 8.04(j))
made in any fiscal year not exceeding in the aggregate in such fiscal year
an amount equal to 5% of the total consolidated assets of the Company and
its Subsidiaries, determined in accordance with GAAP, as of the beginning
of such fiscal year; and
(j) Investments (other than pursuant to subsection 8.04(c)) made by
the Company or a Wholly-Owned Subsidiary in an Emerging Market Entity not
to exceed (when aggregated with all extensions of credit to Wholly-Owned
Subsidiaries that are Emerging Market Subsidiaries pursuant to subsection
8.04(c), all Indebtedness incurred pursuant to subsection 8.05(g) and all
Contingent Obligations incurred pursuant to subsection 8.07(e)(y)) (x) at
any time on or prior to April 18, 1998, $60,000,000 and (y) at any time
thereafter, $100,000,000.
8.05 Limitation on Indebtedness. The Company shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations permitted
pursuant to Section 8.07;
(c) Indebtedness existing on the Closing Date and set forth in
Schedule 8.05;
(d) Indebtedness constituting an Investment permitted pursuant to
Section 8.04;
(e) Indebtedness secured by Liens permitted under subsection
8.01(m);
(f) other Indebtedness (other than pursuant to subsection 8.05(g))
of the Company and its Subsidiaries so long as (x) no Default or Event of
Default shall have occurred or be continuing both before and after giving
effect to the incurrence of any such Indebtedness and (y) not more than
$20,000,000 of such other Indebtedness outstanding at any time shall be
Indebtedness of the Subsidiaries of the Company; and
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(g) Indebtedness of Emerging Market Subsidiaries to a Person other
than the Company so long as (x) no Default or Event of Default shall have
occurred or be continuing both before and after giving effect to the
incurrence of any such Indebtedness and (y) the aggregate amount of all
such Indebtedness shall not exceed (when aggregated with all extensions of
credit to Wholly-Owned Subsidiaries that are Emerging Market Subsidiaries
pursuant to subsection 8.04(c), all Investments effected pursuant to
subsection 8.04(j) and all Contingent Obligations incurred pursuant to
subsection 8.07(e)(y)) (x) at any time on or prior to April 18, 1998,
$60,000,000 and (y) at any time thereafter, $100,000,000.
8.06 Transactions with Affiliates. The Company shall not, and shall not
suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Company, except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Company or such
Subsidiary.
8.07 Contingent Obligations. The Company shall not, and shall not suffer
or permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course
of business;
(b) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 8.07;
(c) Contingent Obligations with respect to Surety Instruments
incurred in the ordinary course of business;
(d) in addition to other Contingent Obligations permitted
hereunder, Contingent Obligations which do not exceed $20,000,000 in the
aggregate at any one time outstanding; and
(e) Guaranty Obligations of the Company with respect to (x) any
Indebtedness of its Subsidiaries permitted pursuant to subsections 8.05(f)
and (g), and (y) (i) any financial obligations of any Wholly-Owned
Subsidiary with respect to its Investment in an Emerging Market Entity and
(ii) any Indebtedness of an Emerging Market Entity, provided, however, that
the aggregate amount of Contingent Obligations pursuant to this clause (y)
shall not exceed (when aggregated with all extensions of credit to
Wholly-Owned Subsidiaries that are Emerging Market Subsidiaries pursuant to
subsection 8.04(c), all Investments effected pursuant to subsection 8.04(j)
and all Indebtedness incurred pursuant to subsection 8.05(g)) (I) at any
time on or prior to April 18, 1998, $60,000,000 and (II) at any time
thereafter, $100,000,000.
8.08 ERISA. The Company shall not, and shall not suffer or permit any of
its ERISA Affiliates to: (a) engage in a prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan which has resulted
or could reasonably expected to result in liability of the
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Company in an aggregate amount in excess of $10,000,000; or (b) engage in a
transaction that could be reasonably expected to be subject to Section 4069 or
4212(c) of ERISA.
8.09 Change in Business. The Company shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Company and its
Subsidiaries on the date hereof taken as a whole, or reasonable extensions
thereof.
8.10 Accounting Changes. The Company shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as permitted by GAAP or SEC reporting requirements,
or change the fiscal year of the Company or of any Subsidiary.
8.11 Financial Covenants.
(a) Interest Coverage Ratio. For the period of four consecutive
fiscal quarters ending on the last day of each fiscal quarter, the Company
shall not permit the Interest Coverage Ratio to be less than 2.5:1.0.
(b) Leverage Ratio. The Company shall not at any time permit the
ratio of (i) Total Debt to (ii) Total Capitalization to be greater than (x)
at any time on or prior to the second anniversary of the date of this
Agreement, 65%, and (y) thereafter, 60% at any time.
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. The Company fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan, or (ii) within
five days after the same becomes due, any interest, fee or any other amount
payable hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by
the Company or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Company, any Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the date made or
deemed made; or
(c) Specific Defaults. The Company fails to perform or observe any
term, covenant or agreement (i) contained in Section 8.01, 8.04 or 8.07 and such
failure continues unremedied for five Business Days or (ii) contained in
subsection 7.03(a), Section 7.12 or in any other provision of Article VIII not
referred to above in clause (i); or
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(d) Other Defaults. The Company fails to perform or observe any
other term or covenant contained in this Agreement or any other Loan Document,
and such default shall continue unremedied for a period of 20 days after the
date upon which written notice thereof is given to the Company by the Agent or
any Bank; or
(e) Cross-Default. The Company or any Subsidiary (i) fails to make
any payment in respect of any Indebtedness or Contingent Obligation having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than (x) at any time prior to the date upon which the
Indebtedness referred to in item 1 of Schedule 8.05 is indefeasibly paid in
full, $10,000,000 and (y) thereafter, $20,000,000, when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or otherwise) and
such failure continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure; or (ii) fails to
perform or observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument relating to any such
Indebtedness or Contingent Obligation referred to in the preceding clause (i),
and such failure continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure if the effect of
such failure, event or condition is to cause, or to permit the holder or holders
of such Indebtedness or Contingent Obligation or beneficiary or beneficiaries of
such Indebtedness or Contingent Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause such
Indebtedness to be declared to be due and payable prior to its stated maturity,
or such Contingent Obligation to become payable or cash collateral in respect
thereof to be demanded; or
(f) Insolvency; Voluntary Proceedings. The Company or any Material
Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any Material Subsidiary,
or any writ, judgment, warrant of attachment, execution or similar process, is
issued or levied against a substantial part of the Company's or any Material
Subsidiary's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Company or any Material Subsidiary admits
the material allegations of a petition against it in any Insolvency Proceeding,
or an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Company or any Material Subsidiary
acquiesces in the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other similar Person
for itself or a substantial portion of its property or business; or
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(h) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted in liability of the
Company under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the
PBGC in an aggregate amount in excess of $10,000,000; (ii) the aggregate amount
of Unfunded Pension Liability among all Pension Plans at any time exceeds
$30,000,000; or (iii) the Company or any ERISA Affiliate shall fail to pay when
due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of $10,000,000; or
(i) Monetary Judgments. One or more final judgments, final orders,
decrees or arbitration awards is entered against the Company or any Subsidiary
involving in the aggregate a liability (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage) as to
any single or related series of transactions, incidents or conditions, of
$10,000,000 or more (determined after allowance for the application of any
insurance proceeds to such judgment or order), and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 10 days after
the entry thereof; or
(j) Change of Control. There occurs any Change of Control; or
(k) Guarantor Defaults. Any guarantor of the Obligations fails in
any material respect to perform or observe any term, covenant or agreement in
any guaranty of the obligations; or any guaranty of the Obligations is for any
reason partially (including with respect to future advances) or wholly revoked
or invalidated, or otherwise ceases to be in full force and effect, or any
guarantor of the Obligations or any other Person contests in any manner the
validity or enforceability thereof or denies that it has any further liability
or obligation thereunder; or any event described at subsection (f) or (g) of
this Section occurs with respect to any guarantor of the Obligations.
9.02 Remedies. If any Event of Default occurs and is continuing, the
Agent shall, at the request of, or may, with the consent of, the Required Banks,
(a) declare the commitment of each Bank to make Committed Loans and
to issue and participate in Letters of Credit and the obligation of the
Issuing Bank to issue Letters of Credit to be terminated, whereupon such
commitments and obligations shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due
and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or
applicable law including, without limitation, the right to stop accepting
competitive Bid Requests;
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provided, however, that upon the occurrence and during the continuance of any
Event of Default specified in subsection (f) or (g) of Section 9.01 with
respect to the Company, the obligation of each Bank to make Loans and the
obligation of any Issuing Bank to issue Letters of Credit shall automatically
terminate and the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable without further act of the Agent or any Bank. In addition, following
the occurrence and during the continuance of an Event of Default, so long as
any Letter of Credit has not been fully drawn and has not been canceled or
expired by its terms, upon demand by the Agent or the request of the Required
Banks (or automatically upon the occurrence of any Event of Default specified
in subsection (f) or (g) of Section 9.01), the Company shall Cash Collateralize
the dollar amount of the aggregate undrawn amount of all Letters of Credit and
any fees in connection with drawings thereon. Such funds shall be promptly
applied by the Agent to reimburse the Issuing Bank for drafts drawn from time
to time under the Letters of Credit. Such funds, if any, remaining following
the payment of all Obligations in full in cash and the termination or
cancellation of all Letters of Credit or the earlier termination of all Events
of Default shall, unless the Agent is otherwise directed by a court of
competent jurisdiction, be promptly paid over to the Company.
9.03 Rights Not Exclusive. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE X
THE AGENT
10.01 Appointment and Authorization; "Agent". Each Bank hereby
irrevocably (subject to Section 10.09) appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
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10.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.03 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Company or any Subsidiary or
Affiliate of the Company, or any officer thereof, contained in this Agreement or
in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Bank to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Company or any of the Company's
Subsidiaries or Affiliates.
10.04 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Banks as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Required Banks and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.
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10.05 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Banks, unless the Agent shall have
received written notice from a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". The Agent will notify the Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Banks in accordance with Article
IX; provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
10.06 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Company and its Subsidiaries, and all applicable bank regulatory laws relating
to the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
10.07 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that no
Bank shall be liable for the payment to the Agent-Related Persons of any portion
of such Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Bank shall reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document,
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or any document contemplated by or referred to herein, to the extent that the
Agent is not reimbursed for such expenses by or on behalf of the Company. The
undertaking in this Section 10.07 shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
10.08 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to or consent of the Banks. The Banks acknowledge that, pursuant
to such activities, BofA or its Affiliates may receive information regarding the
Company or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such Subsidiary) and
acknowledge that the Agent shall be under no obligation to provide such
information to them. With respect to its Loans, BofA shall have the same rights
and powers under this Agreement as any other Bank and may exercise the same as
though it were not the Agent, and the terms "Bank" and "Banks" include BofA in
its individual capacity.
10.09 Successor Agent. The Agent may, and at the request of the Required
Banks shall, resign as Agent upon 30 days' notice to the Banks. If the Agent
resigns under this Agreement, the Required Banks shall appoint from among the
Banks a successor agent for the Banks which successor agent shall be approved by
the Company (such approval not to be unreasonably withheld). If no successor
agent is appointed prior to the effective date of the resignation of the Agent,
the Agent may appoint, after consulting with the Banks and the Company, a
successor agent from among the Banks. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the rights,
powers and duties of the retiring Agent and the term "Agent" shall mean such
successor agent and the retiring Agent's appointment, powers and duties as Agent
shall be terminated. After any retiring Agent's resignation hereunder as Agent,
the provisions of this Article X and Sections 11.04 and 11.05 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent
by the date which is 30 days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Required Banks appoint a successor agent as provided for
above.
10.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of the Agent and the Company, to deliver to the
Agent and the Company:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly completed
and executed copies of IRS Form 1001 before the
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payment of any interest in the first calendar year and before the payment
of any interest in each third succeeding calendar year during which
interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with the conduct of a United States trade or business
by such Bank, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year of such
Bank and in each succeeding taxable year of such Bank during which interest
may be paid under this Agreement; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent and the Company of
any change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Company to such Bank, such Bank agrees to
notify the Agent and the Company of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Company to such Bank. To the
extent of such percentage amount, the Agent and the Company will treat such
Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Company to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent or the Company may withhold from any interest payment
to such Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. However, if the forms or other documentation
required by subsection (a) of this Section 10.10 are not delivered to the Agent
or the Company, then the Agent or the Company may withhold from any interest
payment to such Bank not providing such forms or other documentation an amount
equivalent to the applicable withholding tax imposed by Sections 1441 and 1442
of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent or the Company did
not properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed, or
because such Bank failed to notify the Agent or the Company of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax
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ineffective, or for any other reason) such Bank shall indemnify the Agent and
the Company fully for all amounts paid, directly or indirectly, by the Agent or
the Company as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to the
Agent or the Company under this Section 10.10, together with all costs and
expenses (including Attorney Costs). The obligation of the Banks under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of the Agent.
ARTICLE XI
MISCELLANEOUS
11.01 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company shall be effective unless the same shall be in writing
and signed by the Required Banks (or by the Agent at the written request of the
Required Banks) and the Company and acknowledged by the Agent, and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Banks and
the Company and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Bank (or reinstate
any Commitment terminated pursuant to Section 9.02);
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest (other than
default interest), fees or other amounts due to the Banks (or any of them)
hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other
amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any
of them to take any action hereunder; or
(e) amend this Section 11.01, or Section 2.16, or any provision
herein providing for consent or other action by all Banks;
and, provided further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the Agent in addition to the Required Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document, and (ii) the Fee Letter may be amended,
or rights or privileges thereunder waived, in a writing executed by the parties
thereto.
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11.02 Notices.
(a) All notices, requests, consents, approvals, waivers and other
communications shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that any matter
transmitted by the Company by facsimile (i) shall be immediately confirmed by a
telephone call to the recipient at the number specified on Schedule 11.02, and
(ii) shall be followed promptly by delivery of a hard copy original thereof) and
mailed, faxed or delivered, to the address or facsimile number specified for
notices on Schedule 11.02; or, as directed to the Company or the Agent, to such
other address as shall be designated by such party in a written notice to the
other parties, and as directed to any other party, at such other address as
shall be designated by such party in a written notice to the Company and the
Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or X to the Agent shall not be effective until
actually received by the Agent.
(c) Any agreement of the Agent and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Company. The Agent and the Banks shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by the
Company to give such notice and the Agent and the Banks shall not have any
liability to the Company or other Person on account of any action taken or not
taken by the Agent or the Banks in reliance upon such telephonic or facsimile
notice. The obligation of the Company to repay the Loans shall not be affected
in any way or to any extent by any failure by the Agent and the Banks to receive
written confirmation of any telephonic or facsimile notice or the receipt by the
Agent and the Banks of a confirmation which is at variance with the terms
understood by the Agent and the Banks to be contained in the telephonic or
facsimile notice.
11.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Agent or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
11.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse the Agent promptly after demand for all reasonable
out-of-pocket costs and expenses incurred by the Agent in connection with the
development, preparation, delivery, administration and execution of this
Agreement and the other Loan Documents, and the syndication, sale and/or
assignment by BofA and the Arranger of the Loans, Commitments and interests of
BofA (and its affiliates) hereunder (which the Company acknowledges and agrees
will continue after the Closing
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Date) together with any amendment, supplement, waiver or modification to (in
each case, whether or not consummated) this Agreement, any Loan Document and
any other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, reasonable Attorney Costs incurred by the Agent with
respect thereto; and
(b) pay or reimburse the Agent, the Arranger and each Bank
promptly after demand for all reasonable out-of-pocket costs and expenses
(including reasonable Attorney Costs) incurred by them in connection with the
exercise, enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement or any other Loan Document during the existence of
any Default or Event of Default or after acceleration of the Loans (including in
connection with any "workout" or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding).
11.05 Company Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify, defend and
hold the Agent-Related Persons, and each Bank and each of its respective
officers, directors, employees, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Bank) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any Loan Document, or the transactions contemplated hereby, or any action
taken or omitted by any such Person under or in connection with any of the
foregoing, including with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding) related to or
arising out of this Agreement or the Loans or the use of the proceeds thereof,
or related to any Offshore Currency transactions entered into in connection
herewith, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided that the
Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities to the extent resulting from the gross
negligence or willful misconduct of such Indemnified Person. The agreements in
this Section 11.05 shall survive payment of all other Obligations.
11.06 Payments Set Aside. To the extent that the Company makes a payment
to the Agent or the Banks, or the Agent or the Banks exercise their right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a)
to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each Bank severally agrees to pay to the Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Agent.
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11.07 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Bank.
11.08 Assignments, Participations, etc.
(a) Any Bank may, with the written consent of the Company (which
consent shall not be unreasonably withheld) at all times other than during the
existence of an Event of Default, the Agent and the Issuing Bank, if
applicable, at any time assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Company, the Agent or the Issuing Bank,
if applicable, shall be required in connection with any assignment and
delegation by a Bank to an Eligible Assignee that is an Affiliate of such Bank)
(each an "Assignee") all, or any ratable part of all, of the Loans, the
Commitments and the other rights and obligations of such Bank hereunder, in a
minimum amount of $10,000,000; provided, however, that the Company and the Agent
may continue to deal solely and directly with such Bank in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Company and the Agent by
such Bank and the Assignee; (ii) such Bank and its Assignee shall have delivered
to the Company and the Agent an Assignment and Acceptance in the form of Exhibit
E ("Assignment and Acceptance") together with any Note or Notes subject to such
assignment and (iii) the assignor Bank or Assignee has paid to the Agent a
processing fee in the amount of $3,500.
(b) From and after the date that the Agent notifies the assignor
Bank that it has received (and provided its consent with respect to) an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank under
the Loan Documents, and (ii) the assignor Bank shall, to the extent that rights
and obligations hereunder and under the other Loan Documents have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the
Agent that it has received an executed Assignment and Acceptance and payment of
the processing fee, (and provided that it consents to such assignment in
accordance with subsection 11.08(a)), the Company shall execute and deliver to
the Agent, new Notes evidencing such Assignee's assigned Loans and Commitment
and, if the assignor Bank has retained a portion of its Loans and its
Commitment, replacement Notes in the principal amount of the Loans retained by
the assignor Bank (such Notes to be in exchange for, but not in payment of, the
Notes held by such Bank). Immediately upon each Assignee's making its
processing fee payment under the Assignment and Acceptance, this Agreement shall
be deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Bank pro tanto. The Agent shall not
deliver any new Notes executed by the Company unless the Agent shall
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have received the old Notes to be replaced or customary indemnification
in favor of the Agent and the Company with respect to lost or destroyed notes.
Such old Notes shall be promptly returned to the Company.
(d) Any Bank may at any time sell to one or more commercial banks
or other Persons not Affiliates of the Company (a "Participant") participating
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Company and the
Agent shall continue to deal solely and directly with the originating Bank in
connection with the originating Bank's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant
any participating interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Loan Document, except to the extent such amendment, consent or waiver
would require unanimous consent of the Banks as described in the first proviso
to Section 11.01. In the case of any such participation, the Participant shall
be entitled to the benefit of Sections 4.01, 4.03 and 11.05 as though it were
also a Bank hereunder. Notwithstanding the immediately preceding sentence, all
amounts payable by the Company under this Agreement and each other Loan Document
shall be determined as if no such participation had been sold.
(e) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted under
applicable law. Notwithstanding any such pledge, such Bank shall remain liable
to the Company and the Issuing Bank as if such pledge had not been made.
(f) Notwithstanding anything in this Section 11.09 neither BofA
nor the Arranger will begin contacting prospective Banks about a potential
assignment of their rights hereunder until the earlier of (i) April 20, 1997 or
(ii) the Company's public disclosure of its contemplated recapitalization.
11.09 Confidentiality. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Company and provided to it by the Company or any Subsidiary, or
by the Agent on the Company's or such Subsidiary's behalf, under this Agreement
or any other Loan Document, and neither it nor any of its Affiliates shall use
any such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents or in connection with other business now
or hereafter existing or contemplated with the Company or any Subsidiary; except
to the extent such information (a) was or becomes generally available to the
public other than as a result of disclosure by the Bank, or (b) was or becomes
available on a non-confidential basis from a source other than the Company,
provided that such source is not bound
-76-
<PAGE> 83
by a confidentiality agreement with the Company known to the Bank; provided,
however, that any Bank may disclose such information (i) at the request or
pursuant to any requirement of any Governmental Authority to which the Bank is
subject or in connection with an examination of such Bank by any such
authority; (ii) pursuant to subpoena or other court process; (iii) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (iv) to the extent reasonably required in connection with
any litigation or proceeding to which the Agent, any Bank or their respective
Affiliates may be party; (v) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document;
(vi) to such Bank's independent auditors and other professional advisors; (vii)
to any Participant or Assignee, actual or potential, provided that such Person
agrees in writing to keep such information confidential to the same extent
required of the Banks hereunder; (viii) as to any Bank or its Affiliate, as
expressly permitted under the terms of any other document or agreement
regarding confidentiality to which the Company or any Subsidiary is party or is
deemed party with such Bank or such Affiliate; and (ix) to its Affiliates,
provided that such Affiliate uses such information only in connection with this
Agreement and agrees in writing to keep such information confidential.
11.10 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of the Company against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not the Agent or such Bank
shall have made demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured. Each Bank agrees promptly to
notify the Company and the Agent after any such set-off and application made by
such Bank; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application.
11.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
11.13 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
-77-
<PAGE> 84
11.14 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Banks, the
Agent and the Agent-Related Persons, and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.
11.15 Governing Law and Jurisdiction.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF ILLINOIS;
PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS
OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE BANKS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE AGENT AND
THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY ILLINOIS LAW.
11.16 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT
EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE
BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION 11.16 AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS,
-78-
<PAGE> 85
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
11.17 Judgment. If, for the purposes of obtaining judgment in any court,
it is necessary to convert a sum due hereunder or any other Loan Document in one
currency into another currency, the rate of exchange used shall be that at which
in accordance with normal banking procedures the Agent could purchase the first
currency with such other currency on the Business Day preceding that on which
final judgment is given. The obligation of the Company in respect of any such
sum due from it to the Agent hereunder or under the other Loan Documents shall,
notwithstanding any judgment in a currency (the "Judgment Currency") other than
that in which such sum is denominated in accordance with the applicable
provisions of this Agreement (the "Agreement Currency"), be discharged only to
the extent that on the Business Day following receipt by the Agent of any sum
adjudged to be so due in the Judgment Currency, the Agent may in accordance with
normal banking procedures purchase the Agreement Currency with the Judgment
Currency. If the amount of the Agreement Currency so purchased is less than the
sum originally due to the Agent in the Agreement Currency, the Company agrees,
as a separate obligation and notwithstanding any such judgment, to indemnify the
Agent or the Person to whom such obligation was owing against such loss. If the
amount of the Agreement currency so purchased is greater than the sum originally
due to the Agent in such currency, the Agent agrees to return the amount of any
excess to the Company (or to any other Person who may be entitled thereto under
applicable law).
11.18 Entire Agreement. This Agreement, together with the other Loan
Documents and embodies the entire agreement and understanding among the Company,
the Banks and the Agent, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
[SIGNATURE PAGES FOLLOW]
-79-
<PAGE> 86
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Chicago, Illinois by their proper and duly
authorized officers as of the day and year first above written.
BRIGGS & STRATTON CORPORATION
By:___________________________
Name:_________________________
Title:________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By:___________________________
Name:_________________________
Title:________________________
BANK OF AMERICA ILLINOIS, as Issuing Bank
By:___________________________
Name:_________________________
Title:________________________
BANK OF AMERICA ILLINOIS, as a Bank
By:___________________________
Name:_________________________
Title:________________________
<PAGE> 1
EXHIBIT (g)(1)
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30, 1996, JULY 2, 1995 AND JULY 3, 1994
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
NET SALES ............................. $ 1,287,029,000 $ 1,339,677,000 $ 1,285,517,000
COST OF GOODS SOLD .................... 1,025,281,000 1,068,059,000 1,018,977,000
-------------- -------------- -------------
Gross Profit on Sales ............. 261,748,000 271,618,000 266,540,000
ENGINEERING, SELLING,
GENERAL AND
ADMINISTRATIVE EXPENSES ............. 108,339,000 101,852,000 94,795,000
-------------- -------------- -------------
Income from Operations ............ 153,409,000 169,766,000 171,745,000
INTEREST EXPENSE ...................... (10,069,000) (8,580,000) (8,997,000)
OTHER INCOME, Net ..................... 5,712,000 9,189,000 6,973,000
-------------- -------------- -------------
Income Before Provision for
Income Taxes ...................... 149,052,000 170,375,000 169,721,000
PROVISION FOR INCOME TAXES ............ 56,640,000 65,570,000 67,240,000
-------------- -------------- -------------
Net Income Before Cumulative Effect of
Accounting Changes ................ 92,412,000 104,805,000 102,481,000
CUMULATIVE EFFECT OF
ACCOUNTING CHANGES FOR:
Postretirement Health Care, Net of
Income Taxes of $25,722,000 ...... - - (40,232,000)
Postemployment Benefits, Net of
Income Taxes of $430,000 ......... - - (672,000)
Deferred Income Taxes ............. - - 8,346,000
-------------- -------------- -------------
- - (32,558,000)
-------------- -------------- -------------
NET INCOME ............................ $ 92,412,000 $ 104,805,000 $ 69,923,000
============== ============== =============
PER SHARE DATA:
Net Income Before Cumulative Effect of
Accounting Changes ............... $ 3.19 $ 3.62 $ 3.54
Cumulative Effect of
Accounting Changes ............... - - (1.12)
-------------- -------------- -------------
Net Income ........................ $ 3.19 $ 3.62 $ 2.42
============== ============== =============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
12
<PAGE> 2
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996 AND JULY 2, 1995
ASSETS 1996 1995
-------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents .............................................. $ 150,639,000 $ 170,648,000
Receivables, Less Reserves of $1,544,000 and $1,537,000, Respectively... 119,346,000 94,116,000
Inventories -
Finished Products and Parts .......................................... 96,078,000 96,540,000
Work in Process ...................................................... 36,932,000 40,107,000
Raw Materials ........................................................ 4,393,000 4,027,000
-------------- -------------
Total Inventories .................................................. 137,403,000 140,674,000
Future Income Tax Benefits ............................................. 29,589,000 31,376,000
Prepaid Expenses ....................................................... 19,410,000 16,516,000
-------------- -------------
Total Current Assets ............................................... 456,387,000 453,330,000
PREPAID PENSION COST ..................................................... 4,682,000 -
DEFERRED INCOME TAX ASSET ................................................ 2,883,000 1,866,000
PLANT AND EQUIPMENT:
Land and Land Improvements ............................................. 15,603,000 9,499,000
Buildings .............................................................. 147,670,000 105,844,000
Machinery and Equipment ................................................ 594,608,000 507,606,000
Construction in Progress ............................................... 18,757,000 103,382,000
-------------- -------------
776,638,000 726,331,000
Less - Accumulated Depreciation and Unamortized
Investment Tax Credit ................................................ 402,426,000 383,034,000
-------------- -------------
Total Plant and Equipment, Net ................................... 374,212,000 343,297,000
-------------- -------------
$ 838,164,000 $ 798,493,000
============== =============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts Payable ....................................................... $ 65,642,000 $ 63,913,000
Domestic Notes Payable ................................................. 5,000,000 6,750,000
Foreign Loans .......................................................... 14,922,000 19,653,000
Current Maturities on Long-Term Debt ................................... 15,000,000 -
Accrued Liabilities -
Wages and Salaries ................................................... 25,488,000 44,900,000
Warranty ............................................................. 26,257,000 30,353,000
Other ................................................................ 31,187,000 33,564,000
-------------- -------------
Total Accrued Liabilities .......................................... 82,932,000 108,817,000
Federal and State Income Taxes ......................................... 6,683,000 (1,878,000)
-------------- -------------
Total Current Liabilities .......................................... 190,179,000 197,255,000
ACCRUED PENSION COST ..................................................... - 1,606,000
ACCRUED EMPLOYEE BENEFITS ................................................ 18,431,000 16,447,000
ACCRUED POSTRETIREMENT HEALTH CARE OBLIGATION ............................ 69,049,000 68,707,000
LONG-TERM DEBT ........................................................... 60,000,000 75,000,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' INVESTMENT:
Common Stock -
Authorized 60,000,000 shares $.01 Par Value,
Issued and Outstanding 28,927,000 in 1996 and 1995 ................. 289,000 289,000
Additional Paid-In Capital ............................................. 40,898,000 41,698,000
Retained Earnings ...................................................... 459,666,000 397,627,000
Cumulative Translation Adjustments ..................................... (348,000) (136,000)
------------- -------------
Total Shareholders' Investment ..................................... 500,505,000 439,478,000
------------- -------------
$ 838,164,000 $ 798,493,000
============= =============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
13
<PAGE> 3
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
FOR THE YEARS ENDED JUNE 30, 1996, JULY 2, 1995 AND JULY 3, 1994
<TABLE>
<CAPTION>
Additional Cumulative
Common Paid-In Retained Translation
Stock Capital Earnings Adjustments
----- ---------- -------- -----------
<S> <C> <C> <C> <C>
BALANCES, JUNE 27, 1993 ....................... $ 145,000 $ 42,883,000 $ 318,247,000 $ (1,317,000)
Net Income ................................. - - 69,923,000 -
Cash Dividends Paid ($.90 per share) ....... - - (26,034,000) -
Purchase of Common Stock
for Treasury ............................. - (791,000) - -
Proceeds from Exercise of
Stock Options ............................ - 266,000 - -
Currency Translation Adjustments ........... - - - 470,000
--------- ------------ ------------- ------------
BALANCES, JULY 3, 1994 145,000 42,358,000 362,136,000 (847,000)
Net Income................................. - - 104,805,000 -
Cash Dividends Paid ($.98 per share)....... - - (28,348,000) -
Distribution of Shares of STRATTEC
SECURITY CORPORATION .................. - - (40,966,000) 1,226,000
Two-for-One Stock Split ................... 144,000 (144,000) - -
Purchase of Common Stock
for Treasury ............................ - (915,000) - -
Proceeds from Exercise of
Stock Options ........................... - 399,000 - -
Currency Translation Adjustments .......... - - - (515,000)
--------- ------------ ------------- ------------
BALANCES, JULY 2, 1995 ....................... 289,000 41,698,000 397,627,000 (136,000)
Net Income ................................ - - 92,412,000 -
Cash Dividends Paid ($1.05 per share)...... - - (30,373,000) -
Purchase of Common Stock
for Treasury ............................ - (1,185,000) - -
Proceeds from Exercise of
Stock Options ........................... - 385,000 - -
Currency Translation Adjustments .......... - - - (212,000)
--------- ------------ ------------- ------------
BALANCES, JUNE 30, 1996 ...................... $ 289,000 $ 40,898,000 $ 459,666,000 $ (348,000)
========= ============ ============= ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
14
<PAGE> 4
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED JUNE 30, 1996, JULY 2, 1995 AND JULY 3, 1994
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ................................................ $ 92,412,000 $ 104,805,000 $ 69,923,000
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities -
Cumulative Effect of Accounting Changes,
Net of Income Taxes ................................... - - 32,558,000
Depreciation ............................................ 43,032,000 44,445,000 42,950,000
(Gain) Loss on Disposition of Plant and Equipment ....... 2,692,000 1,452,000 (96,000)
Change in Operating Assets and Liabilities -
(Increase) Decrease in Receivables ..................... (25,230,000) 11,125,000 2,384,000
(Increase) Decrease in Inventories ..................... 3,271,000 (62,753,000) (11,605,000)
(Increase) in Other Current Assets ..................... (1,107,000) (4,720,000) (10,593,000)
Increase (Decrease) in Accounts Payable,
Accrued Liabilities and Income Taxes ................. (15,595,000) (8,220,000) 38,132,000
Other, Net ............................................. (4,979,000) 9,633,000 1,420,000
------------- ------------- ------------
Net Cash Provided by Operating Activities ............ 94,496,000 95,767,000 165,073,000
------------- ------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Plant and Equipment .......................... (77,746,000) (131,034,000) (40,804,000)
Proceeds Received on Sale of Plant and Equipment .......... 1,069,000 2,055,000 7,268,000
Sale of Short-Term Investments ............................ - - 70,422,000
Decrease in Cash Due to Spin-Off of Lock Business ......... - (174,000) -
------------- ------------- ------------
Net Cash Provided by (Used in) Investing Activities (76,677,000) (129,153,000) 36,886,000
------------- ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings (Repayments) on Loans and Notes Payable .... (6,481,000) 12,080,000 5,396,000
Cash Dividends Paid ....................................... (30,373,000) (28,348,000) (26,034,000)
Purchase of Common Stock for Treasury ..................... (1,185,000) (915,000) (791,000)
Proceeds from Exercise of Stock Options ................... 385,000 399,000 266,000
------------- ------------- ------------
Net Cash Used in Financing Activities ................ (37,654,000) (16,784,000) (21,163,000)
------------- ------------- ------------
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS ...................... (174,000) (283,000) 804,000
------------- ------------- ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS .......................................... (20,009,000) (50,453,000) 181,600,000
CASH AND CASH EQUIVALENTS:
Beginning of Year ......................................... 170,648,000 221,101,000 39,501,000
------------- ------------- ------------
End of Year ............................................... $ 150,639,000 $ 170,648,000 $221,101,000
============= ============= ============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Interest Paid ............................................. $ 10,137,000 $ 8,501,000 $ 8,997,000
============= ============= ============
Income Taxes Paid ......................................... $ 48,865,000 $ 88,935,000 $ 77,748,000
============= ============= ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
15
<PAGE> 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1996, JULY 2, 1995 AND JULY 3, 1994
(1) NATURE OF OPERATIONS:
Briggs & Stratton Corporation (the Company) is a U.S. based producer of air
cooled gasoline engines. These engines are sold primarily to original equipment
manufacturers of lawn and garden equipment and other gasoline engine powered
equipment worldwide.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fiscal Year: The Company's fiscal year consists of 52 or 53 weeks, ending on
the Sunday nearest the last day of June in each year. Therefore, the 1996 and
1995 fiscal years were 52 weeks long and the 1994 fiscal year was 53 weeks
long. All references to years relate to fiscal years rather than calendar
years.
Principles of Consolidation: The consolidated financial statements include the
accounts of Briggs & Stratton Corporation and its wholly owned domestic and
foreign subsidiaries after elimination of intercompany accounts and
transactions.
Accounting Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents: This caption includes cash and certificates of
deposit. The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.
Inventories: Inventories are stated at cost, which does not exceed market. The
last-in, first-out (LIFO) method was used for determining the cost of
approximately 93% of total inventories at June 30, 1996 and at July 2, 1995 and
89% at July 3, 1994. The cost for the remaining portion of the inventories was
determined using the first-in, first-out (FIFO) method. If the FIFO inventory
valuation method had been used exclusively, inventories would have been
$48,125,000, $43,582,000 and $42,268,000 higher in the respective years. The
LIFO inventory adjustment was determined on an overall basis, and accordingly,
each class of inventory reflects an allocation based on the FIFO amounts.
Plant and Equipment and Depreciation:
Plant and equipment is stated at cost, and depreciation is computed using the
straight-line method at rates based upon the estimated useful lives of the
assets.
Expenditures for repairs and maintenance are charged to expense as incurred.
Expenditures for major renewals and betterments, which significantly extend the
useful lives of existing plant and equipment, are capitalized and depreciated.
Upon retirement or disposition of plant and equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in other income.
Investment Tax Credits: The Company follows the deferral method of accounting
for the Federal investment tax credit. The credit, which was eliminated in
1986, has been recorded as an addition to accumulated depreciation and is being
amortized over the estimated useful lives of the related assets via a reduction
of depreciation expense.
The amounts amortized into income in each of the three years were $672,000 in
1996, $759,000 in 1995 and $830,000 in 1994. During 1995, $217,000 was
eliminated in the spin-off, as described in subsequent footnotes. At the end of
fiscal years 1996 and 1995, unamortized deferred investment tax credits
aggregated $1,577,000 and $2,249,000, respectively.
16
<PAGE> 6
NOTES . . .
Income Taxes: The Provision for Income Taxes includes Federal, state and
foreign income taxes currently payable and those deferred or prepaid because of
temporary differences between financial statement and tax bases of assets and
liabilities. The Future Income Tax Benefits represent temporary differences
relating to current assets and current liabilities and the Deferred Income
Taxes represent temporary differences relating to noncurrent assets and
liabilities.
Research and Development Costs: Expenditures relating to the development of new
products and processes, including significant improvements and refinements to
existing products, are expensed as incurred. The amounts charged against income
were $12,737,000 in 1996, $13,112,000 in 1995 and $12,520,000 in 1994.
Accrued Employee Benefits: The Company's life insurance program includes
payment of a death benefit to beneficiaries of retired employees. The Company
accrues for the estimated cost of these benefits over the estimated working
life of the employee. Past service costs for all retired employees have been
fully provided for. The Company also accrues for the estimated cost of
supplemental retirement and death benefit agreements with executive officers.
Accrued Postretirement Health Care Obligation: During the 1994 fiscal year, the
Company adopted Financial Accounting Standard (FAS) No. 106 (Postretirement
Benefits Other Than Pensions). This change and the amounts associated with it
are more fully described in subsequent footnotes.
Advertising Costs: Advertising costs, included in Engineering, Selling, General
and Administrative Expenses on the accompanying Consolidated Statement of
Income, are expensed as incurred. These expenses totaled $7,066,000 in 1996,
$6,357,000 in 1995 and $5,411,000 in 1994.
Foreign Currency Translation: Foreign currency balance sheet accounts are
translated into United States dollars at the rates of exchange in effect at
fiscal year end. Income and expenses are translated at the average rates of
exchange in effect during the year. The related translation adjustments are
made directly to a separate component of shareholders' investment.
Derivatives: Potential gains and losses on foreign currency hedges with
controlled subsidiaries are carried on the balance sheet. Gains and losses
related to all other hedges of anticipated transactions are deferred and
recognized as adjustments of carrying amounts when the hedged transaction
occurs.
Start-Up Costs: It is the Company's policy to expense all start-up costs for
new manufacturing plants. Under this policy, the Company expensed $11,660,000
in fiscal 1996 and $5,300,000 in fiscal 1995.
Impairment of Assets: In 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of ".
This new standard requires companies to assess the need for adjustment to
carrying values of assets when an indicator of impairment is present. The
Company adopted this standard during the 1996 fiscal year and determined that
it has no impaired assets.
(3) INCOME TAXES:
The provision for income taxes consists of the following (in thousands of
dollars):
<TABLE>
<CAPTION>
1996 1995 1994
Current ---- ---- ----
<S> <C> <C> <C>
Federal ............ $ 46,448 $ 67,255 $ 62,795
State .............. 7,768 10,644 10,482
Foreign ............ 1,654 873 2,059
--------- --------- ---------
55,870 78,772 75,336
Deferred ............. 770 (13,202) (8,096)
--------- --------- ---------
Total $ 56,640 $ 65,570 $ 67,240
========= ========= =========
</TABLE>
A reconciliation of the U.S. statutory tax rates to the effective tax rates
follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
U.S. statutory rate ......... 35.0% 35.0% 35.0%
State taxes, net of
Federal tax benefit ....... 3.4% 3.5% 3.6%
Foreign Sales Corporation
tax benefit ............... (.7%) (.6%) (.5%)
Other ....................... .3% .6% 1.5%
---- ---- ----
Effective tax rate .......... 38.0% 38.5% 39.6%
==== ==== ====
</TABLE>
17
<PAGE> 7
NOTES . . .
At the beginning of fiscal year 1994, the Company adopted FAS No. 109
(Accounting For Income Taxes) which required a change in the recording of
deferred taxes. The former method emphasized provisions which were made in the
income statement. The emphasis in the new method is on the balance sheet and
requires that the amounts to be recorded are the amounts which will eventually
be paid out. The adoption of this standard resulted in a cumulative adjustment
which was recorded as income totaling $8,346,000 or $ .29 per share.
The components of deferred tax assets and liabilities at the end of the fiscal
year were (in thousands of dollars):
<TABLE>
<CAPTION>
1996 1995
---- ----
Future Income Tax Benefits:
<S> <C> <C>
Inventory .............................. $ 2,518 $ 3,710
Prepaid Expenses ....................... (158) 167
Payroll Related Accruals ............... 4,658 4,153
Warranty Reserves ...................... 10,240 11,838
Other Accrued Liabilities .............. 8,453 8,255
Miscellaneous .......................... 3,878 3,253
---------- ----------
$ 29,589 $ 31,376
========== ==========
Deferred Income Taxes:
Difference between book and
tax methods applied to
maintenance and supply
inventories .......................... $ 9,982 $ 6,618
Pension Cost ........................... (1,679) 400
Accumulated Depreciation ............... (41,768) (39,176)
Accrued Employee Benefits .............. 7,232 6,469
Postretirement .........................
Health Care Obligation ............... 26,929 26,796
Miscellaneous .......................... 2,187 759
---------- ----------
$ 2,883 $ 1,866
========== ==========
</TABLE>
The Company has not recorded deferred income taxes applicable to undistributed
earnings of foreign subsidiaries that are indefinitely reinvested in foreign
operations. These undistributed earnings amounted to approximately $5,200,000
at June 30, 1996. If these earnings were remitted to the U.S., they would be
subject to U.S. income tax. However, this tax would be substantially less than
the U.S. statutory income tax because of available foreign tax credits.
(4) INDUSTRY SEGMENTS:
Certain information concerning the Company's industry segments is presented
below (in thousands of dollars):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
SALES -
Engines & parts ................ $ 1,276,264 $ 1,197,744
Locks .......................... 63,413 87,773
------------- -------------
$ 1,339,677 $ 1,285,517
============= =============
INCOME FROM OPERATIONS -
Engines & parts ................ $ 162,903 $ 158,900
Locks .......................... 6,863 12,845
------------- -------------
$ 169,766 $ 171,745
============= =============
ASSETS -
Engines & parts ................ $ 798,493 $ 467,561
Locks .......................... - 46,832
Unallocated .................... - 262,962
------------- -------------
$ 798,493 $ 777,355
============= =============
DEPRECIATION EXPENSE -
Engines & parts ................ $ 42,746 $ 40,605
Locks .......................... 1,699 2,345
------------- -------------
$ 44,445 $ 42,950
============= =============
EXPENDITURES FOR PLANT
AND EQUIPMENT -
Engines & parts ................ $ 124,604 $ 37,398
Locks .......................... 6,430 3,406
------------- -------------
$ 131,034 $ 40,804
============= =============
</TABLE>
On February 27, 1995, the Company spun off its lock business to its
shareholders in a tax-free distribution. This spin-off was accomplished by
distributing shares in a newly created corporation on the basis of one share in
the new corporation for each five shares of Briggs & Stratton Corporation stock
held on February 16, 1995. The newly created corporation, STRATTEC SECURITY
CORPORATION, is publicly traded. This distribution resulted in a charge of
$40,966,000 against the retained earnings account and represented the total of
the net assets transferred to STRATTEC. The financial statements of Briggs &
Stratton Corporation have not been restated to deal with this distribution as a
discontinued operation because the amounts were not material. Because of the
spin-off, no industry segment data is being presented for 1996.
18
<PAGE> 8
NOTES . . .
The preceding Sales, Income From Operations, Depreciation Expense, and
Expenditures For Plant and Equipment reflect 1995 data for the lock business
from the beginning of the fiscal year to the date of spin-off.
Unallocated assets include cash and cash equivalents, short-term investments,
future income tax benefits, prepaid pension costs and other assets.
Export sales for fiscal 1996 were $323,747,000 (25% of total sales), for fiscal
1995 were $312,234,000 (23%) and for fiscal 1994 were $264,866,000 (21%). These
sales were principally to customers in European countries.
In the fiscal years 1996, 1995 and 1994, there were sales to three major engine
customers that exceeded 10% of total Company net sales. The sales to these
customers are summarized below (in thousands of dollars and percent of total
Company sales):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
Customer Sales % Sales % Sales %
----- - ----- - ----- -
<S> <C> <C> <C> <C> <C> <C>
A $267,257 21% $237,241 18% $234,363 18%
B $177,314 14% $155,072 12% $148,091 12%
C $163,065 13% $189,916 14% $149,397 12%
-------- -- -------- -- -------- --
$607,636 48% $582,229 44% $531,851 42%
======== == ======== == ======== ==
</TABLE>
(5) INDEBTEDNESS:
The Company had access to domestic lines of credit totaling $47,000,000 at June
30, 1996. These lines will remain available until cancelled by either party.
They provide amounts for short-term use at the then prevailing rate. There are
no significant compensating balance requirements and no borrowings at June 30,
1996 using these lines of credit.
The following data relates to domestic notes payable:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Balance at
Fiscal Year End ........ $ 5,000,000 $ 6,750,000
Weighted Average
Interest Rate at
Fiscal Year End ........ 6.10% 5.00%
</TABLE>
The lines of credit available to the Company in foreign countries are in
connection with short-term borrowings and bank overdrafts used in the normal
course of business. These amounts total $18,500,000, expire at various times
through November, 1997 and are renewable. None of these arrangements had
material commitment fees or compensating balance requirements.
The following information relates to the foreign loans:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Balance at
Fiscal Year End ........ $ 14,922,000 $ 19,653,000
Weighted Average
Interest Rate at
Fiscal Year End ........ 4.60% 5.80%
</TABLE>
The Company's long-term debt consists of 9.21% Senior Notes due June 15, 2001.
Payments on these notes are due in five equal annual installments beginning in
1997. The notes include covenants that limit total borrowings, require
maintenance of $200,000,000 minimum net worth and set certain restrictions on
the sale or collateralizing of the Company's assets.
(6) OTHER INCOME (EXPENSE):
The components of other income (expense) are (in thousands of dollars):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Interest income .......... $ 4,477 $ 6,840 $ 3,527
Gain on sale of German
land and buildings ..... - - 2,819
Loss on the
disposition of
plant and equipment .... (2,692) (1,452) (2,723)
Income from joint
ventures .............. 2,957 2,842 2,307
Other items .............. 970 959 1,043
------- ------- -------
Total $ 5,712 $ 9,189 $ 6,973
======= ======= =======
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES:
The Company is a 50% guarantor on bank loans of two unconsolidated joint
ventures. One is in Japan for the manufacture of engines and the second in the
United States for the manufacture of parts. These bank loans totaled
approximately $13,000,000 at the end of 1996.
19
<PAGE> 9
NOTES . . .
Product and general liability claims arise against the Company from time to
time in the ordinary course of business. The Company is self-insured for future
claims up to $1 million per claim. Accordingly, a reserve is maintained for the
estimated costs of such claims. At June 30, 1996, the reserve for product and
general liability claims was $6.5 million based on available information.
There is inherent uncertainty as to the eventual resolution of unsettled
claims. Management, however, believes that any losses in excess of established
reserves will not have a material effect on the Company's financial position or
results of operations.
The Company has no material commitments for materials or capital expenditures
at June 30, 1996.
(8) STOCK OPTIONS:
In 1990, shareholders approved the Stock Incentive Plan under which 400,000
shares of the Company's common stock were reserved for issuance. In fiscal
1994, shareholders approved an additional 1,250,000 shares for issuance under
the Plan, bringing the total shares reserved for issuance to 1,650,000. In
fiscal 1995, pursuant to the terms of the Plan, the number of shares reserved
for issuance was adjusted to 3,361,935 to reflect the two-for-one stock split
and the spin-off of its lock business.
Information on the options outstanding is as follows:
<TABLE>
<CAPTION>
Options
Outstanding in
Number of
Common Stock
Shares
--------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Balance, beginning of year...... 1,169,620 606,864 390,184
Granted during the year -
1994 at $48.369............... - - 253,420
1995 at $45.854............... - 552,000 -
1996 at $49.080............... 600,000 - -
Increase due to spin-off........ - 83,843 -
Exercised during the year....... (65,089) (43,827) (19,000)
Terminated during the year...... - (29,260) (17,740)
--------- --------- -------
Balance, end of year............ 1,704,531 1,169,620 606,864
========= ========= =======
</TABLE>
<TABLE>
<CAPTION>
Grant Summary
- -------------------------------------------------------------------------
Fiscal Grant Exercise Date Options Expiration
Year Date Price (a) Exercisable Outstanding Date
- ------ ----- --------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1990 2-20-90 $13.014 50%, 1-1-94; 6,782 2-19-00
50%, 1-1-95
1991 2-19-91 14.524 50%, 1-1-95; 90,613 2-18-01
50%, 1-1-96
1992 5-18-92 21.525 50%, 1-1-96; 181,546 5-17-02
50%, 1-1-97
1994 8-16-93 48.369 8-16-96 258,085 8-16-98
1995 8-12-94 45.854 8-12-97 567,505 8-12-99
1996 8-7-95 49.080 8-7-98 600,000 8-7-00
</TABLE>
There were no options granted in fiscal 1993.
(a) Exercise prices have been adjusted as appropriate to reflect a
two-for-one stock split and the spin-off of the Company's lock business.
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123
"Accounting for Stock-Based Compensation." This standard establishes financial
accounting and reporting standards for stock-based employee compensation. The
Company plans to adopt the pro forma disclosure requirements of the statement,
and will continue to apply the accounting provisions of Accounting Principles
Board Opinion No. 25, as allowed by the new standard. This disclosure will be
effective for the fiscal 1997 financial statements.
(9) SHAREHOLDER RIGHTS PLAN:
On August 6, 1996, the Board of Directors declared a dividend distribution of
one common stock purchase right (a "right") for each share of the Company's
common stock outstanding on August 19, 1996. Each right would entitle
shareowners to buy one-half of one share of the Company's common stock at an
exercise price of $160.00 per full common share, subject to adjustment. The
rights are not currently exercisable, but would become exercisable if certain
events occurred relating to a person or group acquiring or attempting to
acquire 15 percent or more of the outstanding shares of common stock. The
rights expire on August 19, 2006, unless redeemed or exchanged by the Company
earlier. Rights granted under a previous plan expired July 1, 1996.
20
<PAGE> 10
NOTES . . .
(10) RETIREMENT PLANS AND POSTRETIREMENT COSTS:
The Company has noncontributory, defined benefit retirement plans covering most
Wisconsin employees. The following tables summarize the plans' income and
expense, actuarial assumptions, and funded status for the three years indicated
(dollars in thousands):
<TABLE>
<CAPTION>
Qualified Plans Supplemental Plans
------------------------------ ------------------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Income and Expense:
- -------------------
Service Cost-Benefits Earned
During the Year................... $ 13,143 $ 15,098 $ 13,079 $ 456 $ 453 $ 296
Interest Cost on Projected
Benefit Obligation................ 41,722 39,877 36,408 926 904 706
Actual Return on Plan Assets........ (104,872) (89,941) (7,152) (9) (3) (3)
Net Amortization, Deferral
and Windows....................... 51,830 37,078 (42,978) 462 333 380
--------- -------- -------- -------- -------- -------
Net Periodic Pension
Expense (Income).................. $ 1,823 $ 2,112 $ (643) $ 1,835 $ 1,687 $ 1,379
========= ======== ======== ======== ======== =======
Actuarial Assumptions:
- ----------------------
Discount Rate Used to Determine
Present Value of Projected
Benefit Obligation................ 7.75% 7.75% 7.75% 7.75% 7.75% 7.75%
Expected Rate of Future
Compensation Level Increases...... 5.5% 5.5% 5.5% 5.5% 5.5% 5.5%
Expected Long-Term Rate of
Return on Plan Assets............. 9.0% 9.0% 9.0% 9.0% 9.0% 9.0%
Funded Status:
- --------------
Actuarial Present Value of
Benefit Obligations:
Vested........................... $ 413,035 $389,117 $359,383 $ 8,286 $ 7,991 $ 6,560
Non-Vested....................... 34,268 36,144 34,382 21 6 23
--------- -------- -------- -------- -------- -------
Accumulated Benefit
Obligation..................... 447,303 425,261 393,765 8,307 7,997 6,583
Effect of Projected Future
Wage and Salary Increases......... 120,083 124,651 112,771 4,766 4,679 3,267
--------- -------- -------- -------- -------- -------
Projected Benefit Obligation...... 567,386 549,912 506,536 13,073 12,676 9,850
Plan Assets at Fair Market Value.... 681,819 609,385 560,585 126 100 103
--------- -------- -------- -------- -------- -------
Plan Assets in Excess of (Less Than)
Projected Benefit Obligation...... 114,433 59,473 54,049 (12,947) (12,576) (9,747)
Remaining Unrecognized Net
Obligation (Asset) Arising
from the Initial Application of
SFAS No. 87....................... (31,321) (36,902) (43,776) 179 258 336
Unrecognized Net Loss (Gain)........ (75,983) (21,992) (502) 4,494 5,277 3,416
Unrecognized Prior Service Cost..... (2,447) (2,185) (1,090) 1,029 1,102 1,176
--------- -------- -------- -------- -------- -------
Prepaid (Accrued) Pension Cost...... $ 4,682 $ (1,606) $ 8,681 $ (7,245) $ (5,939) $(4,819)
========= ======== ======== ======== ======== =======
</TABLE>
As part of the spin-off of the lock business as described in Note 4, the
Company's pension trust transferred $15,872,000 in plan assets to STRATTEC
SECURITY CORPORATION in 1995. This resulted in an increase of $5,000,000 in the
prepaid pension cost account due to the Company transferring certain benefit
obligations and unrecognized amounts.
21
<PAGE> 11
NOTES . . .
The Company offered early retirement windows to certain of its Milwaukee union
members during the 1995 fiscal year. As a result, $13,806,000 was added to
pension expense and $5,253,000 was added to postretirement health care expense
in the fourth quarter of the 1995 fiscal year. When the retirements were
scheduled to occur in the first fiscal quarter of 1996, a number of these union
members canceled their acceptance, and thus credits totaling $3,477,000 were
recorded as a change in the original accounting estimate.
During fiscal 1996, the defined benefit pension plan which covered employees at
two of the Company's plants was terminated and replaced by a defined
contribution retirement plan that includes most U.S. non-Wisconsin employees.
The impact of the termination was not material. Under the new plan, the Company
will make a contribution on behalf of covered employees equal to 2% of each
participant's gross income, as defined. For the portion of fiscal 1996 in which
the plan was in effect, the cost to the Company was $757,000.
Most U.S. employees of the Company may participate in a salary reduction
deferred compensation retirement plan. The Company makes matching contributions
of $.50 for every $1.00 deferred by a participant to a maximum of 1-1/2% or 3%
of each participant's salary, depending upon the participant's group. Company
contributions totaled $2,825,000 in 1996, $1,756,000 in 1995 and $1,630,000 in
1994.
At the beginning of fiscal year 1994, the Company adopted two Financial
Accounting Standards as follows:
FAS 106 - Postretirement Benefits Other
Than Pensions -
This standard requires that the Company record the expected
cost of health care and life insurance benefits during the
years that the employees render service - a significant change
from the preceding method which recognized health care benefits
on a cash basis. Postretirement life insurance benefits were
previously being accounted for in a manner substantially emulating
the new standards, so no adjustment was necessary. The cumulative
effect of this change in accounting for postretirement health care
benefits was a charge totaling $65,954,000 on a before tax basis or
$40,232,000 on an after tax basis ($1.39 per share).
For measurement purposes, a 10.5% annual rate of increase in the per
capita cost of covered health care claims was assumed for the years 1995
through 1997, decreasing gradually to 6% for the year 2007. The health
care cost trend rate assumption has a significant effect on the amounts
reported. The rates, if increased by one percentage point, would add
$7,172,000 to the accumulated postretirement benefit and $846,000 to the
service and interest cost for the year.
The discount rate used in determining the accumulated postretirement
benefit obligations was 7.75% compounded annually. Both the health care
and life insurance plans are unfunded.
The components of the accumulated postretirement benefit obligations
were (in thousands of dollars):
<TABLE>
<CAPTION>
Health Care
-----------
1996 1995
---- ----
<S> <C> <C>
Retirees ...................... $33,044 $33,801
Fully Eligible
Plan Participants ........... 4,077 4,990
Other Active Participants ..... 32,628 34,616
------- -------
$69,749 $73,407
Unrecognized net obligation ... - -
Unrecognized gain ............. 4,000 -
------- -------
$73,749 $73,407
Less current portion .......... 4,700 4,700
------- -------
$69,049 $68,707
======= =======
Life Insurance
--------------
1996 1995
---- ----
Retirees ...................... $ 8,840 $ 8,553
Fully Eligible
Plan Participants ........... 2,226 1,453
Other Active Participants ..... 1,736 1,588
------- -------
$12,802 $11,594
Unrecognized net obligation ... (553) (600)
Unrecognized prior
service cost ................ (898) -
Unrecognized loss ............. (908) (1,096)
------- -------
$10,443 $ 9,898
Less current portion .......... - -
------- -------
$10,443 $ 9,898
======= =======
</TABLE>
22
<PAGE> 12
NOTES . . .
The current portion of the health care component above represents the
benefits expected to be paid within the next twelve months and is included
in the caption Accrued Liabilities in the accompanying balance sheet. The
net health care balance has its own caption in this balance sheet. The
life insurance component is included in the caption Accrued Employee
Benefits.
The net periodic postretirement costs recorded were (in thousands of
dollars):
<TABLE>
<CAPTION>
Health Care
------------
1996 1995
---- ----
<S> <C> <C>
Service Cost-Benefits
attributed to service
during the year ................ $1,596 $1,680
Interest cost on accumulated
benefit obligation ............. 5,480 5,150
Other ........................... (91) -
------ ------
$6,985 $6,830
====== ======
<CAPTION>
Life Insurance
--------------
1996 1995
---- ----
<S> <C> <C>
Service Cost-Benefits
attributed to service
during the year ................ $ 90 $ 73
Interest cost on accumulated
benefit obligation ............. 947 801
Other ........................... 118 47
------ ------
$1,155 $ 921
====== ======
</TABLE>
FAS 112 - Postemployment Benefits -
This standard was also adopted in fiscal 1994 and required that the
Company record the expected cost of postemployment benefits (not to be
confused with the postretirement benefits described in the preceding
paragraphs), also over the years that employees render service. These
benefits are substantially smaller amounts because they apply only to
employees who permanently terminate employment prior to retirement. The
cumulative effect of this change was a charge totaling $1,102,000 or
$672,000 after taxes ($ .02 per share). There will be no significant
increase in the annual costs of these plans.
The items included in this amount are disability payments, life
insurance and medical benefits, and these amounts are also discounted
using a 7.75% interest rate.
The balance in this reserve at the end of fiscal 1996 was $1,245,000
and at the end of fiscal 1995 was $1,106,000. Both were included in the
caption Accrued Employee Benefits in the accompanying balance sheets.
(11) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:
Cash and Cash Equivalents, Domestic Notes Payable and Foreign Loans: The
carrying amount approximates fair value because of the short maturity of those
instruments.
Long-Term Debt: The fair value of the Company's long-term debt is estimated
based on quotations made on similar issues.
The estimated fair values of the Company's financial instruments are as follows
(in thousands of dollars):
<TABLE>
<CAPTION>
1996
-----------------------------------
Carrying Fair
Amount Value
-------- -----
<S> <C> <C>
Cash and Cash Equivalents .. $ 150,639 $ 150,639
Domestic Notes Payable ..... $ 5,000 $ 5,000
Foreign Loans .............. $ 14,922 $ 14,922
Long-Term Debt, including
current maturities ........ $ 75,000 $ 77,365
<CAPTION>
1995
-----------------------------------
Carrying Fair
Amount Value
-------- -----
<S> <C> <C>
Cash and Cash Equivalents .. $ 170,648 $ 170,648
Domestic Notes Payable ..... $ 6,750 $ 6,750
Foreign Loans .............. $ 19,653 $ 19,653
Long-Term Debt ............. $ 75,000 $ 81,500
</TABLE>
23
<PAGE> 13
NOTES . . .
(12) STOCK SPLIT:
On October 19, 1994, shareholders approved a doubling of the authorized common
stock shares to 60,000,000. This allowed the Company to effect a 2-for-1 stock
split previously authorized by the Board of Directors. The distribution on
November 14, 1994 increased the number of shares outstanding from 14,463,500 to
28,927,000. The amount of $144,000 was transferred from the additional paid-in
capital account to the common stock account to record this distribution. All
per share amounts in this report have been restated to reflect this stock
split.
(13) FOREIGN EXCHANGE RISK MANAGEMENT:
The Company enters into forward exchange contracts to hedge purchase and sale
commitments denominated in foreign currencies. The term of these currency
derivatives never exceeds one year and the purpose is to protect the Company
from the risk that the eventual dollars being transferred will be adversely
affected by changes in exchange rates.
The Company has forward foreign currency exchange contracts to purchase 4.8
billion Japanese yen for $46 million through June, 1997. These contracts are
used to hedge the commitments to purchase engines from the Company's Japanese
joint venture and accordingly any gain or loss has been deferred at the end of
the 1996 fiscal year. The amount deferred was a loss of approximately $2.3
million.
The Company's foreign subsidiaries have the following forward currency
contracts outstanding at the end of fiscal 1996:
<TABLE>
<CAPTION>
In Millions
-----------
Local U.S. Latest
Currency Currency Dollars Expiration Date
- -------- -------- ------- ---------------
<S> <C> <C> <C>
German Deutschemarks... 1.9 1.3 July, 1996
Canadian Dollars....... 4.8 3.5 June, 1997
</TABLE>
There are no significant gains or losses included in the above amounts.
(14) SUBSEQUENT EVENT:
On July 1, 1996, the Company entered into a contract to sell its Menomonee
Falls, Wisconsin warehouse and manufacturing facility for $16.3 million. The
closing on this property is scheduled to occur on September 30, 1996. The
provisions of the contract state that the Company will continue to own and
occupy the warehouse portion of the facility for a period of up to ten years
(the "Reservation Period"). The contract also contains a buyout clause, at the
buyer's option, of the remaining Reservation Period under certain
circumstances. Given the provisions of the contract, the Company will be
required to account for this as a financing transaction and, therefore, any
cash received will be reflected as a liability and the net book value of the
facility will continue to be shown as an asset with depreciation expense
recorded each period. The pre-tax gain, which will be recognized at the earlier
of the exercise of the buyout option or the expiration of the Reservation
Period, is estimated to be $10 million to $12 million.
24
<PAGE> 14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
Briggs & Stratton Corporation:
We have audited the accompanying consolidated balance sheets of Briggs &
Stratton Corporation (a Wisconsin Corporation) and subsidiaries as of June 30,
1996 and July 2, 1995, and the related consolidated statements of income,
shareholders' investment and cash flows for each of the three years in the
period ended June 30, 1996. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Briggs & Stratton Corporation
and subsidiaries as of June 30, 1996 and July 2, 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 1996, in conformity with generally accepted accounting principles.
As discussed in Notes 3 and 10 to the consolidated financial statements,
effective at the beginning of the 1994 fiscal year, the Company changed its
methods of accounting for postretirement benefits other than pensions,
postemployment benefits and income taxes.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
August 7, 1996.
26
<PAGE> 1
EXHIBIT (g)(2)
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands of dollars)
ASSETS
<TABLE>
<CAPTION>
Dec. 29 June 30 Dec. 31
1996 1996 1995
------- ------- -------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,254 $150,639 $ 6,323
Receivables, net 234,525 119,346 270,142
Inventories -
Finished products and parts 179,857 96,078 156,117
Work in process 45,426 36,932 44,087
Raw materials 5,141 4,393 4,560
-------- -------- --------
Total inventories 230,424 137,403 204,764
Future income tax benefits 32,870 29,589 31,744
Prepaid expenses 14,782 15,725 11,062
-------- -------- --------
Total current assets 515,855 452,702 524,035
-------- -------- --------
OTHER ASSETS:
Prepaid pension cost 7,458 4,682 727
Deferred income tax asset 5,363 2,883 4,157
Purchased software 9,045 3,685 3,734
-------- -------- --------
Total other assets 21,866 11,250 8,618
-------- -------- --------
PLANT AND EQUIPMENT -
Cost 788,453 776,638 759,178
Less - Accumulated depreciation 403,777 402,426 387,056
-------- -------- --------
Total plant and equipment, net 384,676 374,212 372,122
-------- -------- --------
$922,397 $838,164 $904,775
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
-3-
<PAGE> 2
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION (Continued)
CONSOLIDATED CONDENSED BALANCE SHEETS (Continued)
(In thousands of dollars)
LIABILITIES & SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
Dec. 29 June 30 Dec. 31
1996 1996 1995
----------- ------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 62,091 $ 65,642 $ 62,251
Domestic notes payable 43,970 5,000 101,558
Foreign loans 16,440 14,922 20,066
Current maturities on long-term debt 15,000 15,000 -
Accrued liabilities 99,146 82,932 94,602
Dividends payable 7,810 - 7,521
Federal and state income taxes 17,252 6,683 12,815
-------- -------- --------
Total current liabilities 261,709 190,179 298,813
-------- -------- --------
OTHER LIABILITIES:
Deferred revenue on sale of plant and equipment 15,996 - -
Accrued employee benefits 19,465 18,431 17,260
Accrued postretirement health care obligation 69,034 69,049 69,143
Long-Term debt 60,000 60,000 75,000
-------- -------- --------
Total other liabilities 164,495 147,480 161,403
-------- -------- --------
SHAREHOLDERS' INVESTMENT:
Common stock-
Authorized 60,000,000 shares, $.01 par value
Issued and outstanding 28,927,000 shares 289 289 289
Additional paid-in capital 40,705 40,898 41,327
Retained earnings 455,477 459,666 403,209
Cumulative translation adjustments (278) (348) (266)
-------- -------- --------
Total shareholders' investment 496,193 500,505 444,559
-------- -------- --------
$922,397 $838,164 $904,775
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
-4-
<PAGE> 3
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In thousands of dollars except amounts per share)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
Dec. 29 Dec. 31 Dec. 29 Dec. 31
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET SALES $299,664 $329,357 $461,395 $518,834
COST OF GOODS SOLD 242,807 263,594 386,569 433,930
-------- -------- -------- --------
Gross profit on sales $ 56,857 $ 65,763 $ 74,826 $ 84,904
ENGINEERING, SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 28,071 24,801 54,132 49,284
-------- -------- -------- --------
Income from operations $ 28,786 $ 40,962 $ 20,694 $ 35,620
INTEREST EXPENSE (2,408) (2,919) (4,360) (4,976)
OTHER INCOME, net 536 541 2,098 2,620
-------- -------- -------- --------
Income before provision
for income taxes $ 26,914 $ 38,584 $ 18,432 $ 33,264
PROVISION FOR INCOME TAXES 10,220 14,660 7,000 12,640
-------- -------- -------- --------
Net income $ 16,694 $ 23,924 $ 11,432 $ 20,624
======== ======== ======== ========
PER SHARE DATA* -
Net income $ .58 $ .82 $ .40 $ .71
====== ====== ====== ======
Cash dividends $ .27 $ .26 $ .54 $ .52
====== ====== ====== ======
</TABLE>
* Based on 28,927,000 shares outstanding.
The accompanying notes are an integral part of these statements.
-5-
<PAGE> 4
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
Increase(Decrease) in Cash and Cash Equivalents
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
--------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: Dec. 29, 1996 Dec. 31, 1995
------------- --------------
<S> <C> <C>
Net income $ 11,432 $ 20,624
Adjustments to reconcile net income to
net cash provided by operating activities -
Depreciation 21,578 20,938
Loss on disposition of plant and equipment 1,537 680
(Increase)decrease in operating assets -
Accounts receivable (115,179) (176,026)
Inventories (93,021) (64,090)
Other current assets (2,338) 1,400
Other assets (10,616) (3,066)
Increase(decrease) in liabilities -
Accounts payable and accrued
liabilities 31,042 6,337
Other liabilities 1,019 (357)
--------- ---------
Net cash used in
operating activities $(154,546) $(193,560)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant and equipment $ (33,687) $ (51,423)
Proceeds received on sale of plant and equipment 112 928
Proceeds received on sale of
Menomonee Falls, Wisconsin facility 15,996 -
--------- ---------
Net cash used in investing activities $ (17,579) $ (50,495)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings from domestic and
foreign loans $ 40,488 $ 95,221
Dividends (15,621) (15,042)
Purchase of common stock for treasury (301) (547)
Proceeds from exercise of stock options 108 176
--------- ---------
Net cash provided from financing activities $ 24,674 $ 79,808
--------- ---------
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS $ 66 $ (78)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS $(147,385) $(164,325)
CASH AND CASH EQUIVALENTS, beginning 150,639 170,648
--------- ---------
CASH AND CASH EQUIVALENTS, ending $ 3,254 $ 6,323
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 4,217 $ 4,596
========= =========
Income taxes paid $ 2,075 $ 2,576
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE> 5
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with the rules and regulations of the Securities and
Exchange Commission and therefore do not include all information and footnotes
necessary for a fair presentation of financial position, results of operations
and cash flows in conformity with generally accepted accounting principles.
However, in the opinion of the Company, adequate disclosures have been presented
to make the information not misleading, and all adjustments necessary to present
fair statements of the results of operations and financial position have been
included. All of these adjustments are of a normal recurring nature. It is
suggested that these condensed financial statements be read in conjunction with
the financial statements and the notes thereto included in the Company's latest
annual report on Form 10-K.
The new balance sheet caption entitled "Purchased Software" represents
costs of software purchased for use in the Company's business. Amortization of
Purchased Software is computed on an item-by-item basis over a period of three
to ten years, depending on the estimated useful life of the software.
Accumulated amortization amounted to $3,562,000, $3,367,000, and $2,666,000 as
of December 29, 1996, June 30, 1996 and December 31, 1995. Purchased Software
on prior period balance sheets was reclassified from Prepaid Expense to the
current caption.
The sale of the Company's Menomonee Falls, Wisconsin facility for $16.3
million (less costs to sell) was completed at the beginning of the second fiscal
quarter. The provisions of the contract state that the Company will continue to
own and occupy the warehouse portion of the facility for a period of up to ten
years (the "Reservation Period"). The contract also contains a buyout clause,
at the buyer's option and under certain circumstances, of the remaining
Reservation Period. Given the provisions of the contract, the Company is
required to account for this as a financing transaction. Under this method, the
cash received is reflected as a deferred liability, and the assets and the
accumulated depreciation remain on the Company's books. Depreciation expense
continues to be recorded each period, and imputed interest expense is also
recorded and added to the deferred liability. Offsetting this is the fair value
lease income on the non-Company occupied portion of the building. A pretax
gain, which will be recognized at the earlier of the exercise of the buyout
option or the expiration of the Reservation Period, is estimated to be $10
million to $12 million.
-7-
<PAGE> 1
EXHIBIT (g)(3)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
-----------
Date of Report
(Date of earliest
event reported): April 16, 1997
Briggs & Stratton Corporation
(Exact name of registrant as specified in its charter)
Wisconsin 1-1370 39-0182330
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
12301 West Wirth Street, Wauwatosa, Wisconsin 53222
<PAGE> 2
ITEM 5. OTHER EVENTS
The press release of Briggs & Stratton Corporation (the "Company") dated
April 16, 1997 filed as Exhibit 99 hereto that discloses, among other things,
a self tender for up to 5.875 million shares of common stock, the declaration of
a dividend and the unaudited operating results of the Company for the third
fiscal quarter, is incorporated herein by reference.
-2-
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C>
99 Press release of Briggs & Stratton Corporation
dated April 16, 1997.
</TABLE>
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRIGGS & STRATTON CORPORATION
DATE: April 16, 1997 By: /s/Robert H. Eldridge
----------------------------------
Name: Robert H. Eldridge
Title: Executive Vice President and
Chief Financial Officer
-4-
<PAGE> 5
BRIGGS & STRATTON CORPORATION
Exhibit Index to Current Report on Form 8-K
Dated April 16, 1997
<TABLE>
<CAPTION>
Exhibit Exhibit Page
Number
<S> <C> <C>
99 Press release dated April 16, 1997 6
of Briggs & Stratton Corporation
</TABLE>
-5-
<PAGE> 6
EXHIBIT 99.1
NEWS RELEASE
[BRIGGS & STRATTON LETTERHEAD]
BRIGGS & STRATTON ANNOUNCES SELF-TENDER FOR UP TO 5.875 MILLION SHARES,
DECLARES DIVIDEND AND REPORTS THIRD QUARTER RESULTS
Milwaukee, April 16, 1997/PR Newswire/--Briggs & Stratton Corporation
(NYSE:BGG), a Wisconsin Corporation, announced today that its board of
directors has authorized the company to repurchase its common stock pursuant to
a "dutch auction" self-tender offer. The self-tender will be for up to 5.875
million shares of the company's common stock. The tender offer price is
expected to range from $43 to $51 per share in cash, subject to market and other
customary conditions. The offer is expected to commence Tuesday, April 22, 1997
and will expire at 5:00 p.m., New York City time, on Tuesday, May 20, 1997,
unless extended. On April 15, 1997, Briggs & Stratton shares closed at
$42-3/4.
The tender offer will be subject to various terms and conditions described in
offering materials to be distributed to shareholders next week. Under the
terms of the tender offer, Briggs & Stratton shareholders will be given the
opportunity to specify prices within the company's stated price range at which
they are willing to tender their shares. Upon receipt of tenders, Briggs &
Stratton will determine a final price that enables it to purchase up to the
stated amount of shares from those shareholders who agreed to sell at or below
the selected purchase price. All shares purchased will be at the determined
price. If more than 5.875 million shares are tendered at or below the purchase
price, there will be a proration. The offer will not be contingent upon any
minimum number of shares being tendered. Briggs & Stratton currently has
28,927,000 shares of common stock outstanding. The company indicated it
intends to enter into a new credit facility with Bank of America NT&SA as agent
to finance the tender offer and its seasonal working capital needs. The
company intends to reduce borrowings under this credit facility pursuant to an
expected $175 million offering of debt securities announced separately today.
Neither the company nor its board of directors makes any recommendation to
shareholders as to whether to tender or refrain from tendering their shares.
Each shareholder must make the decision whether to tender shares and, if so,
how many shares and at what price or prices shares should be tendered.
Frederick P. Stratton, Jr., Chairman and Chief Executive Officer of Briggs &
Stratton, said "We believe that the use of cash and borrowings to fund the
dutch auction will result in an efficient capital structure for the company and
is consistent with our long term goal of increasing shareholder value."
Credit Suisse First Boston will serve as the dealer manager for the offer.
Georgeson & Company Inc. will serve as the information agent.
Briggs & Stratton Corporation also announced that its board of directors has
authorized an increase in its regular quarterly dividend from Twenty-seven
cents ($0.27) to Twenty-eight ($0.28) per share. The dividend is payable June
27, 1997 to shareholders of record at the close of business on June 5, 1997.
<PAGE> 7
RESULTS FOR THIRD QUARTER & NINE MONTHS FOR FISCAL 1997
Sales and net income for the third quarter were 3% higher than for last year's
third quarter. For the first nine months, sales were 4% lower and net income
12% lower. Engine unit shipments were 2% higher for the quarter but 7% lower
for the nine months.
Thanks to an early spring in the Southeast, the lawn and garden equipment
selling season is off to a strong start. Retailers are reporting significant
sales increases. Equipment manufacturers did not reach full production levels
until the second half of the third quarter and will have to maintain peak
levels well into May to meet strong demand from retailers. If favorable
weather continues in the Southeast and spreads to the Midwest and Northeast, we
should have a good fourth quarter. We believe that unit shipments for the full
fiscal year will be up modestly despite being down 7% for the nine months. We
will take a charge for the cost of an early retirement window in the fourth
quarter, so reported earnings for the quarter and for the full year will be
lower than they were last year.
F.P. Stratton, Jr.
Chairman and Chief Executive Officer
BRIGGS & STRATTON CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
PERIODS ENDED MARCH
-------------------
THIRD QUARTER NINE MONTHS
------------- -----------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---- ---- ---- ----
Net sales $475,955,000 $460,201,000 $937,350,000 $979,035,000
Income from Operations 76,272,000 74,027,000 96,966,000 109,647,000
Income before provision
for income taxes 75,034,000 72,946,000 93,466,000 106,210,000
Net income 46,514,000 45,226,000 57,946,000 65,850,000
Per Share Data-
Net income $ 1.60 $ 1.57 $ 2.00 $ 2.28
Shares outstanding 28,927,000 28,927,000 28,927,000 28,927,000
</TABLE>
Briggs & Stratton is the world's largest producer of air-cooled gasoline
engines for outdoor power equipment.
This release contains certain forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
in the forward-looking statements. The forward-looking statements are based on
the Company's current views and assumptions and involve risks and uncertainties
that include, among other things, the effects of weather on the purchasing
patterns of the Company's customers and end use purchasers of the Company's
engines; the seasonal nature of the Company's business; actions of competitors;
changes in laws and regulations, including accounting standards; employee
relations; customer demand; prices of purchased raw materials and parts;
domestic economic conditions, including housing starts and changes in consumer
disposable income; and foreign economic conditions, including currency rate
fluctuations. Some or all of the factors are beyond the Company's control.
/CONTACT: Robert H. Eldridge, Executive Vice President and Chief Financial
Officer, Secretary-Treasurer, Briggs & Stratton Corporation 414-259-5333.
