SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1998
Commission file number 1-1043
BRUNSWICK CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-0848180
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1 N. Field Ct., Lake Forest, Illinois 60045-4811
(Address of principal executive offices) (Zip Code)
(847) 735-4700
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
At November 9, 1998, there were 96,048,808 shares of the Company's Common
Stock ($.75 par value) outstanding.
Part I- Financial Information
Item I-Financial Statements
<TABLE>
Brunswick Corporation
Consolidated Statements of Income
for the periods ended September 30
(In millions, except per share data)
(unaudited)
Quarter Nine months
ended September 30 ended September 30
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales 956.5 876.5 2,973.7 2,726.3
Cost of sales 698.8 627.6 2,142.0 1,934.6
Selling, general and administrative expense 174.1 169.0 496.1 480.4
Strategic charges 60.0 98.5 60.0 98.5
Operating earnings (loss) 23.6 (18.6) 275.6 212.8
Interest expense (15.1) (14.2) (46.0) (35.6)
Other income and expense (0.4) 3.2 6.1 10.1
Earnings (loss) before income taxes 8.1 (29.6) 235.7 187.3
Income tax provision (benefit) 4.0 (12.5) 89.3 68.8
Net earnings (loss) 4.1 (17.1) 146.4 118.5
Earnings (loss) per common share:
Basic 0.04 (0.17) 1.47 1.20
Diluted 0.04 (0.17) 1.46 1.18
Average shares used for computation of:
Basic earnings per share 99.0 99.4 99.3 99.1
Diluted earnings per share 99.1 100.7 100.0 100.2
Cash dividends declared per common share 0.125 0.125 0.375 0.375
The notes are an integral part of these consolidated statements.
</TABLE>
<TABLE>
Brunswick Corporation
Consolidated Balance Sheets
As of September 30, 1998, December 31, 1997 and September 30, 1997
(In millions, except share data)
(unaudited)
September 30, December 31, September 30,
1998 1997 1997
Assets
Current assets
Cash and cash equivalents, at cost,
<S> <C> <C> <C>
which approximates market 91.1 85.6 81.8
Accounts and notes receivable,
less allowances of $21.9, $20.7 and $19.2 502.9 434.9 462.2
Inventories
Finished goods 367.9 313.4 327.8
Work-in-process 150.9 139.4 143.0
Raw materials 133.4 113.5 112.1
Net inventories 652.2 566.3 582.9
Prepaid income taxes 218.7 210.7 196.0
Prepaid expenses 61.1 46.0 51.1
Income tax refund receivable 0.0 22.5 18.9
Current assets 1,526.0 1,366.0 1,392.9
Property
Land 71.2 68.7 70.7
Buildings 433.0 425.8 421.6
Equipment 887.0 830.8 827.1
Total land, buildings and equipment 1,391.2 1,325.3 1,319.4
Accumulated depreciation (698.9) (656.7) (656.1)
Net land, buildings and equipment 692.3 668.6 663.3
Unamortized product tooling costs 103.7 114.4 106.6
Net property 796.0 783.0 769.9
Other assets
Goodwill 724.2 726.4 706.9
Other intangibles 104.4 115.8 120.3
Investments 86.7 87.5 87.4
Other long-term assets 163.1 162.7 161.0
Other assets 1,078.4 1,092.4 1,075.6
Total assets 3,400.4 3,241.4 3,238.4
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt, including
current maturities of long-term debt 160.2 109.3 108.0
Accounts payable 233.2 252.9 254.2
Accrued expenses 594.4 586.0 611.3
Income taxes payable 20.8 0.0 0.0
Current liabilities 1,008.6 948.2 973.5
Long-term debt
Notes, mortgages and debentures 641.8 645.5 653.6
Deferred items
Income taxes 143.0 144.3 126.1
Postretirement and postemployment benefits 140.9 137.3 136.0
Compensation and other 63.5 51.1 51.3
Deferred items 347.4 332.7 313.4
Common shareholders' equity
Common stock; authorized: 200,000,000 shares,
$.75 par value; issued: 102,538,000 shares 76.9 76.9 76.9
Additional paid-in capital 311.4 308.2 306.2
Retained earnings 1,161.4 1,052.2 1,032.6
Treasury stock, at cost:
3,712,000; 3,057,000 and 2,990,000 shares (81.1) (59.0) (54.7)
Unamortized ESOP expense and other (59.9) (63.1) (64.9)
Accumulated other comprehensive income (6.1) (0.2) 1.8
Common shareholders' equity 1,402.6 1,315.0 1,297.9
Total liabilities and shareholders' equity 3,400.4 3,241.4 3,238.4
The notes are an integral part of these consolidated statements.
</TABLE>
<TABLE>
Brunswick Corporation
Consolidated Statements of Cash Flows
for the nine months ended September 30
(In millions)
(unaudited)
1998 1997
Cash flows from operating activities
<S> <C> <C>
Net earnings 146.4 118.5
Depreciation and amortization 119.5 113.0
Changes in noncash current assets and current
liabilities (190.5) (176.9)
Income taxes 43.1 (16.0)
Strategic charges 60.0 98.5
Other, net (0.5) (4.8)
Net cash provided by operating activities 178.0 132.3
Cash flows from investing activities
Acquisitions of businesses (32.8) (486.0)
Unrestricted cash held for Igloo acquisition 0.0 143.0
Capital expenditures (117.5) (117.2)
Payments advanced for long-term supply arrangements (6.5) (6.3)
Investments (21.6) 3.6
Other, net 21.5 1.8
Net cash used for investing activities (156.9) (461.1)
Cash flows from financing activities
Net proceeds from issuances of short-term
commercial paper and other short-term debt 50.8 98.2
Net proceeds from issuance of long-term debt 0.0 198.6
Payments of long-term debt including current maturities (3.6) (103.3)
Stock options exercised 6.6 15.8
Stock repurchases (32.2) 0.0
Cash dividends paid (37.2) (37.2)
Net cash (used for) provided by financing activities (15.6) 172.1
Net increase (decrease) in cash and cash equivalents 5.5 (156.7)
Cash and cash equivalents at January 1 85.6 238.5
Cash and cash equivalents at September 30 91.1 81.8
Supplemental cash flow disclosures:
Interest paid 40.9 41.8
Income taxes paid, net 46.2 84.8
Treasury stock issued for compensation plans and other 13.0 24.6
The notes are an integral part of these consolidated statements.
</TABLE>
Brunswick Corporation
Notes to Consolidated Financial Statements
September 30, 1998, December 31, 1997 and September 30, 1997
(unaudited)
Note 1 - Accounting Policies
This unaudited financial data has been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and disclosures normally included
in financial statements and footnotes prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. Brunswick Corporation (the "Company") believes that the
disclosures in these statements are adequate to make the
information presented not misleading. Certain previously reported
amounts have been reclassified to conform with the current period
presentation.
These financial statements should be read in conjunction with, and
have been prepared in conformity with, the accounting principles
reflected in the consolidated financial statements and related
notes included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1997. These interim results include, in
the opinion of the Company, all normal and recurring adjustments
necessary to present fairly the results of operations for the
quarter and nine-month periods ended September 30, 1998 and 1997.
The 1998 interim results are not necessarily indicative of the
results which may be expected for the remainder of the year.
Note 2 - Earnings Per Common Share
There is no difference in the net earnings used to compute the
Company's basic and diluted earnings per share. The difference in
the weighted-average number of shares of common stock outstanding
used to compute basic and diluted earnings per share is caused by
potential common stock relating to employee stock options. The
weighted-average number of shares of potential common stock was
0.1 million and 1.3 million for the quarters ended September 30,
1998 and 1997, and 0.7 million and 1.1 million for the nine-month
periods ended September 30, 1998 and 1997, respectively.
Note 3 - Acquisitions
On January 30, 1998, the Company acquired the assets of ParaBody,
Inc., a marketer and manufacturer of a leading consumer line of
multistation gyms, benches and racks. ParaBody has been included
as part of the Recreation segment. The Company also acquired the
assets of certain bowling centers. Total cash consideration paid
for acquisitions totaled $32.8 million in the first nine months of
1998.
Note 4 - Debt
Commercial paper outstanding increased to $139.4 million at
September 30, 1998, versus $86.3 million at December 31, 1997, due
to higher short-term borrowing requirements.
Note 5 - Litigation
On June 19, 1998, a jury awarded $44 million in damages in a suit
brought in December 1995 by Independent Boat Builders, Inc., a
buying group of boat manufacturers and twenty-two of its members.
The lawsuit, Concord Boat Corporation, et al. v. Brunswick
Corporation ("Concord"), was filed in the United States District
Court for the Eastern District of Arkansas, and alleged that the
Company unlawfully monopolized, unreasonably restrained trade, and
made acquisitions which substantially lessened competition in, the
market for sterndrive and inboard marine engines in the United
States and Canada. Under the antitrust laws, that amount will be
trebled, and plaintiffs will be entitled to their attorneys' fees
and interest. Any and all amounts paid by the Company will be
deductible for tax purposes.
The trial court judge has denied the Company's post-trial motions
seeking to set aside the verdict and for a new trial. The judge
has also denied all forms of equitable relief sought by the
plaintiffs in connection with the jury verdict, including their
requests for divestiture of the Company's principal boat
manufacturing operations and orders precluding the Company from
implementing various marketing and pricing programs and from
acquiring other marine-related companies or assets. The judge
granted the Company's motion for judgment as a matter of law on
its counterclaim which asserted a per se violation of the
antitrust laws by a group of six of the plaintiffs and awarded
nominal damages. Plaintiffs recently dismissed, voluntarily, two
related claims which had alleged that the Company attempted to
monopolize the outboard engine and sterndrive boat markets.
The Company is pursuing its appeal of the entry of judgment on the
adverse jury verdict. While there can be no assurances, it
believes the adverse judgment is likely to be reversed. The
Company is not presently able to reasonably estimate the ultimate
outcome of this case, and accordingly, no expense for this
judgment has been recorded. If the adverse judgment is sustained
after all appeals, satisfaction of the judgment is likely to have
a material adverse affect on the Company's results of operations
for a particular year, but is not expected to have a material
adverse affect on the Company's financial condition.
On October 23, 1998, a suit was filed in the United States
District Court for the District of Minnesota by two independent
boat builders alleging antitrust violations by the Company in the
sterndrive and inboard engine business, and invoking the
allegations and damage model of the Concord litigation. In this
suit, Alumacraft Boats Co., et al. v. Brunswick Corporation
("Alumacraft"), the named plaintiffs also seek to represent a
class of all allegedly similarly situated boat builders whose
claims have not been resolved in Concord or in other judicial
proceedings. Sales of sterndrive and inboard marine engines to
the Concord plaintiffs are estimated to have represented less than
one-fifth of the total sold during the six and one-half year time
period for which damages were awarded in that suit. The complaint
in the Alumacraft case seeks damages for a time period covering
slightly less than four years. The Company is still in the
process of evaluating the complaint, (including the fact that
Alumacraft sought and obtained dismissal from the complaint
voluntarily 10 days after it was filed) but believes it is more
likely than not that all proceedings in this case will be stayed
pending the appeal of the Concord judgment.
The Company believes that if the Concord judgment is sustained
after all appeals, and if the Alumacraft suit successfully
proceeds as a class action as alleged, or if other similar suits
are filed, which is likely, and if plaintiffs are successful, the
damages ultimately payable by the Company would be material.
However, a variety of factors affecting both the likelihood and
size of any damage award to these or any other potential claimants
make it difficult to estimate the Company's possible exposure.
Note 6 - Strategic Charge
During the third quarter of 1998, the Company recorded a pretax
charge of $60.0 million ($41.4 million after tax) in the
Recreation segment to cover costs associated with strategic
initiatives designed to streamline operations and enhance
operating efficiencies in response to the effect that the
economic situation in Asia and other emerging
markets is having on its businesses. These strategic actions
include the disposition of 15 retail bowling centers in
Asia, Brazil and Europe; rationalizing manufacturing of bowling
equipment including closing a pinsetter manufacturing plant in
China, accelerating the shutdown of a pinsetter manufacturing
plant in Germany and exiting the manufacture of electronic scorers
and components; closing bowling sales offices and administrative
offices in four countries; and rationalizing the
manufacture and distribution of outdoor recreation products
including the consolidation of certain North American
manufacturing operations and closing seven domestic
distribution warehouses.
These actions will result in asset disposition costs of $28.8
million, lease termination costs of $11.3 million, severance costs
of $10.6 million and $9.3 million of other incremental costs.
Asset disposition costs primarily relate to the write-down of facilities
and equipment at the international bowling centers and the
manufacturing facilities in the outdoor recreation group. Lease
termination costs consist primarily of costs to exit leased
international bowling facilities as well as distribution and
warehouse facilities of the outdoor recreation group. Severance
costs relate to the termination of approximately 750
employees in the Company's bowling businesses and 330
employees in the Company's outdoor recreation group.
Other incremental costs include contract termination costs related
to the manufacture and sales of bowling equipment, clean-up,
holding and shut down costs related to the closing of domestic
distribution warehouses and manufacturing facilities, and legal
costs. The initiatives are expected to be completed by the end of
1998.
During the third quarter of 1997, the Company recorded a pretax
charge of $98.5 million ($63.0 million after tax) to cover
costs associated with strategic initiatives principally
in the Marine segment to streamline its operations and improve
global manufacturing costs. The initiatives
include the termination of development efforts on a line of
personal watercraft; closing boat plant manufacturing facilities
in Ireland and Oklahoma; centralizing European
marketing and customer service in the Marine segment;
rationalizing manufacturing of bowling equipment including the
shutdown of a pinsetter manufacturing plant in Germany and
outsourcing the manufacture of certain components in the Company's
bowling division; consolidating fishing reel manufacturing; and
other actions directed at manufacturing rationalization, product
profitability improvements and general and administrative expense
efficiencies. The charge consisted of $74.7 million recorded in the
Marine segment and $23.8 million recorded in the Recreation segment.
The components of the charge included $32.6 million for severance costs,
$42.0 million for asset disposition costs and $23.9 million for other
incremental costs related to exit activities. Management anticipates that
these actions will be completed by the end of 1998.
The Company's accrued expense balances relating to the 1998 and
1997 strategic charges as of September 30, 1998, and December 31,
1997, were as follows (in millions):
September 30, December 31,
1998 1997
Severance $ 23.2 $ 23.2
Other 26.6 17.2
Total $ 49.8 $ 40.4
The Company has completed approximately 28 percent and 80
percent of the employee reduction program included in the 1998 and
1997 charges, respectively. The balance of the severance-related
accruals at September 30, 1998, covers future payments to be made
for severance actions.
Note 7 - Segment Data
The following table sets forth net sales and operating earnings of
each of the Company's industry segments for the quarter and nine-
month periods ended September 30, 1998 and 1997 (in millions):
Quarter ended September 30
1998 1997
Net Operating Net Operating
Sales Earnings (Loss) Sales Earnings (Loss)
Marine $ 638.7 $ 84.2 $ 581.3 $ (4.9)
Recreation 317.8 (50.7) 295.2 (4.5)
Corporate 0.0 (9.9) 0.0 (9.2)
Total $ 956.5 $ 23.6 $ 876.5 $ (18.6)
Nine months ended September 30
1998 1997
Net Operating Net Operating
Sales Earnings Sales Earnings
Marine $ 1,944.2 $ 288.3 $ 1,809.0 $ 167.9
Recreation 1,029.5 12.8 917.3 74.0
Corporate 0.0 (25.5) 0.0 (29.1)
Total $ 2,973.7 $ 275.6 $ 2,726.3 $ 212.8
Operating earnings for the quarter and nine months ended September
30, 1998, include a strategic charge of $60.0 million in the
Recreation segment to cover costs associated with strategic
initiatives designed to streamline operations and enhance
operating efficiencies in response to the Asian economic situation.
Marine segment operating earnings for the
nine-month period ended September 30, 1998, include $15.0 million
of income recorded in connection with a settlement with MarineMax,
Inc.
Operating earnings for the quarter and nine months ended September
30, 1997, include a $98.5 million strategic charge which consisted
of $74.7 million in the Marine segment and $23.8 million in the
Recreation segment for costs associated with streamlining
operations and improving global manufacturing costs.
Note 8 - Comprehensive Income
As of January 1, 1998, the Company adopted Financial Accounting
Standards Board Statement No. 130, "Reporting Comprehensive
Income." Statement No. 130 requires reporting certain
transactions that result in a change in equity, such as currency
translation, unrealized gains and losses on investments and
minimum pension liability adjustments, as components of
comprehensive income. The adoption of this Statement had no
effect on the Company's net earnings or shareholders'
equity. Accumulated other comprehensive income includes
cumulative translation, unrealized gains and losses on investments
and minimum pension liability adjustments. The components of
comprehensive income, net of related tax, for the quarter and nine-
month periods ended September 30, 1998 and 1997, were as follows
(in millions):
Quarter ended Nine Months ended
September 30 September 30
1998 1997 1998 1997
Net earnings (loss) $ 4.1 $(17.1) $ 146.4 $ 118.5
Other comprehensive loss (2.1) (5.0) (5.9) (9.4)
Comprehensive income (loss) $ 2.0 $(22.1) $ 140.5 $ 109.1
Note 9 - Income Taxes
In December 1996, the Company received notification that the
income allocation and tax basis of assets distributed from two
partnership investments in 1990 and 1991 are being challenged by
the IRS. Should the IRS prevail, it may result in a cash payment
of up to approximately $60 million for taxes due, plus accrued
interest. The Company strongly disagrees with the IRS position
and filed petitions in the United States Tax Court in January 1997
to contest the IRS position. A trial took place in the United
States Tax Court in September 1998 concerning this issue and a
decision is expected in 1999. Although the outcome cannot be
predicted with certainty, it is not expected to have an
unfavorable effect on the Company's results of operations.
Note 10 - Subsequent Event
On October 1, 1998, the Company's Board of Directors authorized
the repurchase of up to seven million shares of the Company's
common stock from time to time in the open market or through
privately negotiated transactions. The Company has repurchased
4,274,000 shares for $69.0 million as of November 9, 1998.
Item 2. - Management's Discussion and Analysis
Overview
The Company's sales for both the third quarter and first nine
months of 1998 increased 9.1 percent. Net earnings and diluted
earnings per share for the third quarter of 1998 were $4.1 million
and $0.04, respectively, compared with a net loss of $17.1
million, or $0.17 per diluted share for the third quarter a year
ago. Net earnings for the first nine months of 1998 increased
23.5 percent to $146.4 million from $118.5 million for the same
period in 1997 and diluted earnings per share increased 23.7
percent to $1.46 from $1.18. Results for 1998 include a $60.0 million
pretax ($41.4 million after tax) strategic charge recorded in the third
quarter of 1998. Results for 1997 include a $98.5 million pretax
($63.0 million after tax) strategic charge recorded in the third quarter
of 1997. See "1998 Strategic Charge" and "1997 Strategic Charge" below.
Excluding these charges, net earnings for the third quarter totaled $45.5
million in 1998 and $45.9 million in 1997, while net earnings for the year-
to-date period were $187.8 million in 1998 and $181.5 million in
1997.
The Company's results for the third quarter and nine-month
period in 1998 reflect sales and earnings growth in the Marine
segment. The Recreation segment experienced revenue growth, but
lower earnings. Comparisons with the prior year for the Recreation segment
continued to reflect a decline in sales volumes of bowling
equipment into Asian markets. Year-to-date results benefited from
acquisitions made in 1998 and 1997 while acquisitions did not have
a material effect on quarterly comparisons. Year-to-date Marine
segment results include a $15.0 million pretax settlement with
MarineMax, described below.
Several acquisitions affect the comparison of the Company's
results for the first nine months of 1998 with
the prior-year period. These acquisitions include Hoppe's
hunting accessories acquired on March 7, 1997; Mongoose bicycles
acquired on April 28, 1997; Life Fitness cardiovascular and
strength training equipment on July 9, 1997; Hammer Strength plate-
loaded strength training equipment on November 13, 1997; DBA
Products bowling lane supplies on November 20, 1997; and ParaBody
multistation gyms, benches and racks on January 30, 1998.
1998 Strategic Charge
During the third quarter of 1998, the Company announced strategic
initiatives to streamline operations and enhance operating
efficiencies in response to the Asian economic situation and the
impact other emerging markets is having on its businesses. These
strategic actions include the disposition of 15 retail bowling
centers in Asia, Brazil, China and Europe; rationalizing its
manufacturing of bowling equipment including closing a pinsetter
manufacturing plant in China, accelerating the shutdown of a
pinsetter manufacturing plant in Germany and exiting the
manufacture of electronic scorers and components; closing bowling
sales offices in these countries and reducing administrative
support; and rationalizing its manufacturing and distribution of
outdoor recreation products including the consolidation of certain
North American manufacturing operations and closing seven domestic
distribution warehouses. The Company's financial results for the third
quarter and first nine months of 1998 include a $60.0 million ($41.4
million after tax) charge to operating earnings in the Recreation
segment to cover exit costs related to these strategic
initiatives. Non-accruable expenses related to the strategic
initiatives are not material and will be expensed as incurred.
The benefits from the above actions did not have a material effect
on the Company's 1998 financial results. The Company expects that
the aggregate pretax savings will total $65 million to $70 million
over the next three years. These savings are the result of more
efficient manufacturing operations in both the indoor and outdoor
recreation groups, reduced sales and administrative overhead and
the elimination of losses from under-performing international
bowling centers. Except for the expected pretax savings, the
actions taken in the strategic charge will not have a significant
impact on the Company's revenues or income.
Results of Operations
Consolidated
The following table sets forth certain information from the
consolidated statements of income for the quarter and nine-month
periods ended September 30, 1998 and 1997 (dollars in millions,
except per share data):
Quarter ended Nine months ended
September 30 September 30
1998 1997 1998 1997
Net sales $956.5 $876.5 $2,973.7 $2,726.3
Percent increase 9.1% 14.8% 9.1% 15.5%
Gross margin 26.9% 28.4% 28.0% 29.0%
Selling, general and
administrative expense
as a percent of sales 18.2% 19.3% 16.7% 17.6%
Operating earnings (1) $23.6 $(18.6) $275.6 $212.8
Net earnings (1) $ 4.1 $(17.1) $146.4 $118.5
Diluted earnings per
share (1) $0.04 $(0.17) $ 1.46 $ 1.18
(1) Includes a $60.0 million pretax ($41.4 million
after tax) strategic charge recorded in the third quarter of 1998
and a $98.5 million pretax ($63.0 million after tax) strategic
charge recorded in the third quarter of 1997. On a pro forma
basis, excluding these charges, the amounts are as follows
(dollars in millions, except per share data):
Quarter ended Nine months ended
September 30 September 30
Pro forma - excluding 1998 1997 1998 1997
strategic charges
Operating earnings $83.6 $79.9 $335.6 $311.3
Percent increase 4.6% 21.1% 7.8% 21.6%
Operating margin 8.7% 9.1% 11.3% 11.4%
Net earnings $45.5 $45.9 $187.8 $181.5
Diluted earnings per
share $0.46 $0.46 $ 1.88 $ 1.81
Sales increased by $80.0 million to $956.5 million in the third
quarter of 1998, compared with $876.5 million in 1997. In 1998,
the Marine segment recorded a sales increase of $57.4 million, and
the Recreation segment added $22.6 million. Total Company sales
increased by $247.4 million to $2,973.7 million in the first nine
months of 1998, compared with $2,726.3 million in 1997. In 1998,
the Marine segment recorded a sales increase of $135.2 million,
and the Recreation segment added $112.2 million. These increases
primarily reflect the benefits of a favorable mix shift to larger,
higher margin boats and engines along with the benefit of expanded
bicycle distribution and new products in the Recreation
segment. Partially offsetting these gains were
reduced sales of bowling lanes, pinsetters and other bowling
equipment primarily in Asia and declines in sales of camping and
fishing equipment. The 1998 year-to-date sales also
include $143.0 million of incremental sales from companies
acquired in 1998 and 1997.
The Company's gross margin percentage for the third quarter
decreased to 26.9 percent in 1998 from 28.4 percent in 1997 and
for the first nine months of 1998 decreased to 28.0 percent from
29.0 percent last year. The lower gross margins
primarily reflect the previously mentioned volume declines in the
bowling equipment business, along with the fishing and camping
businesses. These businesses also experienced pricing
pressures that adversely affected gross
margins. In the Marine segment, increased marketing spending on
smaller boats and the higher costs associated with the
introduction of the low-emission outboard engines
were partially offset by an improved sales mix of boats and the
benefits from cost reduction actions. Year-to-date gross
margin comparisons also include the favorable effect of acquired businesses.
Selling, general and administrative expense as a percent of sales
decreased to 18.2 percent in the third quarter of 1998 from 19.3
percent in the third quarter of 1997 benefiting from cost
reduction actions. In the year-to-date period, selling, general
and administrative expense as a percent of sales declined to
16.7 percent in 1998 from 17.6 percent in 1997. Selling,
general and administrative expense for the first nine months
was positively affected by income recorded in 1998 in
connection with the settlement reached with one of the Company's
boat dealers, MarineMax, Inc. Under the terms of
the settlement, MarineMax has agreed to pay
Brunswick $15.0 million at December 31, 1998, which was recognized
as income in the nine months ended September 30, 1998. Without
the settlement transaction, 1998 selling, general and
administrative expense would have been 17.2 percent of sales for
the year-to-date period versus 17.6 percent in the prior year.
This decline from the prior year reflects the effects of increased
economies of scale and effective cost management activities
partially offset by increases due to the normal operating expense
levels of acquired businesses.
Operating earnings increased to $23.6 million in the third quarter
of 1998, compared with an operating loss of $18.6 million in
1997. Operating earnings for the first nine months of 1998
increased 29.5 percent to $275.6 million, up from $212.8 million
in 1997. Operating results for the third quarter and nine-month
periods in 1998 include the aforementioned $60.0
million ($41.4 million after tax) strategic charge recorded in the
third quarter of 1998. Operating results for the third quarter
and nine-month periods in 1997 include the impact of the
aforementioned $98.5 million ($63.0 million after tax) strategic
charge recorded in the third quarter of 1997. Excluding these
charges, third quarter 1998 operating earnings increased 4.6
percent to $83.6 million from $79.9 million
and year-to-date operating earnings for 1998 increased 7.8 percent
to $335.6 million from $311.3 million.
Net earnings increased to $4.1 million in the third quarter of
1998, compared with a net loss of $17.1 million in 1997 and
increased 23.5 percent to $146.4 million for the first nine months
of 1998 compared with $118.5 million in 1997. Excluding the
aforementioned strategic charges, net earnings for the third
quarter totaled $45.5 million in 1998 and $45.9 million in 1997,
while net earnings for the year-to-date period were $187.8 million in 1998
and $181.5 million in 1997.
Interest expense increased by $0.9 million in the third quarter of
1998 and $10.4 million in the first nine months of 1998 compared
with the same periods in 1997 due to increased debt levels related
to the funding of acquisitions and higher levels of working
capital investments.
The Company's effective tax rate was at 49.4 percent in the third
quarter of 1998, compared with 42.2 percent in 1997 and 37.9
percent and 36.7 percent in the first nine months of 1998 and
1997, respectively. Absent the aforementioned strategic charges,
the effective tax rates were 33.2 percent and 33.4 percent for the
third quarter of 1998 and 1997, respectively, and 36.5 percent for
both of the nine-month periods in 1998 and 1997.
Diluted earnings per share increased to $0.04 for the third
quarter of 1998, compared with a loss of $0.17 in 1997
and increased to $1.46 in the first nine months of 1998 compared
with $1.18 in 1997. Excluding the aforementioned strategic
charges, diluted earnings per share totaled $0.46 in the third
quarter of 1998 and 1997 and in the nine-month periods were $1.88
in 1998 versus $1.81 in 1997. Weighted common shares
outstanding used to calculate diluted earnings per share decreased
to 99.1 million in the third quarter of 1998 from 100.7 million in
1997 reflecting the effect of stock repurchases and the impact of
a lower stock price on the dilutive effect of stock options.
Weighted common shares outstanding used to calculate diluted
earnings per share were 100.0 million and 100.2 million in the
first nine months of 1998 and 1997, respectively.
Recreation Segment
The following table sets forth Recreation segment results for the
quarter and nine-month periods ended September 30, 1998 and 1997
(dollars in millions):
Quarter ended Nine months ended
September 30 September 30
1998 1997 1998 1997
Net sales $317.8 $295.2 $1,029.5 $917.3
Percent increase 7.7% 49.5% 12.2% 50.5%
Operating earnings
(loss) (1) $(50.7) $ (4.5) $ 12.8 $ 74.0
Capital expenditures $ 20.0 $ 7.1 $ 50.4 $ 33.4
(1) Includes a $60.0 million strategic charge
recorded in the third quarter of 1998 and a $23.8 million
strategic charge recorded in the third quarter of 1997. On a pro
forma basis, excluding these charges, the Recreation segment
results for the quarter and nine-month periods ended September 30,
1998 and 1997, were as follows (dollars in millions):
Quarter ended Nine months ended
September 30 September 30
Pro forma - excluding 1998 1997 1998 1997
strategic charges
Operating earnings $ 9.3 $19.3 $72.8 $97.8
Percent increase (51.8)% 53.2% (25.6)% 68.3%
(decrease)
Operating margin 2.9% 6.5% 7.1% 10.7%
In 1998, Recreation segment sales increased 7.7 percent to $317.8
million in the third quarter and 12.2 percent to $1,029.5 million
in the first nine months. The sales gains reflect increased bicycle
sales due to an expanded distribution
network, fitness equipment sales due to growth in traditional and
hospital-based health clubs and improvements in sales of ice
chests and beverage coolers due to new product introductions. In
the year-to-date period, the increase also includes the effects of
the aforementioned businesses acquired in 1998 and 1997. These
gains were partially offset by the continued effects of
substantial reductions in bowling equipment sales
in Asia and declines in sales of camping and fishing equipment due
to lower-cost Asian imports and changes in the buying behavior of
major retailers.
The Recreation segment incurred an operating loss of $50.7 million
in the third quarter of 1998, compared with an operating loss of
$4.5 million in 1997. Operating earnings for the first nine
months decreased 82.7 percent to $12.8 million for the first nine
months of 1998 compared with $74.0 million in 1997. Operating
results for the third quarter and nine-month periods include
strategic charges of $60.0 million and $23.8 million in 1998 and
1997, respectively, as previously described.
Operating earnings for the third quarter, excluding the strategic
charges in 1998 and 1997, decreased
51.8 percent to $9.3 million in 1998 from $19.3 million in 1997.
Operating earnings for the nine-month period excluding the
strategic charges declined 25.6 percent in 1998 to $72.8
million from $97.8 million in 1997. Operating margins excluding
strategic charges decreased to 2.9 percent in the
third quarter of 1998 compared with 6.5 percent in 1997 and
decreased to 7.1 percent in the first nine months of 1998 from
10.7 percent in 1997. The operating margin declines reflect the
aforementioned drop in bowling equipment sales and lower fishing
and camping equipment sales. Additionally, those businesses
experienced pricing pressures that unfavorably affected margins.
Marine Segment
The following table sets forth Marine segment results for the
quarter and nine-month periods ended September 30, 1998 and 1997
(dollars in millions):
Quarter ended Nine months ended
September 30 September 30
1998 1997 1998 1997
Net sales $ 638.7 $ 581.3 $1,944.2 $1,809.0
Percent increase 9.9% 2.7% 7.5% 3.3%
Operating earnings
(loss) (1) $ 84.2 $ (4.9) $ 288.3 $ 167.9
Capital expenditures $ 24.9 $ 30.9 $ 66.9 $ 79.3
(1) Includes a $74.7 million strategic charge
recorded in the third quarter of 1997. On a pro forma basis,
excluding the 1997 charge, the Marine segment results for the
quarter and nine-month periods ended September 30, 1998 and 1997,
were as follows (dollars in millions):
Quarter ended Nine months ended
September 30 September 30
Pro forma - excluding 1998 1997 1998 1997
strategic charge
Operating earnings $ 84.2 $ 69.8 $ 288.3 $ 242.6
Percent increase 20.6% 7.4% 18.8% 6.3%
Operating margin 13.2% 12.0% 14.8% 13.4%
The Marine segment posted sales gains of 9.9 percent and 7.5
percent in the third quarter and first nine months of 1998,
respectively, primarily as a result of an improved sales mix of
larger, higher-margin boats and engines. Operating earnings for
the segment increased to $84.2 million in the third quarter of
1998, compared with an operating loss of $4.9 million in the same
period last year. Operating earnings for the
first nine months of 1998 were $288.3 million, a 71.7 percent
increase compared with $167.9 million in 1997. Operating earnings
in the third quarter and nine-month periods of 1997 include a
$74.7 million strategic charge.
Operating margins in the quarter improved to 13.2 percent in 1998
versus 12.0 percent in 1997, excluding the previously mentioned
strategic charge. Operating margins for the first nine months of
1998 totaled 14.8 percent, and benefited from $15.0 million of
income recorded in connection with the aforementioned MarineMax
settlement. Excluding the MarineMax settlement and strategic
charge, operating margins were 14.1 percent for the first nine
months of 1998 versus 13.4 percent in 1997. The improvements in
operating margins reflect the benefits of cost
management actions partially offset by the costs associated with
marketing spending designed to increase small boat sales, and the
introduction of low-emissions outboard engine products.
1997 Strategic Charge
During the third quarter of 1997, the Company announced a
strategic initiative to streamline its operations and improve
global manufacturing costs. The initiative includes the
termination of development efforts on a line of personal
watercraft; closing boat plant manufacturing facilities in Ireland
and Oklahoma; centralizing European marketing and customer service
in the Marine segment; rationalizing manufacturing of bowling
equipment including the shutdown of a pinsetter manufacturing
plant in Germany and outsourcing the manufacture of certain
components in the Company's bowling division; consolidating
fishing reel manufacturing; and other actions directed at
manufacturing rationalization, product profitability improvements
and general and administrative expense efficiencies. Management
anticipates that these actions will be substantially completed by
the end of 1998.
Included in the Company's financial results for the third quarter
and nine-month periods in 1997 was a $98.5 million ($63.0 million
after tax) charge to operating earnings to cover exit costs
related to the strategic initiatives. The charge consisted of
$74.4 million recorded in the Marine segment and $23.8 million
recorded in the Recreation segment.
The benefits from the above actions did not have a material effect
on the Company's 1997 financial results. The Company expects that
the aggregate pretax savings will total $55 million to $60 million
over the next three years. These estimates are dependent on the
timing of the programs along with the ability to achieve the
financial performance objectives. The savings are the result of
reduced sales and administrative overhead and more efficient
manufacturing operations along with the elimination of losses from
the development personal watercraft and under performing bowling
center assets. The actions taken in the strategic charge did not
result in material increases in other expenses and/or decreases in
revenue.
Cash Flow, Liquidity and Capital Resources
Cash generated from operating activities, available cash balances
and selected borrowings are the Company's major sources of funds
for investments and dividend payments. Cash and cash equivalents
totaled $91.1 million at September 30, 1998, compared with $85.6
million at the end of 1997.
Cash provided by operating activities for the first nine months of
1998 and 1997 totaled $178.0 million and $132.3 million,
respectively. The primary components of cash provided by
operating activities include the Company's net earnings adjusted
for noncash expenses; the timing of cash flows relating to
operating expenses, sales and income taxes; and the management of
inventory levels. The improvement in 1998 versus 1997 primarily
reflects the favorable timing of income tax payments versus
provisions between years.
During the first nine months of 1998, the Company invested $117.5
million in capital expenditures, compared with $117.2 million in
1997. The 1998 capital expenditure budget is approximately $200
million, principally for growth and productivity initiatives. A
significant portion of the 1998 capital expenditures budget is
dedicated to substantially upgrading information system
capabilities company wide. Acquisitions of businesses totaled $32.8
million in the first nine months of 1998 versus $486.0 million in the same
period in 1997.
Total debt at September 30, 1998, increased to $802.0 million
versus $754.8 million at the end of 1997 due to increased
commercial paper borrowings to support higher short-term
borrowing requirements. Debt-to-capitalization ratios at these
dates were 36.4 percent and 36.5 percent, respectively.
Under the systematic repurchase program announced in October 1997,
the Company repurchased 1,181,000 shares of its common stock for
$32.2 million in open market transactions during the first nine
months of 1998. On October 1, 1998, the Company's Board of
Directors authorized the repurchase of up to seven million shares
of the Company's common stock from time to time in the open market
or through privately negotiated transactions. The Company has
repurchased 4,274,000 shares for $69.0 million under this program
as of November 9, 1998. These repurchases have been funded with
operating cash flow and commercial paper.
The Company's financial flexibility and access to capital markets
is supported by its balance sheet position, investment-grade
credit ratings and ability to generate significant cash from
operating activities. The Company has a $400 million long-term
credit agreement with a group of banks, which supports the
Company's commercial paper borrowings, and $150 million available
under a universal shelf registration filed in 1996 with the
Securities and Exchange Commission for the issuance of equity
and/or debt securities. The Company extended the termination date
on $360 million of the long-term credit agreement from May 22,
2002 to May 22, 2003. Management believes that these factors
provide adequate sources of liquidity to meet the Company's long-
term and short-term needs.
The Company uses its cash balances and other sources of liquidity
to invest in its current businesses to promote innovation and new
product lines, and to acquire complementary businesses. These
investments, along with other actions taken to improve the profit
margins of current businesses, are designed to continue
improvement in the Company's financial performance and enhance
shareholder value.
Year 2000
In January 1998, the Company initiated a formal program to address
the Year 2000 issue. The Year 2000 issue involves the inability
of date sensitive computer applications to process dates beyond
the year 2000. The Company has established a Year 2000 Project
Office to lead the initiatives that address areas with the
potential of having a major adverse impact on the business.
The Company uses software and related technologies throughout its
businesses and in certain of its products that will be affected by
the Year 2000 issue. A comprehensive inventory and assessment of
business systems and processes that may be affected by Year 2000
issues have been substantially completed. Key areas requiring
priority focus include the Company's information ("IT") systems
including financial, invoicing, order entry, purchasing, payroll,
inventory management and production management systems along with
IT systems infrastructure, as well as the Company's manufacturing
and other non-IT systems.
The Company is in the process of implementing its plan to address
its IT and non-IT systems that includes a combination of
replacement and remediation activities. This plan is expected to
be substantially complete in June 1999. The Company's IT
replacement projects, which are being done in connection with a
company-wide IT systems upgrade project, are over 50 percent
complete and include financial and order processing systems in
certain businesses. The remaining IT systems are being addressed
through remediation efforts, a majority of which have been
completed. The Company's testing activities will include system
certification, unit testing and Year 2000 regression analysis.
Testing efforts are ongoing, with an expected finish date for
substantially all IT systems in June 1999. Replacement and
remediation of non-IT systems is also ongoing, with a targeted
finish date of June 1999 for substantially all such systems.
An inventory and assessment of the technology incorporated into
the Company's products is substantially complete. Key areas of
focus include bowling products consisting of electronic scorers
and bowling center management systems. The Company is currently
aware of certain Year 2000 problems affecting versions of selected
bowling products and has taken, or is taking, steps to address the
problems, including notifying known users and, in many cases,
providing Year 2000 solutions. This process is expected to be
completed by March 1999.
The Company is assessing the Year 2000 readiness of its critical
customers and suppliers and has sent letters inquiring as to their
Year 2000 readiness. The Company will perform additional
procedures as necessary, which may include interviews and on-site
visits, to evaluate risks associated with third parties and will
consider these risks in establishing its contingency plans.
While the Company believes that its efforts to address the Year
2000 issue will be successful in avoiding any material adverse
effect on the Company's results of operation or financial
condition, given the complexity and number of potential risks,
there can be no guarantee that the Company's efforts will be
successful. The risks to a successful Year 2000 plan include, but
are not limited to, the readiness of customers and suppliers, the
availability of technical resources, and the effectiveness of
systems replacement and remediation programs and product fixes.
If the Company's efforts to achieve Year 2000 readiness are
unsuccessful, the impact could have a material adverse effect on
the Company's results of operation and financial condition. The
potential adverse effects include a limited ability to manufacture
and distribute products and process daily business transactions.
The Company is developing contingency plans to mitigate the
potential disruptions that may result from the Year 2000 issue.
These plans may include shifting from replacement to remediation
activities for IT systems, securing alternative sources for key
suppliers of materials and services, investing in safety stocks of
key raw materials and finished goods and other measures considered
appropriate by management. Once developed and approved,
contingency plans, and the related cost estimates, will be
continually refined, as additional information becomes available.
The Company expects to substantially complete its contingency
plans by April 1999, with implementation as required during the
latter half of 1999.
The costs of remediating existing software and other Year 2000 related
expenses have been determined and are not expected to exceed
approximately $15 million. The Company has expensed approximately
$6 million of costs since the Year 2000 assessment process began
in 1997. The majority of this amount was expensed in 1998. Costs
associated with the company-wide systems upgrade, which are
included in the Company's capital expenditures budget, are
expected to total approximately $50 million in 1998 and
substantially less in 1999.
The foregoing discussion regarding the Year 2000 project timing,
effectiveness, implementation and costs are based on management's
current evaluation using available information. Factors that
might cause material changes include, but are not limited to, the
availability of resources, the readiness of third parties, and the
Company's ability to respond to unforeseen Year 2000 compliance
issues.
New Accounting Pronouncements
In 1997, the Financial Accounting Standards Board ("FASB") issued
Statements No. 130, "Reporting Comprehensive Income," and No.
131, "Disclosures About Segments of an Enterprise and Related
Information," which require adoption in 1998. Statement No. 130
requires companies to report certain transactions that result in a
change in equity, such as foreign currency translation, unrealized
gains and losses on investments and minimum pension liability
adjustments, as components of comprehensive income as part of the
financial statements. This statement, which was adopted effective
January 1, 1998, had no impact on the Company's net income or
shareholders' equity. Total comprehensive income amounted to $2.0
million and a loss of $22.1 million in the third quarter of 1998
and 1997, respectively, and $140.5 million and $109.1 million in
the first nine months of 1998 and 1997, respectively.
Statement No. 131 requires companies to report segment information
based on how management disaggregates its businesses for
evaluating performance and making operating decisions. The
Company intends to adopt this statement by December 31, 1998.
In June 1998, the FASB issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which establishes
accounting and reporting standards for derivative instruments and
hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities and measure those
instruments at fair value. The Company is currently evaluating
the effect of this statement and does not expect it to have a
material impact on the Company's financial statements. The
Company will adopt this Statement on or before January 1, 2000.
Forward Looking Statements
Certain statements in this Form 10-Q are forward looking as
defined in the Private Securities Litigation Reform Act of 1995.
These statements involve certain risks and uncertainties that may
cause actual results to differ materially from expectations as of
the date of this filing. These risks include, but are not limited
to, the ability to complete the initiatives included in the 1997
and 1998 strategic charges in the time estimated; Year
2000 issues including the effectiveness of the Company's
remediation and replacement initiatives, the readiness of third
parties including customers and suppliers and the Company's
ability to complete the information systems initiatives within the
time and cost estimated; the effect of economic conditions in Asia
and other emerging markets; adverse weather conditions retarding
sales of outdoor recreation products; inventory adjustments by
major retailers; competitive pricing pressures; the ability to
integrate acquisitions; the success of marketing and cost-
management programs; the outcome of pending litigation; and shifts
in market demand for the Company's products.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Note 5 to the Financial Statements in Part I of this
Quarterly Report on pages 6 and 7 is hereby
incorporated by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
10.1 Amendment dated October 9, 1998, to
Employment Agreement by and between the
Company and Peter B. Hamilton.
10.2 Form of Change of Control Agreement dated July 28,
1998, by and between the Company and each of M. D. Allen,
W. J. Barrington, G. W. Buckley,
K. J. Chieger, J. W. Dawson, F. J. Florjancic, Jr.,
P. B. Hamilton, D. E. Lyons,
D. E. Lyons, R. S. O'Brien, J. R. Patterson,
V. J. Reich, J. Russell,
J. A. Schenk, R. L. Sell,
K. B. Zeigler, and J. P. Zelisko.
10.3 1997 Stock Plan for Non-Employee Directors.
10.4 1995 Stock Plan for Non-Employee Directors.
10.5 1991 Stock Plan.
10.6 Change in Control Severance Plan.
10.7 Supplemental Pension Plan.
10.8 Elective Deferred Compensation Plan.
10.9 Automatic Deferred Compensation Plan.
(b) Reports on Form 8-K.
The Company on July 17, 1998, filed a report on
Form 8-K dated June 19, 1998, which reports in Item
5 developments in the Concord Boat Corporation, et
al. v. Brunswick Corporation lawsuit.
Signatures
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
BRUNSWICK CORPORATION
November 12, 1998 By: /s/ Victoria J. Reich
Victoria J. Reich,
Vice President and Controller*
*Ms. Reich is signing this report both as a duly authorized
officer and as the chief accounting officer.
Exhibit Index
No. Title
10.1 Amendment dated October 9, 1998, to Employment Agreement by
and between the Company and Peter B. Hamilton.
10.2 Form of change of Control Agreement dated July 28, 1998, by
and between the Company and each of M. D. Allen, W. J. Barrington,
G. W. Buckley, K. J. Chieger, J. W. Dawson,
F. J. Florjancic, Jr., P. B. Hamilton, D. E. Lyons,
R. S. O'Brien, J. R. Patterson, V. J. Reich ,
J. Russell, J. A. Schenk, R. L. Sell, K. B. Zeigler,
and J. P. Zelisko.
10.3 1997 Stock Plan for Non-Employee Directors.
10.4 1995 Stock Plan for Non-Employee Directors.
10.5 1991 Stock Plan.
10.6 Change in Control Severance Plan.
10.7 Supplemental Pension Plan.
10.8 Effective Deferred Compensation Plan.
10.9 Automatic Deferred Compensation Plan.
EXHIBIT 10.1
AMENDMENT NO. 1
TO EMPLOYMENT AGREEMENT
This Amendment No. 1 (the "Amendment") to the Employment
Agreement dated December 1, 1995 (the "Agreement") by and between
BRUNSWICK CORPORATION, a Delaware corporation (the "Company") and
PETER B. HAMILTON (the "Executive"), is made and entered into as
of October 9, 1998 (the "Effective Date");
W I T N E S S E T H:
WHEREAS, the Executive has previously entered into the
Agreement under the terms and conditions set forth therein; and
WHEREAS, the Executive and the Company wish to provide for
the non-renewal of the Agreement, which will result in the
Agreement Term of the Agreement ending on December 31, 1998;
NOW, THEREFORE, in consideration of the foregoing, the
mutual promises, covenants and agreements contained herein, and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, IT IS HEREBY
AGREED, by and between the Executive and the Company that the
Agreement is hereby amended, effective as of the Effective Date,
by adding the following paragraph 19 thereto:
"19. End of Agreement Term. It is hereby acknowledged
that, as of the end of the normal business day on December
31, 1998, the Agreement Term, as it is defined in paragraph
1(d), shall end, and thereafter this Agreement shall be null
and void, subject to the following:
(a) This paragraph 19 shall not adversely affect the
Executive's right to compensation and benefits earned
by reason of his employment by the Company prior to
January 1, 1999.
(b) Notwithstanding the provisions of paragraph 19(a), if
the Executive's Date of Termination does not occur
during the Agreement Term, the provisions of paragraph
4(b) (relating to payments and benefits following
termination by the Company without Cause and
termination by the Executive for Good Reason) shall be
without effect, and the Executive shall not be entitled
to payments or benefits in accordance with paragraph
4(b).
(c) Notwithstanding the provisions of paragraph 19(a), after
the end of the Agreement Term, the Executive's right to
pension benefits and retiree medical benefits shall be
based on the terms of the Company's applicable pension
and medical benefit arrangements as in effect from time
to time, provided that the Executive shall be treated as
having earned the right to the adjustments specified in
paragraphs 2(f) and 2(g) of this Agreement (including the
crediting of an additional 12.5 years of service, and
subject to the offset for the benefits of the Predecessor
Employer, to the extent set forth in those paragraphs).
(d) The parties acknowledge that the non-renewal provided in
this paragraph 19 is mutually agreed upon by the parties,
and that they waive any notice requirement of such non-
renewal.
(e) This paragraph 19 shall be without effect if the
Executive's Date of Termination occurs on or before
December 31, 1998.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the Effective Date.
BRUNSWICK CORPORATION
By: /s/ Peter N. Larson
Peter N. Larson
Chairman and Chief Executive
Executive
/s/ Peter B. Hamilton
PETER B. HAMILTON
EXHIBIT 10.2
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT by and between Brunswick Corporation, a
Delaware corporation (the "Company"), and ____________________ (the
"Executive"), dated as of July 28, 1998.
WITNESSETH THAT:
WHEREAS, the Company wishes to induce the Executive to remain
in its employ, to provide fair and equitable treatment and a
competitive compensation package to the Executive, and to assure
continued attention of the Executive to his duties without any
distraction arising out of uncertain personal circumstances in a
change in control environment;
NOW, THEREFORE, it is hereby agreed by and between the parties
as follows:
1. Term of Agreement. The "term" of this Agreement shall
commence on the date stated above and shall terminate on the
earliest of: (i) the date on which the Executive attains age 65,
or (ii) one year after the Company provides written notice to the
Executive that the Company wishes to terminate this Agreement;
provided, however, that any written notice pursuant to (ii) above
shall not be effective if a Change in Control has occurred prior to
the date that such notice is given or if a Change in Control occurs
during such one-year period. This Agreement shall supersede and
replace any previous Change in Control Agreement between the
Company and the Executive.
2. Definitions.
Change in Control. "Change in Control" of the Company
means the occurrence of any of the following events:
(a) any Person other than a trustee or other fiduciary of securities
held under an employee benefit plan of the Company or any of its
subsidiaries, is or becomes a Beneficial Owner, directly or
indirectly, of stock of the Company representing 30% or more of the
total voting power of the Company's then outstanding stock and
securities, excluding any Person who becomes such a Beneficial
Owner in connection with a transaction described in Clause (A) of
paragraph (d), below;
(b) a tender offer (for which a filing has
been made with the Securities and Exchange
Commission ("SEC") which purports to comply with
the requirements of Section 14(d) of the Securities
Exchange Act of 1934 and the corresponding SEC
rules) is made for the stock of the Company, which
has not been negotiated and approved by the Board
of Directors of the Company, then the first to
occur of
(i) any time during the offer when
the Person making the offer owns or has
accepted for payment stock of the Company with
25% or more of the total voting power of the
Company's stock, or
(ii) three business days before
the offer is to terminate unless the offer is
withdrawn first if the Person making the offer
could own, by the terms of the offer plus any
shares owned by this Person, stock with 50% or
more of the total voting power of the
Company's stock when the offer terminates;
(c) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent
Board") of the Company, cease for any reason to
constitute a majority thereof; provided, however,
that any individual becoming a director whose
election, or nomination for election by the
Company's stockholders, was approved by a vote of
at least 75% of the directors then comprising the
Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but
excluding, for this purpose, any such individual
whose initial assumption of office occurs as a
result of an actual or threatened election contest
with respect to the election or removal of
directors or other actual or threatened
solicitation of proxies or consents by or on behalf
of a Person other than the Board of Directors of
the Company;
(d) there is consummated a merger or
consolidation of the Company (or any direct or
indirect subsidiary of the Company) with any other
corporation, other than (A) a merger or
consolidation which would result in the voting
securities of the Company outstanding immediately
prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by
being converted into voting securities of the
surviving entity or any parent thereof) at least
75% of the combined voting power of the stock and
securities of the Company or such surviving entity
or any parent thereof outstanding immediately after
such merger or consolidation, or (B) a merger or
consolidation effected to implement a
recapitalization of the Company (or similar
transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of stock
and securities of the Company representing more
than 25% of the combined voting power of the
Company's then outstanding stock and securities; or
(e) the stockholders of the Company
approve a plan of complete liquidation or
dissolution of the Company or there is consummated
an agreement for the sale or disposition by the
Company of all or substantially all of the
Company's assets other than a sale or disposition
by the Company of all or substantially all of the
assets to an entity at least 75% of the combined
voting power of the stock and securities which is
owned by Persons in substantially the same
proportions as their ownership of the Company's
voting stock immediately prior to such sale.
"Person" shall mean any person (as defined in
Section 3(a)(9) of the Securities Exchange Act (the
"Exchange Act"), as such term is modified in Section
13(d) and 14(d) of the Exchange Act) other than (1) any
employee plan established by the Company, (2) the
Company or any of its affiliates (as defined in Rule
12b-2 promulgated under the Exchange Act), (3) an
underwriter temporarily holding securities pursuant to
an offering of such securities, or (4) a corporation
owned, directly or indirectly, by stockholders of the
Company in substantially the same proportions as their
ownership of the Company. "Beneficial Owner" shall
mean beneficial owner as defined in Rule 13d-3 under
the Exchange Act.
Disability. For purposes of this Agreement, the term
"Disability" means an incapacity, due to physical injury or
illness or mental illness, causing the Executive to be unable to
perform his duties with the Company on a full-time basis for a
period of at least six consecutive calendar months.
Cause. For purposes of this Agreement, the term "Cause"
means gross misconduct or willful and material breach of this
Agreement by the Executive.
Termination for Good Reason. For purposes of this
Agreement, the term "Termination for Good Reason" means a
termination of employment by the Executive after any of the
following events:
(a) any material diminution in the nature or
scope of the Executive's authorities or duties from
those described in Section 3, a reduction in total
compensation from that provided in Section 4, or
the breach by the Company of any other provision of
this Agreement;
(b) a reasonable determination by the
Executive that, as a result of a Change in Control
of the Company and a change in circumstances
thereafter significantly affecting his position, he
is unable to exercise the authorities, powers,
functions or duties attached to his position and
contemplated by Section 3 of the Agreement; or
(c) the relocation of the Executive's
office to a location more than fifty miles from the
location of his office immediately prior to the
Employment Period.
In addition, "Termination for Good Reason" shall include
a termination of employment by the Executive for any reason
(other than for death or Disability) during the 30 day period
beginning on the first anniversary of a Change in Control.
3. Employment. If the Executive is in the employ of the
Company on the date of a Change in Control, the Company hereby
agrees to continue the Executive in its employ, and the Executive
hereby agrees to remain in the employ of the Company for the
period commencing on such date and ending on the earlier to occur
of the third anniversary of such date or the 65th birthday of the
Executive (the "Employment Period"). During the Employment
Period the Executive shall exercise such authority and perform
such executive duties as are commensurate with the authority
being exercised and duties being performed by the Executive
immediately prior to the Change in Control, which services shall
be performed at the location where the Executive was employed
immediately prior to the Change in Control or at such other
location as the Company may reasonably require; provided that the
Executive shall not be required to accept a location which is
unreasonable in light of the Executive's personal circumstances.
The Executive agrees that during the Employment Period he shall
devote his full business time exclusively to his executive duties
as described herein and perform such duties faithfully and
efficiently.
4. Compensation, Compensation Plans, Perquisites. During
the Employment Period, the Executive shall be compensated as
follows:
(a) He shall receive an annual salary which
is not less than his annual salary immediately
prior to the date of the Change in Control, with
the opportunity for increases, from time to time
thereafter, which are in accordance with the
Company's regular practices.
(b) He shall be eligible to participate on a
reasonable basis in bonus, stock option, restricted
stock and other incentive compensation plans which
provide opportunities to receive compensation
which, in the aggregate, are the greater of (i) the
opportunities provided by the Company for
executives with comparable duties or (ii) the
opportunities under any such plans under which he
was participating immediately prior to the date of
Change in Control.
(c) He shall be entitled to receive employee
benefits (including, but not limited to, pension,
medical, dental, life insurance, and split-dollar
life insurance arrangements and programs) and
perquisites which, in the aggregate, are the
greater of (i) the employee benefits and
perquisites provided by the Company to executives
with comparable duties or (ii) the employee
benefits and perquisites to which he was entitled
immediately prior to the date of the Change in
Control.
5. Termination and Resignation. The term "Termination"
means (i) termination by the Company of the employment of the
Executive with the Company during the Employment Period for any
reason other than death, Disability or Cause, or (ii) Termination
for Good Reason after the date of a Change in Control. The
effective date of the Executive's Termination shall be the date
specified by the Executive or the Company as the case may be, in
a written notice to the other party complying with the
requirements of Section 12.
6. Non-Competition and Confidentiality. The Executive
agrees that:
(a) for one year after the termination of the
Executive's employment with the Company (without
regard to the definition of Termination contained
in Section 5), the Executive shall not be employed
by, or otherwise engage or be interested in, any
business which is competitive with any business of
the Company or of any of its subsidiaries in which
the Executive was engaged during his employment
prior to his termination, but this restriction
shall apply only if such employment or activity is
likely to cause, or causes, serious damage to the
Company or any of its subsidiaries; and
(b) during and after the Executive's employment by
the Company, he will not divulge or appropriate to
his own use or the use of others any secret or
confidential information or knowledge pertaining to
the business of the Company, or any of its
subsidiaries, obtained during his employment by the
Company or any of its subsidiaries.
After a Change in Control occurs all agreements between
the Executive and the Company, its affiliates and subsidiaries
with respect to non-competition and confidentiality shall be null
and void, other than this Section 6 which shall remain in full
force and effect.
7. Severance Payments for Termination. In the event of a
Termination during the Employment Period, the Executive shall:
(a) be paid a lump sum cash severance
allowance no later than 10 days after the date of
such Termination in an amount which is equal to 3
times the sum of:
(i) the annual salary as of the
date of Termination (or if greater, as of the
date of the Change in Control) to which the
Executive otherwise would have been entitled
in accordance with Section 4, and
(ii) a bonus equal to 100% [or
applicable target percentage for relevant
Executive] of the Executive's annual salary
as of the date of Termination (or if greater,
as of the date of the Change in Control),
which is in place of the bonus payable under
the Brunswick Performance Plan;
(b) be entitled to receive:
(i) a lump sum distribution to the
Executive of (i) the actuarial equivalence of
the Executive's accrued benefit, if any,
under the Company's supplemental pension
plan, and (ii) the balance, if any, credited
to the account of the Executive under any
other deferred compensation arrangement
maintained by the Company or any of its
subsidiaries, other than a plan which is
qualified under Section 401 (a) of the
Internal Revenue Code of 1986, as amended
(the "Code").
(ii) in addition to the benefits
provided under the Brunswick Pension Plan for
Salaried Employees (the "Pension Plan") and
the supplemental pension plan maintained by
the Company, the difference between (x) the
pension benefits the Executive would have
accrued under the Pension Plan and the
supplemental pension plan if on the date of
such Termination he had 3 additional years of
service at his annual salary as of the date
of Termination (or if greater as of the date
of the Change in Control) and with an annual
bonus for each year equal to 100% of this
salary and had been 3 years older than his
actual age on such date and (y) the pension
benefits he actually accrued under the
Pension Plan and the supplemental pension
plan as of the date of Termination;
(iii) other incentive
compensation (including stock options and
stock appreciation rights the value of which
shall be determined in accordance with the
Black-Scholes valuation method or such other
reasonable valuation method selected by the
Company and agreed to by the Executive) to
which the Executive would have been entitled
had he remained in the employ of the Company
for 36 calendar months after his Termination
and continued his participation therein on
the same basis as set forth in Section 4(b);
(iv) the employee benefits (in
addition to pension benefits in clause (ii)
above and split dollar life insurance
benefits in clause (vi) below) to which he
would have been entitled under all employee
benefit plans, programs or arrangements
maintained by the Company as of the date of
Termination (including, but not limited to,
coverage under any medical, dental, and life
insurance arrangements or programs) if he had
remained in the employ of the Company for 36
calendar months after his Termination;
(v) a lump sum distribution of all
amounts held for the Executive under any
deferred compensation program; and
(vi) continued participation in any
applicable split dollar arrangement on the
same basis as prior to such Termination; it
being understood that the Executive shall
immediately vest in the benefits provided
under such arrangement and that the Company
shall continue to fund all insurance premiums
(on the same basis as prior to the
Termination) until the expected release date
of such arrangement.
The actuarial equivalence of the benefits described in
clause (i) and (ii) of subsection (b) of this Section
shall be determined on the basis of the rates, tables,
and factors then in effect for purposes of determining
the actuarial equivalence of optional forms of payment
under the Pension Plan; provided, however, that the
interest rate or rates which would be used as of the
date of Termination by the Pension Benefit Guaranty
Corporation ("PBGC") for purposes of determining the
present value of the Executive's benefits under the
Pension Plan if the Pension Plan had terminated on the
date of Termination with insufficient assets to provide
benefits guaranteed by the PBGC on that date shall be
substituted for the interest assumption used under the
Pension Plan. Instead of providing the benefits
described in clauses (iii) and (iv) of this
subsection (b), the Company may pay the Executive the
value of such benefits by periodic payments or in a lump
sum; and
(c) be immediately and fully vested in all outstanding
Equity Awards. Notwithstanding any other provision to the
contrary in any other agreement, the Executive shall be entitled
to exercise all outstanding options and stock appreciation rights
during the period that ends on the earlier of (i) two years
following his termination or (ii) the expiration of the original
10-year term of such option or right. For this purpose, "Equity
Awards" means all options, stock appreciation rights, grants of
restricted stock and all other grants or awards made in, or with
reference to, shares of the Company's common stock.
8. Limitation on Benefits. Despite anything to the
contrary in Section 7, in the event that the Executive would with
the passage of time be expected to attain age 65 prior to the end
of the 36 month period referred to in Section 7, the amount and
the duration of the payments and benefits shall be reduced to a
level determined by multiplying the amount or duration of
benefits set forth in Section 7 by a fraction, the numerator of
which shall be the number of full months between the first day of
the Employment Period and the date the Executive would otherwise
attain age 65, and the denominator of which shall be 36.
9. Tax Penalties. The Company's independent accountants
(the "Accountants") shall advise the Executive as to the extent
to which the Executive's compensation under this Agreement and
all other compensation agreements, plans and programs of the
Company and its subsidiaries may constitute parachute payments or
excess parachute payments under Section 280G of the Code. In the
event that any such compensation constitutes an excess parachute
payment which is subject to tax under Section 4999 of the Code or
any successor provision thereto (the "Excise Tax"), the Company
shall pay to the Executive an additional amount (the "Gross-Up
Amount") which, after payment of all federal and state income
taxes thereon (assuming the Executive is at the highest marginal
federal and applicable state income tax rate in effect on the
date of payment of the Gross-Up Amount) and payment of the Excise
Tax on the Gross-Up Amount, is equal to the Excise Tax payable by
the Executive on such excess parachute payment. The Gross-Up
Amount payable with respect to each excess parachute payment
shall be paid by the Company coincident with payment of
such excess parachute payment; provided, however, that if the
Gross-Up Amount cannot be finally determined on or before the
payment date, the Company shall pay to the Executive on such date
an estimate, as determined in good faith by the Accountants, of
the minimum amount of such payments and shall pay the remainder
of such payment (together with interest at the rate provided
under Section 1274(b)(2)(B) of the Code) as soon as the amount
can be determined but no later than the 30th day after the date
Executive becomes subject to the payment of Excise Tax. In the
event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of
payment by the Company, the Executive shall repay to the Company
at the time that the amount of such reduction in Excise Tax is
finally determined the portion of the Gross-Up Amount
attributable to such reduction (plus the portion of the Gross-Up
Amount attributable to the Excise Tax and federal and state
income taxes imposed on the Gross-Up Amount being repaid by
Executive if such repayment results in a reduction in Excise Tax
and/or a federal tax deduction) plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of
payment by the Company, the Company shall pay an additional Gross-
Up Amount which, after payment of all federal and state income
taxes and Excise Tax thereon, is equal to such excess plus any
interest, penalties, fines and costs incurred by the Executive
with respect thereto.
10. Arbitration of All Disputes. Any controversy or claim
arising out of or relating to this Agreement or the breach
thereof, shall be settled by arbitration in the City of
Chicago in accordance with the laws of the State of Illinois by
three arbitrators appointed by the parties. If the parties cannot
agree on the appointment of the arbitrators, one shall be
appointed by the Company, one by the Executive and the third
shall be appointed by the first two arbitrators. If the first
two arbitrators cannot agree on the appointment of a third
arbitrator, then the third arbitrator shall be appointed by the
Chief Judge of the United States Court of Appeals for the Seventh
Circuit. The arbitration shall be conducted in accordance with
the rules of the American Arbitration Association, except with
respect to the selection of arbitrators which shall be as
provided in this Section 10. Judgment upon the award rendered by
the arbitrators may be entered in any court having jurisdiction
thereof. The Company shall pay (or the Executive shall be
entitled to recover from the Company, as the case may be) the
Executive's reasonable attorneys' fees and costs and expenses in
connection with enforcement of his rights (including the
enforcement of any arbitration award in court), regardless of the
final outcome, unless the arbitrators shall determine that under
the circumstances recovery by the Executive of all or a part of
any such fees and costs and expenses would be unjust.
11. Mitigation and Set-Off. The Executive shall not be
required to mitigate the amount of any payment provided for in
this Agreement by seeking other employment or otherwise. The
Company shall not be entitled to set off against the amounts
payable to the Executive hereunder any amounts owed to the
Company, any amounts earned by the Executive in other employment
after termination of his employment with the Company, or any
amounts which might have been earned by the Executive in other
employment had he sought such other employment.
12. Notices. Any notices, requests, demands and other
communications provided for by this Agreement shall be sufficient
if in writing and if sent by registered or certified mail to the
Executive at the last address he has filed in writing with the
Company or, in the case of the Company, at its principal
executive offices.
13. Effect on Other Benefits. The benefits provided in
this Agreement shall be in addition to, and shall not diminish,
the benefits provided under any plan, program or policy of the
Company.
14. Non-Alienation. The Executive shall not have any right
to pledge, hypothecate, anticipate or in any way create a lien
upon any amounts provided under this Agreement; and no benefits
payable hereunder shall be assignable in anticipation of payment
either by voluntary or involuntary acts, or by operation of law.
Nothing in this Section shall limit the Executive's rights or
powers to dispose of his property by will or limit any rights or
powers which his executor or administrator would otherwise have.
15. Governing Law. The provisions of this Agreement shall
be construed in accordance with the laws of the State of
Illinois.
16. Amendment. This Agreement may be amended or canceled
by mutual agreement of the parties in writing without the consent
of any other person and, so long as the Executive lives, no
person, other than the parties hereto, shall have any rights
under or interest in this Agreement or the subject matter hereof.
17. Successors to the Company. Except as otherwise
provided herein, this Agreement shall be binding upon and inure
to the benefit of the Company and any successors of the Company.
In the event the Executive is transferred or assigned to any
affiliate or subsidiary of the Company, this Agreement shall be
binding upon and enforceable against such affiliate or
subsidiary. The employment of the Executive by any affiliate or
subsidiary of the Company shall be deemed to constitute consent
to the adoption of this Agreement by such affiliate or
subsidiary.
18. Severability. In the event that any provision or
portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full
force and effect.
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name
and on its behalf, as of the day and year first above written.
________________________
Executive
BRUNSWICK CORPORATION
By:__________________________
Vice President and
General Counsel
ATTEST:
______________________
Assistant Secretary
EXHIBIT 10.3
1997 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
(As Amended through July 28, 1998)
1. Purpose of the Plan. The purpose of the Brunswick
Corporation 1997 Stock Plan for Non-Employee Directors (the
"Plan") is to provide for the compensation of non-employee
directors of Brunswick Corporation ("Company") with Common Stock,
par value $.75 per share ("Common Stock"), of the Company and to
provide for the award of stock options to non-employee directors
so as to increase their proprietary interest in the Company and
their identification with the interests of the Company's
stockholders. The Plan shall become effective on April 23, 1997.
2. Stock Awards. The Board of Directors may award non-
employee directors Common Stock of the Company.
3. New Directors' Awards. Each non-employee director
elected to the Board of Directors for the first time after April
23, 1997 will receive an award of such Common Stock as the Board
of Directors authorizes.
4. Fair Market Value. The "Fair Market Value" of the
Common Stock shall be the reported closing price for the Common
Stock on the New York Stock Exchange Composite Tape for the
applicable date. The number of shares of Common Stock which a non-
employee director is to receive for any award which is
denominated in dollars shall be determined by dividing the
applicable amount by the Fair Market Value on the applicable
date, and any fractional shares shall be rounded up or down to
the nearest whole number with the fraction one-half being rounded
up. For purposes of determining the amount of taxable income
upon exercise of stock options and the value of any Common Stock
used to pay the option purchase price, the Fair Market Value of
the Common Stock on the Date of Exercise shall be used.
5. Deferral. Receipt of the Common Stock awarded under
this Plan may be deferred until the director's retirement from
the Board as authorized by the Board of Directors. Dividends on
deferred Common Stock will be reinvested in additional shares of
Common Stock, except that dividends in the form of securities
shall be deferred to the same extent as Common Stock. The
deferred Common Stock, including the additional shares acquired
through reinvestment of dividends, will be paid to each non-
employee director in one lump sum after retirement unless the
director elects one year prior to retirement to have the deferred
Common Stock paid after retirement in up to 15 annual
installments.
6. Options. The Board of Directors may award non-employee
directors options to purchase Common Stock of the Company.
7. Option Price. The option exercise price per share of
Common Stock shall be 100% of the reported closing price for the
Common Stock on the New York Stock Exchange Composite Tape for
the date on which the award is granted.
8. Option Exercise. Options shall be exercised in whole
or in part by written notice to the Company and payment in full
of the option price. Payment of the option price may be made, at
the discretion of the option holder, (a) in cash (including
check, bank draft, money order or payment in accordance with a
cashless exercise program under which, if so instructed by the
director, shares of Common Stock may be issued directly to the
director's broker or dealer upon receipt of the option price in
cash from the broker or dealer), (b) in Common Stock (valued at
the Fair Market Value on the Date of Exercise), or (c) by a
combination of cash and Common Stock.
9. Date of Exercise. The "Date of Exercise" of an option
shall be the date on which written notification of the intent to
exercise is received by the Company from the director.
10. Change in Control. "Change in Control" of the Company
means the occurrence of any of the following events:
(a)any Person other than a trustee or other
fiduciary of securities held under an employee
benefit plan of the Company or any of its
subsidiaries, is or becomes a Beneficial Owner,
directly or indirectly, of stock of the Company
representing 30% or more of the total voting power
of the Company's then outstanding stock and
securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction
described in Clause (A) of paragraph (d), below;
(b)a tender offer (for which a filing has been
made with the Securities and Exchange Commission
("SEC") which purports to comply with the
requirements of Section 14(d) of the Securities
Exchange Act of 1934 and the corresponding SEC
rules)is made for the stock of the Company, which
has not been negotiated and approved by the Board
of Directors of the Company, then the first to
occur of
(i) any time during the offer when
the Person making the offer owns or has
accepted for payment stock of the Company
with 25% or more of the total voting power of
the Company's stock, or
(ii) three business days before the
offer is to terminate unless the offer is
withdrawn first if the Person making the
offer could own, by the terms of the offer
plus any shares owned by this Person, stock
with 50% or more of the total voting power of
the Company's stock when the offer
terminates;
(c) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent
Board") of the Company, cease for any reason to
constitute a majority thereof; provided, however,
that any individual becoming a director whose
election, or nomination for election by the
Company's stockholders, was approved by a vote of
at least 75% of the directors then comprising the
Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board,
but excluding, for this purpose, any such
individual whose initial assumption of office
occurs as a result of an actual or threatened
election contest with respect to the election or
removal of directors or other actual or threatened
solicitation of proxies or consents by or on
behalf of a Person other than the Board of
Directors of the Company;
(d) there is consummated a merger or
consolidation of the Company (or any direct or
indirect subsidiary of the Company) with any other
corporation, other than (A) a merger or
consolidation which would result in the voting
securities of the Company outstanding immediately
prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by
being converted into voting securities of the
surviving entity or any parent thereof) at least
75% of the combined voting power of the stock and
securities of the Company or such surviving entity
or any parent thereof outstanding immediately after
such merger or consolidation, or (B) a merger or
consolidation effected to implement a
recapitalization of the Company (or similar
transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of stock
and securities of the Company representing more
than 25% of the combined voting power of the
Company's then outstanding stock and securities; or
(e) the stockholders of the Company approve a
plan of complete liquidation or dissolution of the
Company or there is consummated an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets other
than a sale or disposition by the Company of all or
substantially all of the assets to an entity at
least 75% of the combined voting power of the stock
and securities which is owned by Persons in
substantially the same proportions as their
ownership of the Company's voting stock immediately
prior to such sale.
"Person" shall mean any person (as defined in
Section 3(a)(9) of the Securities Exchange Act (the
"Exchange Act"), as such term is modified in Section
13(d) and 14(d) of the Exchange Act) other than (1) any
employee plan established by the Company, (2) the
Company or any of its affiliates (as defined in Rule
12b-2 promulgated under the Exchange Act), (3) an
underwriter temporarily holding securities pursuant to
an offering of such securities, or (4) a corporation
owned, directly or indirectly, by stockholders of the
Company in substantially the same proportions as their
ownership of the Company. "Beneficial Owner" shall
mean beneficial owner as defined in Rule 13d-3 under
the Exchange Act.
11. Administration of the Plan. The Plan shall be
administered by the Corporate Governance Committee of the Board
of Directors of the Company ("Committee"). The Committee shall
have full power, discretion and authority to interpret and
administer the Plan. The Committee's interpretations and actions
shall, except as otherwise determined by the Board of Directors,
be final, conclusive and binding on all persons for all purposes.
12. Non-Transferability. No award under the Plan, and no
interest therein, shall be transferable by the director otherwise
than (i) by the designation of a beneficiary to receive the
director's benefits in the event of death, (ii) by will or the
laws of the descent and distribution, or (iii) in accordance with
guidelines established by the Committee. Notwithstanding the
foregoing, stock options awarded under this Plan may be
transferred by a director for no consideration to or for the
benefit of a director's Immediate Family (including, without
limitation, to a trust for the benefit of a director's Immediate
Family or to a partnership for members of a director's Immediate
Family), and the transferee shall remain subject to all the terms
and conditions applicable to the stock option prior to such
transfer and to such other restrictions as may be imposed by the
Committee from time to time. With respect to a particular
director, the term "Immediate Family" shall mean the director's
spouse, children, stepchildren, adoptive relationships, sisters,
brothers and grandchildren (and, for this purpose, shall also
include the director). Any purported transfer contrary to this
provision will nullify the award.
13. Issuance of Stock. As promptly as practical following
each award of Common Stock, the Company shall issue to each
director Common Stock certificates for the shares awarded which
have not been deferred pursuant to Section 5. Common Stock
issued pursuant to the Plan shall be Treasury shares.
14. Changes in Capitalization and Similar Changes. In the
event that each of the outstanding shares of Common Stock shall
be changed into or exchanged for a different number or kind of
shares of stock or securities of the Company or of another
corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, stock dividend, split-up,
combination of shares, or otherwise), then there shall be
substituted for each share of Common Stock then offered,
available for offer or deferred under the Plan the numbers and
kinds of shares of stock or securities into which shares shall be
so exchanged. The Committee in its sole discretion shall make
any equitable adjustments as may be necessary. No fraction of a
share of Common Stock shall be delivered if an adjustment in the
number of shares is necessary. In the event of a spin-off,
extraordinary dividend or other distribution or similar
transaction, the Committee may adjust equitably the exercise
price of any outstanding options.
15. Payments in the Event of Death. If a non-employee
director dies before payment of his or her deferred, vested
Common Stock commences, all of his or her deferred, vested Common
Stock shall be distributed to his or her Beneficiary (as
described below), as soon as practicable after his or her death,
in a lump sum. If a non-employee director dies after payment of
his or her deferred, vested Common Stock has commenced but before
the entire balance of such deferred, vested Common Stock has been
distributed, the remaining deferred, vested Common Stock shall be
distributed to his or her Beneficiary, as soon as practicable
after his or her death, in a lump sum. For purposes of the Plan,
a non-employee director's "Beneficiary" is the person or persons
the non-employee director designates, which designation shall be
in writing, signed by the non-employee director and filed with
the Committee prior to the non-employee director's death. A
Beneficiary designation shall be effective when filed with the
Committee in accordance with the preceding sentence. If more
than one Beneficiary has been designated, the non-employee
director's deferred, vested Common Stock shall be distributed to
each such Beneficiary. In the absence of a Beneficiary
designation or if no Beneficiary survives the non-employee
director, the Beneficiary shall be the non-employee director's
estate.
16. Amendment or Termination of the Plan. The Board of
Directors may, at any time amend or terminate the Plan provided,
however, that no such amendment, suspension or termination shall
impair the rights of directors affected thereby.
17. No Right to Renomination. Nothing in the Plan or in any
award shall confer upon any director the right to be nominated
for reelection to the Board.
EXHIBIT 10.4
BRUNSWICK CORPORATION
1995 STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS
(As Amended Through July 28, 1998)
1. Purpose of the Plan. The purpose of the Brunswick
Corporation 1995 Stock Plan for Non-Employee Directors ("Plan")
is to compensate non-employee directors of Brunswick Corporation
("Company") primarily with Common Stock, par value $.75 per share
("Common Stock"), of the Company so as to increase their
proprietary interest in the Company and their identification with
the interests of the Company's stockholders ("Stockholders").
The Plan shall become effective as of August l, 1995, provided it
is approved by the Stockholders at the 1996 Annual Meeting of
Stockholders.
2. Annual Fees. Each non-employee director shall be paid
in Common Stock the annual retainer fee and the fee for serving
as the chairperson of a committee of the Board of Directors
authorized by the Board of Directors. Such fees should be paid
monthly in arrears on the last business day of each month
beginning with fees paid for August, 1995. The Common Stock for
the fees will not be distributed to the directors until the Plan
is approved by the Stockholders, and until such approval is
obtained, the dividends on the Common Stock will be reinvested in
additional shares of Common Stock. If stockholder approval is
not obtained, the directors will be paid the cash amount of the
fees and the cash amount of the dividends.
3. Meeting Fees. Each non-employee director may elect on
forms provided by the Company to be paid in Common Stock for the
fees authorized by the Board of Directors for attending meetings
of the Board of Directors and its committees. The Common Stock
for such fees shall be determined on the last business day of
each month. Such elections must be made in writing six months in
advance and shall continue until terminated. Elections may be
terminated upon six months advance written notice.
4. New Directors' Awards. Each non-employee director
elected to the Board of Directors for the first time after July
25, 1995, will receive an award in Common Stock equal to the
amount of the annual retainer fee then being paid to non-employee
directors. The number of shares will be determined on the date
the non-employee director first is elected to the Board of
Directors. Forty percent of this award will vest six months
after the date the director first was elected to the Board of
Directors and 20% of the award will vest on each of the first
three annual anniversaries of the date the director first was
elected to the Board of Directors.
5. Fair Market Value. The "Fair Market Value" of the
Common Stock shall be the reported closing price for the Common
Stock on the New York Stock Exchange Composite Tape for the
applicable date. The number of shares of Common Stock which a non-
employee director is to receive for annual retainer, committee
chair and meeting fees and for a new director award shall be
determined by dividing the applicable amount by the Fair Market
Value on the applicable date, and any fractional shares shall be
rounded up or down to the nearest whole number with the fraction
1/2 being rounded up.
6. Retirement Benefits. Each non-employee director elected
prior to July 25, 1995 shall receive after retirement Common
Stock which has a Fair Market Value on July 25, 1995 equal to the
July 25, 1995 present value of the director's retirement benefits
at retirement under the non-employee directors' pension plan (the
"Pension Plan") using the unisex 1983 Group Annuity Mortality
table and an interest rate of 6%, provided the director at
retirement has satisfied the age and service requirements
specified in the Pension Plan. If the director retires before
satisfying these requirements, the Common Stock payable to the
director will be reduced by the same percentage as the director's
benefit under the Pension Plan would have been reduced.
7. Deferral. Payment of the Common Stock as awards to new
directors and as a result of the termination of the directors'
pension plan will be deferred until the director's retirement
from the Board. The directors also will be able to defer the
payment of the Common Stock for their annual retainer, committee
chair and meeting fees until after retirement. Dividends on
deferred Common Stock will be reinvested in additional shares of
Common Stock. The deferred Common Stock, including the
additional shares acquired through reinvestment of dividends,
will be paid to each non-employee director in one lump sum after
retirement unless the director elects one year prior to
retirement to have the deferred Common Stock paid after
retirement in up to 15 annual installments.
8. Change of Control. "Change in Control" of the Company
means the occurrence of any of the following events:
(a) any Person other than a trustee or other
fiduciary of securities held under an employee
benefit plan of the Company or any of its
subsidiaries, is or becomes a Beneficial Owner,
directly or indirectly, of stock of the Company
representing 30% or more of the total voting power
of the Company's then outstanding stock and securities,
excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in Clause
(A) of paragraph (d), below;
(b) a tender offer (for which a filing has been
made with the Securities and Exchange Commission
("SEC") which purports to comply with the
requirements of Section 14(d) of the Securities
Exchange Act of 1934 and the corresponding SEC
rules) is made for the stock of the Company, which
has not been negotiated and approved by the Board
of Directors of the Company, then the first to
occur of
(i) any time during the offer
when the Person making the offer owns or has
accepted for payment stock of the Company with
25% or more of the total voting power of the
Company's stock, or
(ii) three business days before
the offer is to terminate unless the offer is
withdrawn first if the Person making the offer
could own, by the terms of the offer plus any
shares owned by this Person, stock with 50% or
more of the total voting power of the
Company's stock when the offer terminates;
(c) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent
Board") of the Company, cease for any reason to
constitute a majority thereof; provided, however,
that any individual becoming a director whose
election, or nomination for election by the
Company's stockholders, was approved by a vote of
at least 75% of the directors then comprising the
Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but
excluding, for this purpose, any such individual
whose initial assumption of office occurs as a
result of an actual or threatened election contest
with respect to the election or removal of
directors or other actual or threatened
solicitation of proxies or consents by or on behalf
of a Person other than the Board of Directors of
the Company;
(d) there is consummated a merger or
consolidation of the Company (or any direct or
indirect subsidiary of the Company) with any other
corporation, other than (A) a merger or consolidation which
would result in the voting securities of the
Company outstanding immediately prior to such
merger or consolidation continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the surviving
entity or any parent thereof) at least 75% of the
combined voting power of the stock and securities
of the Company or such surviving entity or any
parent thereof outstanding immediately after such
merger or consolidation, or (B) a merger or
consolidation effected to implement a
recapitalization of the Company ( or similar
transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of stock
and securities of the Company representing more
than 25% of the combined voting power of the
Company's then outstanding stock and securities; or
(e) the stockholders of the Company approve a
plan of complete liquidation or dissolution of the
Company or there is consummated an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets other
than a sale or disposition by the Company of all or
substantially all of the assets to an entity at
least 75% of the combined voting power of the stock
and securities which is owned by Persons in
substantially the same proportions as their
ownership of the Company's voting stock immediately
prior to such sale.
"Person" shall mean any person (as defined in
Section 3(a)(9) of the Securities Exchange Act (the
"Exchange Act"), as such term is modified in Section
13(d) and 14(d) of the Exchange Act) other than (1) any
employee plan established by the Company, (2) the
Company or any of its affiliates (as defined in Rule
12b-2 promulgated under the Exchange Act), (3) an
underwriter temporarily holding securities pursuant to
an offering of such securities, or (4) a corporation
owned, directly or indirectly, by stockholders of the
Company in substantially the same proportions as their
ownership of the Company. "Beneficial Owner" shall
mean beneficial owner as defined in Rule 13d-3 under
the Exchange Act.
9. Non-Transferability. No award under the Plan, and no
interest therein, shall be transferable by the participant
otherwise than by the designation of a beneficiary to receive the
director's benefits in the event of death or by will or the laws
of the descent and distribution. Any purported transfer contrary
to this provision will nullify the award.
10. Issuance of Stock. As promptly as practical following
each award of Common Stock, the Company shall issue to each
Director Common Stock certificates for the shares awarded which
have not been deferred pursuant to Section 7. All Common Stock
shall be transferred from the Company's treasury and shall not be
newly-issued. The Common Stock issued to each Director shall not
be subject to any restrictions.
11. Number of Shares. The aggregate number of shares of
Common Stock which may be awarded under the Plan shall not exceed
250,000, except for adjustments provided for in this Section 11.
Shares related to awards that are forfeited, surrendered,
terminated, or cancelled in such manner that all or some of the
shares covered by an award are not issued to a director shall
immediately become available for additional awards under the
Plan. In the event that each of the outstanding shares of Common
Stock shall be changed into or exchanged for a different number
or kind of shares of stock or securities of the Company or of
another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, stock dividend, split-up,
combination of shares, or otherwise), then there shall be
substituted for each share of Common Stock then available for
award under the Plan the numbers and kind of shares of stock or
securities into which shares shall be so exchanged.
12. Administration of the Plan. The Plan shall be
administered by the Compensation Committee of the Board of
Directors of the Company ("Committee"). The Committee shall have
full power, discretion and authority to interpret and administer
the Plan, except that the Committee shall have no power to
determine the eligibility for awards or the number of shares of
Common Stock or timing or value of awards to be grated to any
Director. The Committee's interpretations and actions shall,
except as otherwise determined by the Board of Directors, be
final, conclusive and binding on all persons for all purposes.
13. Payments in the Event of Death. If a non-employee
director dies before payment of his or her deferred Common Stock
commences, all of his or her deferred Common Stock shall be
distributed to his or her Beneficiary (as described below), as
soon as practicable after his or her death, in a lump sum. If a
non-employee director dies after payment of his or her deferred
Common Stock has commenced but before the entire balance of such
deferred Common Stock has been distributed, the remaining deferred Common
Stock shall be distributed to his or her Beneficiary, as soon as
practicable after his or her death, in a lump sum. For the
purposes of the Plan, a non-employee director's "Beneficiary" is
the person or persons the non-employee director designates, which
designation shall be in writing, signed by the non-employee
director and filed with the Committee prior to the non-employee
director's death. A Beneficiary designation shall be effective
when filed with the Committee in accordance with the preceding
sentence. If more than one Beneficiary has been designated, the
non-employee director's deferred Common Stock shall be
distributed to each such Beneficiary per capita. In the absence
of a Beneficiary designation or if no Beneficiary survives the
non-employee director, the Beneficiary shall be the non-employee
director's estate.
14. Amendment or Termination of the Plan. The Board of
Directors may, at any time, amend or terminate the Plan provided,
however, that the Plan may not be amended more than once every
six months, other than to comply with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the
rules thereunder. No such amendment shall, without stockholder
approval, increase the size of awards under the Plan or modify
the requirements for eligibility to receive awards under the
Plan. Also, no such amendment shall be made without stockholder
approval to the extent such approval is required by law,
agreement or the rules of any exchange upon which the Common
Stock is listed. No such amendment, suspension or termination
shall impair the rights of directors affected thereby or make any
change that would disqualify the Plan, or any other plan of the
Company intended to be so qualified, from the exemption provided
by Rule 16b-3.
15. No Right to Renomination. Nothing in the Plan or in
any award shall confer upon any Director the right to be
nominated for reelection to the Board.
EXHIBIT 10.5
BRUNSWICK CORPORATION
1991 STOCK PLAN
(As Amended Through July 28, 1998)
1. Purpose. The purpose of the Brunswick Corporation 1991
Stock Plan (the "Plan") is to promote the long term financial
interests and growth of Brunswick Corporation (the "Company") by
(a) attracting and retaining management personnel, (b) motivating
management personnel by means of growth-related incentives, (c)
providing incentive compensation opportunities that are
competitive with those of other major corporations, and (d)
furthering the identity of interests of participants with those
of the stockholders of the Company.
2. Definitions. The following definitions are applicable
to the Plan:
"Affiliate" means any entity in which the Company has a
direct or indirect equity interest which is so designated by the
Committee.
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute.
"Committee" means the Compensation Committee of the
Board of Directors of the Company.
"Common Stock" means the Common Stock, par value $.75
per share, of the Company or such other securities as may be
substituted therefor pursuant to paragraph 5(c).
The "fair market value" of the Common Stock shall be
determined in accordance with procedures established by the
Committee.
"Participant" means any management employee of the
Company or an Affiliate selected by the Committee.
"Rule 16b-3" means such rule adopted under the
Securities Exchange Act of 1934, as amended, or any successor
rule.
3. Limitation on Aggregate Shares. The number of shares
of Common Stock with respect to which awards may be granted under
the Plan and which may be issued upon the exercise or payment
thereof shall not exceed, in the aggregate, 11,200,000 shares,
except for adjustments provided for in paragraph 5(c) of the Plan
and provided, however, that shares related to awards that expire
unexercised or are forfeited, surrendered, terminated, cancelled,
or settled in cash in lieu of stock or in such manner that all or
some of the shares covered by an award are not issued to a
participant shall immediately become available for additional
awards under the Plan, except for shares withheld pursuant to
paragraph 5(d) of the Plan. Such 11,200,000 shares of Common
Stock may be either authorized and unissued shares, treasury
shares, or a combination thereof, as the Committee shall
determine.
4. Awards. The Committee may grant to participants, in
accordance with this paragraph 4 and the other provisions of the
Plan, stock options, stock appreciation rights ("SARs"),
restricted stock and other awards. The maximum number of shares
of Common Stock as to which a participant may receive stock
options and stock appreciation rights under the Plan in 1996 or
in any subsequent calendar year is 300,000 subject to the
provisions of Section 5(c) hereof.
(a) Options.
(i) Options granted under the Plan may be
incentive stock options ("ISOs") within the
meaning of Section 422 of the Code or any
successor provision, or in such other form,
consistent with the Plan, as the Committee
may determine.
(ii) The option price per share of
Common Stock shall be fixed by the
Committee at not less than 100% of the fair
market value of a share of Common Stock on
the date of grant, provided, however, that
the option price may be reduced below 100%
of such fair market value to the extent
that the participant forgoes current or
deferred cash compensation in an amount
equal to such reduction, and provided that
in no event shall the option price be less
than the par value.
(iii) The Committee may require options
other than ISOs to be purchased by
participants for a purchase price
determined by the Committee.
(iv) Options shall be exercisable at
such time or times as the Committee shall
determine at or subsequent to grant.
(v) Options shall be exercised in whole
or in part by written notice to the Company
(to the attention of the Corporate
Secretary) and payment in full of the
option price. Payment of the option price
may be made, at the discretion of the
optionee, and to the extent permitted by
the Committee, (A) in cash (including
check, bank draft, or money order), (B) in
Common Stock (valued at the fair market
value thereof on the date of exercise), (C)
by a combination of cash and Common Stock
or (D) with any other consideration
(including payment in accordance with a
cashless exercise program under which, if
so instructed by the participant, shares of
Common Stock may be issued directly to the
participant's broker or dealer upon receipt
of the option price in cash from the broker
or dealer).
(b) SARs.
(i) An SAR shall entitle its holder to
receive from the Company, at the time of
exercise of such right, an amount equal to
the excess of the fair market value (at the
date of exercise) of a share of Common
Stock over a specified price fixed by the
Committee multiplied by the number of
shares as to which the holder is exercising
the SAR. SARs may be in tandem with any
previously or contemporaneously granted
option or independent of any option. The
specified price of a tandem SAR shall be
the option price of the related option.
The amount payable may be paid by the
Company in Common Stock (valued at its fair
market value on the date of exercise), cash
or a combination thereof, as the Committee
may determine, which determination shall be
made after considering any preference
expressed by the holder.
(ii) An SAR shall be exercised by
written notice to the Company (to the
attention of the Corporate Secretary) at
any time prior to its stated expiration.
To the extent a tandem SAR is exercised, the related
option will be cancelled and, to the extent
the related option is exercised, the tandem
SAR will be cancelled.
(c) Restricted Stock.
(i) The Committee may award to any
participant shares of Common Stock, subject
to this paragraph 4(c) and such other terms
and conditions as the Committee may
prescribe (such shares being called
"restricted stock"). Each certificate for
restricted stock shall be registered in the
name of the participant and deposited,
together with a stock power endorsed in
blank, with the Company.
(ii) There shall be established for each
restricted stock award a restriction period
(the "restriction period") of such length
as shall be determined by the Committee.
Shares of restricted stock may not be sold,
assigned, transferred, pledged or otherwise
encumbered, except as hereinafter provided,
during the restriction period. Except for
the restrictions on transfer and such other
restrictions as the Committee may impose,
the participant shall have all the rights
of holder of Common Stock as to such
restricted stock. At the expiration of the
restriction period, the Company shall
redeliver to the participant (or the
participant's legal representative) the
certificates deposited pursuant to this
paragraph.
(iii) Except as provided by the Committee
at the time of grant or otherwise, upon
termination of employment for any reason
during the restriction period all shares
still subject to restriction shall be
forfeited by the participant.
(d) Other Awards. Other awards, including,
without limitation, performance shares and other
forms of awards measured in whole or in part by
the value of shares, the performance of the
participant or the performance of the Company, may be
granted under the Plan. Such awards may be payable in
Common Stock, cash or both, and shall be subject
to such restrictions and conditions, as the
Committee shall determine. At the time of such an
award, the Committee shall, if applicable,
determine a performance period and performance
goals to be achieved during the performance
period, subject to such later revisions as the
Committee shall deem appropriate to reflect
significant unforeseen events. Following the
conclusion of each performance period, the
Committee shall determine the extent to which
performance goals have been attained or the degree
of achievement between maximum and minimum levels
during the performance period in order to evaluate
the level of payment to be made, if any.
5. Miscellaneous Provisions.
(a) Administration. The Plan
shall be administered by the Committee. Subject
to the limitations of the Plan, the Committee
shall have the sole and complete authority: (i) to
select participants in the Plan, (ii) to make
awards in such forms and amounts as it shall
determine, (iii) to impose such limitations,
restrictions and conditions upon such awards as it
shall deem appropriate, (iv) to interpret the Plan
and to adopt, amend and rescind administrative
guidelines and other rules and regulations
relating to the Plan, (v) to correct any defect or
omission or to reconcile any inconsistency in the
Plan or in any award granted hereunder and (vi) to
make all other determinations and to take all
other actions necessary or advisable for the
implementation and administration of the Plan.
The Committee's determinations on matters within
its authority shall be conclusive and binding upon
the Company and all other persons. All expenses
associated with the Plan shall be borne by the
Company, subject to such allocation to its
Affiliates and operating units as it deems
appropriate. The Committee may, to the extent
that such action will not prevent the Plan from
complying with Rule 16b-3, delegate any of its
authority hereunder to such persons as it deems
appropriate.
(b) Transferability. An award under
the Plan may be transferred only (i) by will or
the laws of descent and distribution, (ii) in
accordance with guidelines established by the
Committee, or (iii) pursuant to a qualified
domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security
Act, or the rules thereunder (but only if
permitting such transfer will not affect the
status of the award under the Code). Any
purported transfer contrary to this provision will
nullify the award.
(c) Changes in Capitalization and
Similar Changes. In the event that each of the
outstanding shares of Common Stock shall be
changed into or exchanged for a different number
or kind of shares of stock or securities of the
Company or of another corporation (whether by
reason of merger, consolidation, recapitalization,
reclassification, stock dividend, stock split,
combination of shares, or otherwise), then there
shall be substituted for each share of Common
Stock then offered or available for offer under
the Plan the number and kind of shares of stock
into which such outstanding shares of the Common
Stock of the company shall be so changed or for
which such shares shall be so exchanged. The
Committee in its sole discretion shall make any
equitable adjustments as may be necessary. No
fraction of a share of Common Stock shall be
delivered if an adjustment in the number of shares
is necessary. In the event of a spin-off,
extraordinary dividend or other distribution or
similar transaction, the Committee may adjust
equitably the exercise price of any outstanding
options or the terms of any outstanding SARs.
(d) Tax Withholding. The Committee
shall have the power to withhold, or require a
participant to remit to the Company, an amount
sufficient to satisfy any withholding or other tax
due with respect to any amount payable and/or
shares issuable under the Plan, and the Committee
may defer such payment or issuance unless
indemnified to its satisfaction. Subject to the
consent of the Committee, a participant may make
an irrevocable election to have shares of Common
Stock otherwise issuable under an award withheld,
tender back to the
Company shares of Common Stock received pursuant
to an award or deliver to the Company previously
acquired shares of Common Stock having a fair
market value sufficient to satisfy all or part of
the Company's withholding tax obligations for the
participant associated with the transaction. Such
election must be made by a participant prior to
the date on which the relevant tax obligation
arises. The Committee may disapprove of any
election and may limit, suspend or terminate the
right to make such elections.
(e) Listing and Legal Compliance. The
Committee may suspend the exercise or payment of
any award so long as it determines that securities
exchange listing or registration or qualification
under any securities laws is required in
connection therewith and has not been completed on
terms acceptable to the Committee.
(f) Rights to Participants. Nothing in
the Plan shall interfere with or limit in any way
the right of the Company to terminate any
participant's employment at any time, nor confer
upon any participant any right to continue in the
employ of the Company for any period of time or to
continue his or her present or any other rate of
compensation. No employee shall have a right to
be selected as a participant, or, having been so
selected, to be selected again as a participant.
(g) Amendment, Suspension and
Termination of Plan. The Board of Directors or
the Committee may suspend or terminate the Plan or
any portion thereof at any time and may amend it
from time to time in such respects as the Board of
Directors or the Committee may deem advisable;
provided, however, that no such amendment shall be
made, without stockholder approval to the extent
such approval is required by law, agreement or the
rules of any exchange upon which the Common Stock
is listed. No such amendment, suspension or
termination shall impair the rights of
participants affected thereby or make any change
that would disqualify the Plan, or any other plan
of the Company intended to be so qualified, from
the exemption provided by Rule 16b-3.
The Company may amend or modify any award in any manner
to the extent that the Committee would have had the
authority under the Plan to initially grant such award.
No such amendment or modification shall impair the
rights of any participant under any award without the
consent of such participant.
6. Change in Control. "Change in Control" of the Company
means the occurrence of any of the following events:
(a) any Person other than a trustee or other
fiduciary of securities held under an employee
benefit plan of the Company or any of its
subsidiaries, is or becomes a Beneficial Owner,
directly or indirectly, of stock of the Company
representing 30% or more of the total voting power
of the Company's then outstanding stock and
securities, excluding any Person who becomes such
a Beneficial Owner in connection with a
transaction described in Clause (A) of paragraph
(d), below;
(b) a tender offer (for which a filing has been
made with the Securities and Exchange Commission
("SEC") which purports to comply with the
requirements of Section 14(d) of the Securities
Exchange Act of 1934 and the corresponding SEC
rules) is made for the stock of the Company, which
has not been negotiated and approved by the Board
of Directors of the Company, then the first to
occur of
(i) any time during the offer when
the Person making the offer owns or has
accepted for payment stock of the Company
with 25% or more of the total voting power of
the Company's stock, or
(ii) three business days before the
offer is to terminate unless the offer is
withdrawn first if the Person making the
offer could own, by the terms of the offer
plus any shares owned by this Person, stock
with 50% or more of the total voting power of
the Company's stock when the offer
terminates;
(c) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent
Board") of the Company, cease for any reason to
constitute a majority thereof; provided, however,
that any individual becoming a director whose
election, or nomination for election by the
Company's stockholders, was approved by a vote of
at least 75% of the directors then comprising the
Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board,
but excluding, for this purpose, any such
individual whose initial assumption of office
occurs as a result of an actual or threatened
election contest with respect to the election or
removal of directors or other actual or threatened
solicitation of proxies or consents by or on
behalf of a Person other than the Board of
Directors of the Company;
(d) there is consummated a merger or
consolidation of the Company (or any direct or
indirect subsidiary of the Company) with any other
corporation, other than (A) a merger or
consolidation which would result in the voting
securities of the Company outstanding immediately
prior to such merger or consolidation continuing
to represent (either by remaining outstanding or
by being converted into voting securities of the
surviving entity or any parent thereof) at least
75% of the combined voting power of the stock and
securities of the Company or such surviving entity
or any parent thereof outstanding immediately
after such merger or consolidation, or (B) a
merger or consolidation effected to implement a
recapitalization of the Company ( or similar
transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of stock
and securities of the Company representing more
than 25% of the combined voting power of the
Company's then outstanding stock and securities;
or
(e) the stockholders of the Company approve
a plan of complete liquidation or dissolution of
the Company or there is consummated an agreement
for the sale or disposition by the Company of all
or substantially all of the Company's assets other
than a sale or disposition by the Company of all
or substantially all of the assets to an entity at
least 75% of the combined voting power of the
stock and securities which is owned by Persons in
substantially the same proportions as their
ownership of the Company's voting stock
immediately prior to such sale.
"Person" shall mean any person (as defined in
Section 3(a)(9) of the Securities Exchange Act (the
"Exchange Act"), as such term is modified in Section
13(d) and 14(d) of the Exchange Act) other than (1) any
employee plan established by the Company, (2) the
Company or any of its affiliates (as defined in Rule
12b-2 promulgated under the Exchange Act), (3) an
underwriter temporarily holding securities pursuant to
an offering of such securities, or (4) a corporation
owned, directly or indirectly, by stockholders of the
Company in substantially the same proportions as their
ownership of the Company. "Beneficial Owner" shall
mean beneficial owner as defined in Rule 13d-3 under
the Exchange Act.
The Committee may provide in any award that in the event of
a Change in Control, the participant may (a) exercise any
outstanding Options or SARs which would not then be exercisable
by the participant absent the Change in Control; (b) require the
Company to release all restrictions on shares of restricted stock
awarded to the participant; and (c) require the Company to pay
the participant the fair value (prorated to the date of the
Change in Control) of any other awards under the Plan then held
by the participant.
EXHIBIT 10.6
BRUNSWICK CORPORATION
CHANGE IN CONTROL SEVERANCE PLAN
(As Amended Through July 28, 1998)
1. Purpose. The Brunswick Corporation change in Control
Severance Plan has been established by Brunswick Corporation (the
"Company") to attract and retain well qualified personnel.
2. Change in Control. "Change in Control" of the Company
means the occurrence of any of the following events:
(a) any Person other than a trustee or other
fiduciary of securities held under an employee
benefit plan of the Company or any of its
subsidiaries, is or becomes a Beneficial Owner,
directly or indirectly, of stock of the Company
representing 30% or more of the total voting power
of the Company's then outstanding stock and
securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction
described in Clause (A) of paragraph (d), below;
(b) a tender offer (for which a filing has been
made with the Securities and Exchange Commission
("SEC") which purports to comply with the
requirements of Section 14(d) of the Securities
Exchange Act of 1934 and the corresponding SEC
rules) is made for the stock of the Company, which
has not been negotiated and approved by the Board of
Directors of the Company, then the first to occur of
(i) any time during the
offer when the Person making the offer owns or
has accepted for payment stock of the Company
with 25% or more of the total voting power of
the Company's stock, or
(ii) three business days before
the offer is to terminate unless the offer is
withdrawn first if the Person making the offer
could own, by the terms of the offer plus any
shares owned by this Person, stock with 50% or
more of the total voting power of the Company's
stock when the offer terminates;
(c) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent
Board") of the Company, cease for any reason to
constitute a majority thereof; provided, however,
that any individual becoming a director whose
election, or nomination for election by the
Company's stockholders, was approved by a vote of at
least 75% of the directors then comprising the
Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but
excluding, for this purpose, any such individual
whose initial assumption of office occurs as a
result of an actual or threatened election contest
with respect to the election or removal of directors
or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person
other than the Board of Directors of the Company;
(d) there is consummated a merger or
consolidation of the Company (or any direct or
indirect subsidiary of the Company) with any other
corporation, other than (A) a merger or
consolidation which would result in the voting
securities of the Company outstanding immediately
prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by
being converted into voting securities of the
surviving entity or any parent thereof) at least 75%
of the combined voting power of the stock and
securities of the Company or such surviving entity
or any parent thereof outstanding immediately after
such merger or consolidation, or (B) a merger or
consolidation effected to implement a
recapitalization of the Company ( or similar
transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of stock
and securities of the Company representing more than
25% of the combined voting power of the Company's
then outstanding stock and securities; or
(e) the stockholders of the Company
approve a plan of complete liquidation or
dissolution of the Company or there is consummated
an agreement for the sale or disposition by the
Company of all or substantially all of the Company's
assets other than a sale or disposition by the Company of all or
substantially all of the assets to an entity at
least 75% of the combined voting power of the stock
and securities which is owned by Persons in
substantially the same proportions as their
ownership of the Company's voting stock immediately
prior to such sale.
"Person" shall mean any person (as defined in
Section 3(a)(9) of the Securities Exchange Act (the
"Exchange Act"), as such term is modified in Section
13(d) and 14(d) of the Exchange Act) other than (1) any
employee plan established by the Company, (2) the
Company or any of its affiliates (as defined in Rule 12b-
2 promulgated under the Exchange Act), (3) an
underwriter temporarily holding securities pursuant to
an offering of such securities, or (4) a corporation
owned, directly or indirectly, by stockholders of the
Company in substantially the same proportions as their
ownership of the Company. "Beneficial Owner" shall mean
beneficial owner as defined in Rule 13d-3 under the
Exchange Act.
3. Definitions.
(a) "Subsidiary" is any corporation of which the
Company owns directly or indirectly all of the
outstanding capital stock.
(b) "Good Reason" means (i) a material diminishment
of the duties, responsibilities or authorities of
the employee, or (ii) a reduction in the employee's
annual base salary as in effect on the date of a
Change in Control of the Company.
(c) An "Eligible Terminated Employee" is a person
(i) who is a salaried employee of the Company or of
any corporation which is a Subsidiary at the time of
a Change in Control of the Company, (ii) who has not
entered into a change in control agreement with the
Company or any Subsidiary, and (iii) whose
employment during the two year period following a
Change in Control of the Company is terminated (a)
involuntarily by the Company or any Subsidiary for
reasons other than death, physical or mental incapacity,
dishonesty or gross misconduct or (b) voluntarily by
the employee for Good Reason.
4. Severance. The Company and each Subsidiary at the time
it terminates the employment of an Eligible Terminated Employee
will pay such Eligible Terminated Employee a severance payment
equal to one month of such Eligible Terminated Employee's base
salary at the time of termination for each year that the Eligible
Terminated Employee had been employed by the Company and any
Subsidiary (including former Subsidiaries and including periods
of employment with a Subsidiary prior to the time it became a
Subsidiary and with a business the Company acquired prior to the
acquisition) and for any partial year of such employment one
month of such base salary multiplied by the fraction of the year
for which he or she was so employed, provided that an Eligible
Terminated Employee who has been employed by the Company and its
Subsidiaries for less than three years will receive a severance
payment equal to three months of his or her base salary. The
Company and each Subsidiary will not be required to pay such
severance payments to any Eligible Terminated Employee who is
employed by a successor to any business of the Company or a
Subsidiary in a comparable job without any material diminishment
of responsibilities or duties and for the same salary as he or
she was employed by the Company or a Subsidiary if such successor
agrees that if such Eligible Terminated Employee is terminated by
such successor or resigns for Good Reason during the two years
following the Change in Control of the Company, such successor
will pay him or her the severance payments which the Company or
Subsidiary would have paid him or her under this Severance Plan
if the Company or Subsidiary had been his or her employer.
Severance payments under this Plan will be reduced by any other
severance payments paid by the Company or a Subsidiary to an
Eligible Terminated Employee at the time of termination of
employment.
5. Governing Laws. The Plan shall be construed and
administered in accordance with the internal laws of the State of
Illinois to the extent that such laws are not preempted by the
laws of the United States.
6. Reimbursement of Costs and Expenses. In the event that
it shall be necessary or desirable for an employee to retain
legal counsel or incur other costs and expenses in connection
with enforcement of his or her rights under the Plan, his or her
employer shall pay (or the employee shall be entitled to recover
from his or her employer, as the case may be) his or her
reasonable attorneys' fees and costs and expenses in connection
with enforcement of his or her rights. Payments shall be made to
the employee at the time such fees, costs and expenses are
incurred. If, however, a court shall determine that under the
circumstances, payment by the employer of all or a part of any
such fees, costs and expenses would be unjust, the employee shall
repay such amounts to the employer in accordance with a final
order of a court.
7. Amendment. The Board of Directors of the Company may
amend or terminate this Plat at any time prior to a Change in
Control of the Company, provided any such amendment or
termination shall be effective only after six months from the
time this Plan is amended or terminated and provided further that
any such amendment or termination shall not be effective if there
is a Change in Control of the Company during such six months
period. After a Change in Control of the Company occurs, this
Plan may not be amended or terminated.
EXHIBIT 10.7
BRUNSWICK CORPORATION
SUPPLEMENTAL PENSION PLAN
(As Amended Through July 28, 1998)
Section 1
GENERAL
1.1 History and Purpose. Brunswick Corporation, a Delaware
corporation (the "Company"), has maintained a retirement program
to provide retirement benefits for its eligible employees which,
when added to the benefits payable on their account under the
Brunswick Pension Plan for Salaried Employees (the "Salaried
Plan") and the Brunswick Pension Plan for Defense Division
Salaried Employees (the "Defense Plan") (the Salaried Plan and
the Defense Plan are hereinafter referred to as the "Pension
Plans"), will equal the benefits which would have been payable on
their account under the Pension Plans but for the limitations
imposed on such benefits by Sections 401(a)(17) and 415 of the
Internal Revenue Code of 1986, as amended (the "Code"). The
Company has now determined to utilize the retirement program to
fulfill its obligations to provide supplemental pension benefits
in accordance with the provisions of certain deferred
compensation agreements entered into, from time to time, with its
executives.
1.2 Plan Name and Effective Date. The provisions set forth
herein shall be known as the Brunswick Supplemental Pension Plan
(the "Plan") and constitute an amendment and continuation of the
retirement program in effect prior to January 1, 1981, the
"Effective Date" of this Plan.
1.3 Definitions. The following words and phrases as used
herein shall have the following meaning:
(a) Deferred Compensation Agreement. A
"Deferred Compensation Agreement" means a contract
under which an employee defers receipt of current
compensation (including employment contracts
containing provisions for deferment of
compensation) and under which the Company is
required to make supplemental payments to the
extent that the benefits payable to or on account
of such employee under the provisions of the
Pensions Plans are reduced by reason of such
deferral.
(b) Adjusted Earnings. An employee's "Adjusted
Earnings" for any calendar year means an amount equal
to the sum of:
(1) his Earnings (as defined in the Pension
Plans) for that year without regard to any
limitations on the dollar amount of earnings set
forth in the Pension Plans or in Section
401(a)(17) of the Code; plus
(2) the amount of any compensation deferred
by him during that year pursuant to the terms of a
Deferred Compensation Agreement;
except, however, that an employee's Adjusted Earnings
shall not be less than his Adjusted Earnings, if any,
determined under the terms of the Plan as in effect on
April 30, 1984, and as if he had retired on that date
and without regard to any cash or stock in which he
would have become entitled under either Section 5(e)(i)
or (ii) or Section 9 of the Company's 1978 Restricted
Stock Plan (the "Restricted Stock Plan") by reason of
such retirement.
1.4 Change in Control. "Change in Control" of the Company
means the occurrence of any of the following events:
(a) any Person other than a trustee or other
fiduciary of securities held under an employee
benefit plan of the Company or any of its
subsidiaries, is or becomes a Beneficial Owner,
directly or indirectly, of stock of the Company
representing 30% or more of the total voting power
of the Company's then outstanding stock and
securities, excluding any Person who becomes such
a Beneficial Owner in connection with a
transaction described in Clause (A) of paragraph
(d), below;
(b) a tender offer (for which a filing has
been made with the Securities and Exchange
Commission ("SEC") which purports to comply with
the requirements of Section 14(d) of the
Securities Exchange Act of 1934 and the
corresponding SEC rules) is made for the stock of
the Company, which has not been negotiated and
approved by the Board of Directors of the Company,
then the first to occur of
(i) any time during the offer
when the Person making the offer owns or has
accepted for payment stock of the Company
with 25% or more of the total voting power of
the Company's stock, or
(ii) three business days before the
offer is to terminate unless the offer is
withdrawn first if the Person making the
offer could own, by the terms of the offer
plus any shares owned by this Person, stock
with 50% or more of the total voting power of
the Company's stock when the offer
terminates;
(c) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent
Board") of the Company, cease for any reason to
constitute a majority thereof; provided, however,
that any individual becoming a director whose
election, or nomination for election by the
Company's stockholders, was approved by a vote of
at least 75% of the directors then comprising the
Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board,
but excluding, for this purpose, any such
individual whose initial assumption of office
occurs as a result of an actual or threatened
election contest with respect to the election or
removal of directors or other actual or threatened
solicitation of proxies or consents by or on
behalf of a Person other than the Board of
Directors of the Company;
(d) there is consummated a merger or
consolidation of the Company (or any direct or
indirect subsidiary of the Company) with any other
corporation, other than (A) a merger or
consolidation which would result in the voting
securities of the Company outstanding immediately
prior to such merger or consolidation continuing
to represent (either by remaining outstanding or
by being converted into voting securities of the
surviving entity or any parent thereof) at least
75% of the combined voting power of the stock and
securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger
or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of the
Company ( or similar transaction) in which no
Person is or becomes the Beneficial Owner,
directly or indirectly, of stock and securities of
the Company representing more than 25% of the
combined voting power of the Company's then
outstanding stock and securities; or
(e) the stockholders of the Company approve
a plan of complete liquidation or dissolution of
the Company or there is consummated an agreement
for the sale or disposition by the Company of all
or substantially all of the Company's assets other
than a sale or disposition by the Company of all
or substantially all of the assets to an entity at
least 75% of the combined voting power of the
stock and securities which is owned by Persons in
substantially the same proportions as their
ownership of the Company's voting stock
immediately prior to such sale.
"Person" shall mean any person (as defined in
Section 3(a)(9) of the Securities Exchange Act (the
"Exchange Act"), as such term is modified in Section
13(d) and 14(d) of the Exchange Act) other than (1) any
employee plan established by the Company, (2) the
Company or any of its affiliates (as defined in Rule
12b-2 promulgated under the Exchange Act), (3) an
underwriter temporarily holding securities pursuant to
an offering of such securities, or (4) a corporation
owned, directly or indirectly, by stockholders of the
Company in substantially the same proportions as their
ownership of the Company. "Beneficial Owner" shall
mean beneficial owner as defined in Rule 13d-3 under
the Exchange Act.
1.5 Plan Administration. The authority to control and
manage the operation and administration of the Plan shall be
vested in the Human Resource and Compensation Committee of the
Board of Directors of the Company (the "Committee"). In
controlling and managing the operation and administration of the
Plan, the Committee shall have the power and authority to
interpret and construe the provisions of the Plan, to determine
the amount of benefits and the rights or eligibility of employees
or Participants under the Plan and shall have such other power
and authority as may be necessary to discharge its duties
hereunder.
1.6 Source of Benefit Payments. The amount of any benefit
payable under the Plan shall be paid from the general revenues of
the Company.
1.7 Applicable Laws. The Plan shall be construed and
administered in accordance with the laws of the State of Illinois
to the extent that such laws are not preempted by the laws of the
United States of America.
1.8 Gender and Number. Where the context admits, words in
any gender shall include any other gender, words in the singular
shall include the plural and the plural shall include the
singular.
1.9 No Enlargement of Employment Rights. Nothing herein
contained shall be construed to give any Participant the right to
be retained in the employment of the Company or to limit the
right of the Company to terminate the employment of any
Participant at any time.
Section 2
PARTICIPATION
Participants in the Plan shall be:
(a) Employee Participants:
(1) participants in the Restricted Stock Plan;
(2) employees who have deferred receipt
of current compensation under a Deferred
Compensation Agreement;
(3) employees whose benefits payable under
the Salaried Plan or the Defense Plan, as amended
from time to time, are limited by reason of
application of Sections 401(a)(17) or 415 of the
Code; and
(4) individuals described in (1), (2) or (3)
next above whose employment shall have been
terminated by reason of retirement or otherwise.
(b) Beneficiary Participants:
(1) Subject to the provisions of
subsection (b)(2), each individual who becomes
entitled to a benefit under the Salaried Plan or
the Defense Plan on account of an employee's or
former employee's death ("Pension Plan
Beneficiary") shall become a Participant in the
Plan on the Date on which such Beneficiary first
becomes entitled to the benefit if (i) such
benefit is limited by reason of the application of
Sections 401(a)(17) or 415 of the Code, or (ii)
the employee or former employee was a Participant
in the Restricted Stock Plan or had deferred
compensation under a Deferred Compensation
Agreement.
(2) Notwithstanding the provisions of
subsection (b) (1), a Participant as described in
subsection (a) may, from time to time, designate a
beneficiary ("Designated Beneficiary") to whom the
benefits payable under the Plan on the
Participant's account will be paid in the event of
Participant's death. If the Participant
designates a beneficiary other than the Pension
Plan Beneficiary, then, in lieu of the Pension
Plan Beneficiary, the Designated Beneficiary shall
become a Participant in the Plan at such time as
the Designated Beneficiary becomes entitled to
such benefit. For purposes of Section 3, the
amount and term of the benefit payable to the
Designated Beneficiary under the Plan shall be the
same as if the Pension Plan Beneficiary had been
the Designated Beneficiary and, to the extent
applicable, shall be based on the life or life
expectancy of the Pension Plan Beneficiary. A
Beneficiary designation in accordance with the
provisions of this subsection (b) (2) shall be
filed with the Administrator of the Plan while the
Participant is alive and shall revoke all prior
beneficiary designations filed under this Plan.
Section 3
AMOUNT AND PAYMENT OF PLAN BENEFITS
3.1 Amount of Plan Benefits. The benefit payable under the
Plan to a Participant as of any date shall be in an amount equal
to:
(a) The amount of the benefits (expressed in
the form of benefits which the Participant is
actually receiving under the Pension Plans) that
the Participant would have been entitled to
receive under the Pension Plans as of that date if
his Earnings for purposes of the Pension Plans
were equal to his Adjusted Earnings, determined
without regard to the limitations imposed by
Section 415 of the Code.
REDUCED BY
(b) The amount of the benefits that the
Participant actually receives under the Pension
Plans as of that date.
3.2 Payment of Plan Benefits. A Participant's Plan
benefits will be paid to him or on his account on the same dates
and for the same period during which benefits are payable to him
or on his account under the Pension Plans or in such other form
as the Committee may, at the request of the Participant,
determine.
3.3 Payment to Persons Under Legal Disability. In the
event that any amount shall be payable under this Plan to a
Participant under legal or other disability who, in the opinion
of the Committee, is unable to administer such payment, the
payments shall be made to the legal conservator of the estate of
such Participant or, if no such legal conservator shall have been
appointed, then to any individual (for the benefit of such
Participant) whom the Committee may from time to time approve.
3.4 Benefits May Not Be Assigned or Alienated. The
benefits payable to any Participant under the Plan may not be
voluntarily or involuntarily assigned or alienated.
3.5 Acceleration of Benefits. Notwithstanding the
foregoing provisions of this Section 3, during the 60-day period
commencing on the date of termination of an Employee Participant
within three years following a Change in Control of the Company, during
the 60-day period commencing with and following any date which has been
designated by the Committee or by the Board of Directors of the
Company as an "Election Date" or during any other period provided
in any employment agreement between the Participant and the
Company, an Employee Participant may elect to receive a lump sum
payment which, subject to the following provisions of this
subsection 3.5, is the actuarial equivalent of:
(a) The amount that would be the
Participant's Accrued Benefit under the Pension
Plans, determined without regard to the
limitations imposed by Section 415 of the Code, if
the Participant's Earnings for purposes of the
Pension Plans were equal to his Adjusted Earnings.
REDUCED BY
(b) The amount of the Participant's Accrued
Benefit under the Pension Plans, but not in excess
of the limitations then in effect under Section
415 of the Code.
For purposes of this subsection 3.5, actuarial
equivalence shall be determined on the basis of the rates, tables
and factors then in effect for purposes of determining the
actuarial equivalence of optional forms of payment under the
Pension Plans; provided however, that the interest rate or rates
which then would be used by the Pension Benefit Guaranty
Corporation ("PBGC") for purposes of determining the present
value of the Participant's benefits under the Pension Plans if
the Pension Plans had then terminated with insufficient assets to
provide benefits guaranteed by the PBGC shall be substituted for
the interest assumption used under the Pension Plans. If a
Participant elects a lump sum payment in accordance with the
foregoing provisions of this subsection 3.5, the amount of the
benefit to which he would otherwise become entitled under the
provisions of this Section 3 upon a subsequent termination of
employment shall be reduced by the actuarial equivalent of such
lump sum payment. A Participant who does not elect within the 60-
day period following an Election Date to receive a lump sum
payment shall have his benefits under the Plan paid to him in
accordance with the foregoing provisions of this Section 3
without regard to the provisions of this subsection 3.5.
Section 4
AMENDMENT AND TERMINATION
4.1 Amendment and Termination. The Company reserves the
right to amend or terminate the Plan by action of its Board of
Directors; provided, however, that no such amendment or
termination of the Plan and no amendment or termination of the
Pension Plans shall:
(a) reduce or impair the interests of
Participants in benefits being paid under the Plan
as at the date of amendment or termination, as the
case may be; or
(b) reduce the aggregate amount of benefits
subsequently payable to or on account of any
employee under this Plan and the Pension Plans to
an amount which is less than the amount that would
have been so payable if the employee had retired
immediately prior to such amendment or
termination, as the case may be; or
(c) impair a Participant's right to receive
a lump sum payment determined and paid in
accordance with the provisions of subsection 3.5
following any previously designated Election Date.
4.2 Successors. Subject to the provisions of subsection
4.1, this Plan shall be binding upon any assignee or successor in
interest to the Company, whether by merger, consolidation or the
sale of substantially all of the Company's assets.
EXHIBIT 10.8
BRUNSWICK CORPORATION
ELECTIVE DEFERRED COMPENSATION PLAN
(As Amended Through July 28, 1998)
SECTION 1
General
1.1 Purpose. Brunswick Corporation Elective Deferred
Compensation Plan (the "Plan") has been established by Brunswick
Corporation (the "Company") so that it, and each of the Related
Companies which, with the consent of the Company, adopts the Plan
may provide its eligible employees with an opportunity to build
additional financial security, thereby aiding such companies in
attracting and retaining employees of exceptional ability.
1.2 Effective Date. The "Effective Date" of the Plan is
January 1, 1997.
1.3 Related Companies and Employers. For purposes of the Plan,
the term "Related Company" means (i) any corporation,
partnership, joint venture or other entity during any period in
which it owns, directly or indirectly, at least 50% of the voting
power of all classes of stock of the Company (or successor to the
Company) entitled to vote; and (ii) any corporation, partnership,
joint venture or other entity during any period in which at least
a 50% voting or profits interest is owned, directly or
indirectly, by the Company, by any entity that is a successor to
the Company, or by any entity that is a Related Company by reason
of clause (i) next above. The Company and each Related Company
which, with the consent of the Company, adopts the Plan for the
benefit of its eligible employees are referred to below
collectively as the "Employers" and individually as an
"Employer." A Related Company may adopt the Plan by action of
its Board of Directors; provided that a Related Company will be
considered to have adopted the Plan for its Eligible Employees
(without the need for action by its Board of Directors) if an
executive officer of the Related Company announces such adoption
to the Eligible Employees.
1.4 Operation and Administration. The authority to control
and manage the operation and administration of the Plan shall be
vested in the Human Resources and Compensation Committee (the
"Committee") of the Board of Directors of the Company (the
"Board"). In controlling and managing the operation and
administration of the Plan, the Committee shall have the rights,
powers and duties set forth in Section 7. Capitalized terms in
the Plan shall be defined as set forth in the Plan.
1.5 Plan Year. The term "Plan Year" means the calendar
year.
1.6 Applicable Law. The Plan shall be construed and
administered in accordance with the laws of the State of Illinois
to the extent that such laws are not preempted by the laws of the
United States of America.
1.7 Gender and Number. Where the context admits, words in
any gender shall include any other gender, words in the singular
shall include the plural and the plural shall include the
singular.
1.8 Notices. Any notice or document required to be filed
with the Plan Administrator or the Committee under the Plan will
be properly filed if delivered or mailed to the Plan
Administrator, in care of the Company, at its principal executive
offices. The Plan Administrator may, by advance written notice
to affected persons, revise such notice procedure from time to
time. Any notice required under the Plan may be waived by the
person entitled to notice.
1.9 Form and Time of Elections. Unless otherwise specified
herein, each election required or permitted to be made by any
Participant or other person entitled to benefits under the Plan,
and any permitted modification or revocation thereof, shall be in
writing filed with the Plan Administrator at such times, in such
form, and subject to such restrictions and limitations as the
Plan Administrator shall require.
1.10 Benefits Under Qualified Plans. Compensation of any
Participant that is deferred under the Plan, and benefits payable
under the Plan, shall be disregarded for purposes of determining
the benefits under any plan that is intended to be qualified
under section 401(a) of the Internal Revenue Code of 1986.
1.11 Other Costs and Benefits. The Plan is intended to
defer, but not to eliminate, payment of compensation to a
Participant. Accordingly, if any compensation or benefits that
would otherwise be provided to a Participant in the absence of
the Plan are reduced or eliminated by reason of deferral under
the Plan, the Company shall equitably compensate the Participant
for such reduction or elimination. However, no reimbursement
will be made for increased taxes resulting from benefits under
the Plan (whether resulting from a change in individual income
tax rates or otherwise).
1.12 Evidence. Evidence required of anyone under the Plan
may be by certificate, affidavit, document or other information
which the person acting on it considers pertinent and reliable,
and signed, made or presented by the proper party or parties.
1.13 Action by Employers. Any action required or permitted
to be taken by any Employer shall be by resolution of its board
of directors, or by a duly authorized officer of the Employer.
SECTION 2
Participation
2.1 Participant. Subject to the terms of the Plan, an
individual shall be eligible to make deferrals under the Plan
during any period he or she is an Eligible Employee. For
purposes of the Plan, the term "Eligible Employee" for any period
shall mean any employee of any Employer who is designated as an
Eligible Employee for that period, either by individual
designation by the Committee, or by being a member of a group
designated by the Committee.
2.2 Deferral Election. An Eligible Employee shall
participate in the Plan by electing to defer payment of all or a
portion of his Eligible Compensation pursuant to the terms of a
"Deferral Election." An individual's Deferral Election shall be
filed at such time and in such form as may be determined by the
Committee from time to time. Except as otherwise provided by the
Committee, a Participant may not revoke any deferral elections.
The Committee may revoke a Participant's Deferral Election as of
the date on which the Participant ceases to be an Eligible
Employee (provided that this sentence shall not be construed to
permit the Committee to revoke a Distribution Election by reason
of the Participant ceasing to be an Eligible Employee).
2.3 Eligible Compensation. For purposes of the Plan, a
Participant's "Eligible Compensation" from any Employer for any
Plan Year means such amounts as would otherwise be payable to him
by the Employer, and which are designated by the Committee as
compensation eligible for deferral in accordance with the Plan.
2.4 Plan Not Contract of Employment. The Plan does not
constitute a contract of employment, and participation in the
Plan will not give any employee the right to be retained in the
employ of any Employer nor any right or claim to any benefit
under the Plan, unless such right or claim has specifically
accrued under the terms of the Plan.
SECTION 3
Plan Accounting
3.1 Accounts. The Plan Administrator shall establish an
Account for each Participant who has filed a Deferral Election.
If a Participant's Eligible Compensation subject to a Deferral
Election would otherwise be payable from more than one Employer,
a separate Account shall be established for the Participant with
respect to the Eligible Compensation from each such Employer.
3.2 Adjustment of Accounts. Each Account shall be adjusted
in accordance with this Section 3 in a uniform manner as of such
periodic "Accounting Dates" as may be determined by the Plan
Administrator from time to time (which Accounting Dates shall be
not less frequent than monthly). As of each Accounting Date, the
balance of each Account shall be adjusted as follows:
(a) first, charge to the Account balance the amount of
any distributions under the Plan with respect to
that Account that have not previously been charged;
(b) then, adjust the Account balance for the applicable
Investment Return Rate(s); and
(c) then, credit to the Account balance the amount to be
credited to that Account in accordance with subsection
3.3 that have not previously been credited.
3.3 Crediting Under Deferral Election. The balance of a
Participant's Account for any Plan Year shall be credited, in
accordance with the provisions of paragraph 3.2(c), with the
amount by which his Eligible Compensation for the year is reduced
pursuant to a Deferral Election. Such crediting shall occur as
of the date on which such Eligible Compensation would otherwise
have been paid to the Participant by the Employer were it not for
the reduction made pursuant to the Deferral Election or, if such
date is not an Accounting Date, as of the first Accounting Date
occurring thereafter.
3.4 Investment Return Rates. The "Investment Return
Rate(s)" with respect to the Account(s), or portions of the
Account(s), of any Participant for any period shall be the
Investment Return Rate(s) elected by the Participant in
accordance with subsection 3.5 from among such investment
alternatives (if any) for that period which, in the discretion of
the Committee, are offered from time to time under this
subsection 3.4.
3.5 Selection of Investment Return Rate. The Investment
Return Rate alternatives under the Plan, and a Participant's
ability to choose among Investment Return Rate alternatives,
shall be determined in accordance with rules established by the
Committee from time to time; provided, however, that the
Committee may not modify the Investment Return Rate with respect
to periods prior to the adoption of the modification.
3.6 Statement of Accounts. As soon as practicable after
the end of each Plan Year, and at such other times as determined
by the Committee or the Chief Executive Officer of the Company,
the Company shall provide each Participant having one or more
Accounts under the Plan with a statement of the transactions in
his Accounts during that year and his Account balances as of the
end of the year.
SECTION 4
Distributions
4.1 General. Subject to this Section 4 and Section 5
(relating to Change in Control), the balance of a Participant's
Account(s) with respect to any year shall be distributed in
accordance with the Participant's Distribution Election. In no
event shall the amount distributed with respect to any
Participant's Account as of any date exceed the amount of the
Account balance as of that date.
4.2 Distribution Election. A Participant's Deferral
Election shall specify the manner (including the time and form of
distribution) in which the Participant's Account(s) shall be
distributed, subject to such restrictions and limitations as may
be imposed by the Committee. Except as provided in subsection
5.1, no distribution may be made under the Plan to the extent
that distribution would cause the Participant to have
compensation that is not deductible by reason of section 162(m)
of the Internal Revenue Code of 1986, and payment of such amounts
will be deferred in accordance with the applicable terms of the
Company's plans or arrangements relating to such deferral.
4.3 Beneficiary. Subject to the terms of the Plan, any
benefits payable to a Participant under the Plan that have not
been paid at the time of the Participant's death shall be paid at
the time and in the form determined in accordance with the
foregoing provisions of the Plan, to the beneficiary designated
by the Participant in writing filed with the Plan Administrator
in such form and at such time as the Plan Administrator shall
require. A beneficiary designation form will be effective only
when the signed form is filed with the Plan Administrator while
the Participant is alive and will cancel all beneficiary
designation forms filed earlier. If a deceased Participant
failed to designate a beneficiary, or if the designated
beneficiary of a deceased Participant dies before him or before
complete payment of the Participant's benefits, the amounts shall
be paid to the legal representative or representatives of the
estate of the last to die of the Participant and his designated
beneficiary.
4.4 Distributions to Disabled Persons. Notwithstanding the
provisions of this Section 4, if, in the Plan Administrator's
opinion, a Participant or beneficiary is under a legal disability
or is in any way incapacitated so as to be unable to manage his
financial affairs, the Plan Administrator may direct that payment
be made to a relative or friend of such person for his benefit
until claim is made by a conservator or other person legally
charged with the care of his person or his estate, and such
payment shall be in lieu of any such payment to such Participant
or beneficiary. Thereafter, any benefits under the Plan to which
such Participant or beneficiary is entitled shall be paid to such
conservator or other person legally charged with the care of his
person or his estate.
4.5 Benefits May Not be Assigned. Neither the Participant
nor any other person shall have any voluntary or involuntary
right to commute, sell, assign, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate or convey in advance of
actual receipt of the amounts, if any, payable hereunder, or any
part hereof, which are expressly declared to be unassignable and
non-transferable. No part of the amounts payable shall be, prior
to actual payment, subject to seizure or sequestration for
payment of any debts, judgements, alimony or separate maintenance
owed by the Participant or any other person, or be transferred by
operation of law in the event of the Participant's or any other
person's bankruptcy or insolvency.
4.6 Offset. Notwithstanding the provisions of subsection
4.5, if, at the time payments are to be made under the Plan, the
Participant or beneficiary or both are indebted or obligated to
any Employer or Related Company, then the payments remaining to
be made to the Participant or the beneficiary or both may, at the
discretion of the Plan Administrator, be reduced by the amount of
such indebtedness, or obligation, provided, however, that an
election by the Plan Administrator not to reduce any such payment
shall not constitute a waiver of the claim for such indebtedness
or obligation.
SECTION 5
Change in Control
5.1 Distribution on Change in Control. Each Participant's
Deferral Election shall be automatically revoked as of the date
on which termination of employment of the Participant occurs
following a Change in Control. Upon the termination of
employment of the Participant following a Change in Control, the
Participant shall receive a lump sum distribution equal to the
Participant's Account balances determined as of the date of the
termination of employment. Such distribution shall be made to
the Participant regardless of any elections providing for later
distribution that may otherwise be applicable under the Plan, and
shall be made as soon as practicable after the date of
termination of employment, but in no event later than 15 days
after the termination of employment. Payments under this
subsection 5.1 shall be in lieu of any amounts that would
otherwise be payable after the date as of which the Participant's
Account balance is determined for purposes of payment under this
subsection.
5.2 Change in Control Definition. For purposes of the
Plan, the term "Change in Control" means the occurrence of any of
the following events:
(a)any Person other than a trustee or other
fiduciary of securities held under an employee
benefit plan of the Company or any of its
subsidiaries, is or becomes a Beneficial Owner,
directly or indirectly, of stock of the Company
representing 30% or more of the total voting power
of the Company's then outstanding stock and
securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction
described in Clause (A) of paragraph (d), below;
(b)a tender offer (for which a filing has been
made with the Securities and Exchange Commission
("SEC") which purports to comply with the
requirements of Section 14(d) of the Securities
Exchange Act of 1934 and the corresponding SEC
rules) is made for the stock of the Company, which
has not been negotiated and approved by the Board
of Directors of the Company, then the first to
occur of
(i) any time during the offer when the
Person making the offer owns or has accepted
for payment stock of the Company with 25% or
more of the total voting power of the
Company's stock, or
(ii) three business days
before the offer is to terminate unless the
offer is withdrawn first if the Person making
the offer could own, by the terms of the offer
plus any shares owned by this Person, stock
with 50% or more of the total voting power of
the Company's stock when the offer terminates;
(c) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent
Board") of the Company, cease for any reason to
constitute a majority thereof; provided, however,
that any individual becoming a director whose
election, or nomination for election by the
Company's stockholders, was approved by a vote of
at least 75% of the directors then comprising the
Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but
excluding, for this purpose, any such individual
whose initial assumption of office occurs as a
result of an actual or threatened election contest
with respect to the election or removal of
directors or other actual or threatened
solicitation of proxies or consents by or on behalf
of a Person other than the Board of Directors of
the Company;
(d) there is consummated a merger or
consolidation of the Company (or any direct or
indirect subsidiary of the Company) with any other
corporation, other than (A) a merger or
consolidation which would result in the voting
securities of the Company outstanding immediately
prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by
being converted into voting securities of the
surviving entity or any parent thereof) at least
75% of the combined voting power of the stock and
securities of the Company or such surviving entity
or any parent thereof outstanding immediately after
such merger or consolidation, or (B) a merger or
consolidation effected to implement a
recapitalization of the Company (or similar
transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of stock
and securities of the Company representing more
than 25% of the combined voting power of the
Company's then outstanding stock and securities; or
(e) the stockholders of the Company approve a
plan of complete liquidation or dissolution of the
Company or there is consummated an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets other
than a sale or disposition by the Company of all or
substantially all of the assets to an entity at
least 75% of the combined voting power of the stock
and securities which is owned by Persons in
substantially the same proportions as their
ownership of the Company's voting stock immediately
prior to such sale.
(f) The occurrence of events resulting in an Affiliate
(the "Transferred Company") ceasing
to satisfy the definition of an "Affiliate" as
set forth in this Section 5. However, the
circumstances described in this paragraph (f) shall
constitute a "Change in Control" only with respect
to individuals who are employed at the Transferred
Company immediately before the events constituting
the Change in Control under this paragraph (f), and
then only with respect to individuals who are not
employed by the Company or an Affiliate at any time
during the 30-day period following the events
constituting the Change in Control. For purposes
of this paragraph (f), shares of the Company that
are beneficially owned by an employee benefit plan
(including a fiduciary of such plan) maintained by
the Company or an Affiliate shall be treated as not
outstanding.
(g) Substantially all of the business and assets of an Affiliate,
or substantially all of
the business and assets of any division of the
Company (the "Transferred Business") are
transferred to a business (the "Transferee
Business") other than the Company or an Affiliate;
provided, however, that the circumstances described
in this paragraph (g) shall constitute a "Change in
Control" only with respect to individuals who are
employed at the Transferred Business immediately
before the events constituting the Change in
Control under this paragraph (g), and then only
with respect to individuals who are not employed by
the Company or an Affiliate at any time during the
30-day period following the events constituting the
Change in Control.
For purposes of this subsection 5.2:
(I) The term "Person" shall mean any person (as defined
in Section 3(a)(9) of the Exchange Act, as such term
is modified in Sections 13(d) and 14(d) of the
Exchange Act) other than (1) any employee plan
established by the Company, (2) the Company or any
of its affiliates (as defined in Rule 12b-2
promulgated under the Exchange Act), (3) an
underwriter temporarily holding securities pursuant
to an offering of such securities, or (4) a
corporation owned, directly or indirectly by
stockholders of the Company in substantially the
same proportions as their ownership of the Company.
(II) The term "Beneficial Owner" shall mean beneficial owner as
defined in Rule 13d-3 under the Exchange Act.
(III) The term "Affiliate" means (i) any corporation,
partnership, joint venture or other entity during
any period in which it owns, directly or indirectly,
at least 50% of the voting power of all classes of
stock of the Company (or successor to the Company)
entitled to vote; and (ii) any corporation,
partnership, joint venture or other entity during
any period in which at least a 50% voting or profits
interest is owned, directly or indirectly, by the
Company, by any entity that is a successor to the
Company, or by any entity that is an Affiliate by
reason of clause (i) next above.
5.3 Transfer of Liability. If, immediately after a change
in control described in paragraph 5.2(f) or 5.2(g), the Company
(or any other entity that is then an Affiliate) would otherwise
have any liability for benefits under the Plan for Participants
with respect to whom such Change in Control occurs (the
"Brunswick Employers") then, with the consent of the applicable
Brunswick Employer and either the Transferred Company (in the
case of a Change in Control described in paragraph 5.2(f)) or the
Transferee Business (in the case of a Change in Control described
in paragraph 5.2(g)), but without the consent of such
Participants, the liability of the applicable Brunswick Employer
to such Participants under the Plan may be transferred to the
Transferred Company or Transferee Business, whichever is
applicable. In the event of such transfer, with respect to such
Participants:
(a)Notwithstanding the provisions
of subsection 6.1 or any other provision of the
Plan, the Brunswick Employer shall have no
obligation to such Participants under the Plan for
payments or benefits after the transfer.
(b)The rights and obligations of
the Transferred Company or Transferee Business,
whichever is applicable, with respect to such
Participants shall be governed by the terms of the
Plan, with the Transferred Company or Transferee
Business, whichever is applicable, substituted for
the Brunswick Employer (and the Company) under the
Plan for the obligation (on and after the date of
transfer) to pay any and all benefits to such
participants.
(c)The Transferred Company or
Transferee Business, whichever is applicable, shall
not be required to give effect to such
Participants' Deferral Elections with respect to
remuneration earned after the Change in Control.
SECTION 6
Source of Benefit Payments
6.1 Liability for Benefit Payments. Subject to the
provisions of this Section 6, an Employer shall be liable for
payment of benefits under the Plan with respect to any
Participant to the extent that such benefits are attributable to
the deferral of compensation otherwise payable by that Employer
to the Participant. Any disputes relating to liability of
Employers for benefit payments shall be resolved by the
Committee.
6.2 No Guarantee. Neither a Participant nor any other
person shall, by reason of the Plan, acquire any right in or
title to any assets, funds or property of the Employers
whatsoever, including, without limitation, any specific funds,
assets, or other property which the Employers, in their sole
discretion, may set aside in anticipation of a liability under
the Plan. A Participant shall have only a contractual right to
the amounts, if any, payable under the Plan, unsecured by any
assets of the Employers. Nothing contained in the Plan shall
constitute a guarantee by any of the Employers that the assets of
the Employers shall be sufficient to pay any benefits to any
person.
SECTION 7
Committee
7.1 Powers of Committee. Responsibility for the day-to-day
administration of the Plan shall be vested in the Plan
Administrator, which shall be the Committee. The authority to
control and manage all other aspects of the operation and
administration of the Plan shall also be vested in the Committee.
The Committee is authorized to interpret the Plan, to establish,
amend, and rescind any rules and regulations relating to the
Plan, to determine the terms and provisions of any agreements
made pursuant to the Plan, and to make all other determinations
that may be necessary or advisable for the administration of the
Plan. Except as otherwise specifically provided by the Plan, any
determinations to be made by the Committee under the Plan shall
be decided by the Committee in its sole discretion. Any
interpretation of the Plan by the Committee and any decision made
by it under the Plan is final and binding on all persons.
7.2 Delegation by Committee. The Committee may allocate
all or any portion of its responsibilities and powers to any one
or more of its members and may delegate all or any part of its
responsibilities and powers to any person or persons selected by
it. Any such allocation or delegation may be revoked by the
Committee at any time. Until the Committee takes action to the
contrary:
(a)The Chief Executive Officer of the
Company shall be delegated the power and
responsibility to take all actions assigned to or
permitted to be taken by the Committee under
Section 2, Section 3, and Section 4 (other than the
powers and responsibility of the Plan
Administrator).
(b)The powers and responsibilities of the
Plan Administrator shall be delegated to the Vice
President - Human Resources (or his delegate) of
the Company, subject to such direction as may be
provided to the Vice President - Human Resources or
his delegate from time to time by the Committee and
the Chief Executive Officer of the Company.
7.3 Information to be Furnished to Committee. The
Employers and Related Companies shall furnish the Committee with
such data and information as may be required for it to discharge
its duties. The records of the Employers and Related Companies
as to an employee's or Participant's employment, termination of
employment, leave of absence, reemployment and Eligible
Compensation shall be conclusive on all persons unless determined
to be incorrect. Participants and other persons entitled to
benefits under the Plan must furnish the Committee such evidence,
data or information as the Committee considers desirable to carry
out the Plan.
7.4 Liability and Indemnification of Committee. No member
or authorized delegate of the Committee shall be liable to any
person for any action taken or omitted in connection with the
administration of the Plan unless attributable to his own fraud
or willful misconduct; nor shall the Employers be liable to any
person for any such action unless attributable to fraud or
willful misconduct on the part of a director or employee of the
Employers. The Committee, the individual members thereof, and
persons acting as the authorized delegates of the Committee under
the Plan, shall be indemnified by the Employers against any and
all liabilities, losses, costs and expenses (including legal fees
and expenses) of whatsoever kind and nature which may be imposed
on, incurred by or asserted against the Committee or its members
or authorized delegates by reason of the performance of a
Committee function if the Committee or its members or authorized
delegates did not act dishonestly or in willful violation of the
law or regulation under which such liability, loss, cost or
expense arises. This indemnification shall not duplicate but may
supplement any coverage available under any applicable insurance.
SECTION 8
Amendment and Termination
The Committee may, at any time, amend or terminate the Plan
(including the rules for administration of the Plan), subject to
the following:
(a) Subject to the following provisions of this
Section 8, no amendment or termination may materially
adversely affect the rights of any Participant or
beneficiary under the Plan.
(b) The Committee may revoke the right to defer
Eligible Compensation under the Plan; provided,
however, that, except as may be approved by the Board,
no such revocation shall apply to the Eligible
Compensation of any Participant to the extent that the
revocation is adopted by the Committee after the date
the Eligible Compensation is otherwise required to be
credited to the Participant's Account under the Plan.
(c) The Plan may not be amended to delay the date on
which benefits are otherwise payable under the Plan
without the consent of each affected Participant. The
Committee, with the approval of the Board, may amend the
Plan to accelerate the date on which Plan benefits are
otherwise payable under the Plan.
(d) The Committee, with the approval of the Board, may
amend the Plan to accelerate the date on which Plan
benefits are otherwise payable under the Plan, and
eliminate all future deferrals under the Plan, thereby
terminating the Plan.
(e) The Committee may amend the Plan to modify or
eliminate any Investment Return Rate alternative, except
that any such amendment may not modify the Investment
Return Rate with respect to periods prior to the adoption
of the amendment.
(f) Notwithstanding any other provision of the Plan to
the contrary, neither the Committee nor the Board may
delegate its rights and responsibilities under this
Section 8; provided, however, that, the Board of
Directors may, from time to time, substitute itself, or
another committee of the Board, for the Human Resources
and Compensation Committee under this Section 8.
EXHIBIT 10.9
BRUNSWICK CORPORATION
AUTOMATIC DEFERRED COMPENSATION PLAN
(As Amended Through July 28, 1998)
SECTION 1
General
1.1 Purpose. Brunswick Corporation Automatic Deferred
Compensation Plan (the "Plan") has been established by Brunswick
Corporation (the "Company") to provide for the deferral of
compensation payable to Covered Executives by the Company and
Related Companies that would otherwise be non-deductible by reason
of section 162(m) of the Code, and thereby avoid the loss of such
deduction, and to compensate the Covered Executives for such
deferral.
1.2 Code. For purposes of the Plan, the term "Code" means
the Internal Revenue Code of 1986, as amended. References to
sections of the Code also refer to any successor provisions
thereof. References in the Plan to an amount being "deductible"
refer to its being deductible by the Company or a Related Company
for Federal income tax purposes; provided, however, that if
deductibility would not be precluded by reason of Code section
162(m), then it shall be deemed to be "deductible" for purposes of
the Plan, regardless of whether it is non-deductible for any other
reason. If, after the Effective Date, there is a change in the
provisions or interpretation of Code section 162(m) which would
have a material effect on the benefits to a Covered Executive or
the Company, the Company shall revise the Plan in good faith to
preserve the benefit of the Plan for the Company, the Related
Companies, and the Covered Executives; provided, however, that if
any change to the Plan pursuant to this sentence is adverse to a
Covered Executive, the Covered Executive shall be provided with
reasonable compensation therefore.
1.3 Effective Date. The "Effective Date" of the Plan is July
29, 1997.
1.4 Related Companies. The term "Related Company" means any
company during any period in which compensation paid to a Covered
Executive by such company would be required to be aggregated with
compensation paid to the Covered Executive by the Company, in
accordance with the affiliated group rules applicable to Code
section 162(m). The Company shall enter into such arrangements
with the Related Companies as it shall deem appropriate to
implement the terms of the Plan, and shall inform the Covered
Executive of any material failure to provide for such
implementation.
1.5 Operation and Administration. The authority to control
and manage the operation and administration of the Plan shall be
vested in the Human Resources and Compensation Committee (the
"Committee") of the Board of Directors of the Company (the
"Board"). In controlling and managing the operation and
administration of the Plan, the Committee shall have the rights,
powers and duties set forth in Section 7. Capitalized terms in
the Plan shall be defined as set forth in the Plan.
1.6 Applicable Law. The Plan shall be construed and
administered in accordance with the laws of the State of Illinois
to the extent that such laws are not preempted by the laws of the
United States of America.
1.7 Gender and Number. Where the context admits, words in
any gender shall include any other gender, words in the singular
shall include the plural and the plural shall include the
singular.
1.8 Notices. Any notice or document required to be filed
with the Committee under the Plan will be properly filed if
delivered or mailed to the Human Resources and Compensation
Committee, in care of the Company, at its principal executive
offices. The Committee may, by advance written notice to
affected persons, revise such notice procedure from time to time.
Any notice required under the Plan may be waived by the person
entitled to notice.
1.9 Benefits Under Qualified Plans. Compensation of any
Covered Executive that is deferred under the Plan, and benefits
payable under the Plan, shall be disregarded for purposes of
determining the benefits under any plan that is intended to be
qualified under section 401(a) of the Internal Revenue Code of
1986.
1.10 Other Costs and Benefits. The Plan is intended to
defer, but not to eliminate, payment of compensation to a Covered
Executive. Accordingly, if any compensation or benefits that
would otherwise be provided to a Covered Executive in the absence
of the Plan are reduced or eliminated by reason of deferral under
the Plan, the Company shall equitably compensate the Covered
Executive for such reduction or elimination, and the Company
shall reimburse the Covered Executive for any increased or
additional penalty taxes which he may incur by reason of deferral
under the Plan which would not have been incurred in the absence
of such deferral, except that no reimbursement will be made for
taxes resulting from an increase or decrease in individual income
tax rates, or resulting from an increase in the amount of
compensation payable to the Covered Executive by reason of the
accrual of earnings or any other provision of the Plan.
1.11 Evidence. Evidence required of anyone under the Plan
may be by certificate, affidavit, document or other information
which the person acting on it considers pertinent and reliable,
and signed, made or presented by the proper party or parties.
1.12 Action by Company. Any action required or permitted to
be taken by any Company shall be by resolution of its board of
directors, or by a duly authorized officer of the Company.
SECTION 2
Participation
2.1 Covered Executives. Subject to the terms of the Plan,
an individual shall be a "Covered Executive" subject to the
deferral requirements of the Plan for any year, if, for that
year, the individual is a "covered employee" with respect to the
Company, as that term is used in Code section 162(m)(3) and
Treas. Reg. section 1.162-27(c)(2). The provisions of the Plan
shall not apply to any employee to the extent that the employee
is subject to an individual agreement with the Company providing
for automatic deferral of compensation to avoid non-deductibility
of compensation by reason of Code section 162(m).
2.2 Plan Not Contract of Employment. The Plan does not
constitute a contract of employment, and participation in the
Plan will not give any employee the right to be retained in the
employ of the Company nor any right or claim to any benefit under
the Plan, unless such right or claim has specifically accrued
under the terms of the Plan.
SECTION 3
Automatic Deferral
3.1 Deferred Amount. If any compensation otherwise payable
to a Covered Executive by the Company or any Related Company
would be non-deductible by reason of Code section 162(m), such
amount shall not be paid to the Covered Executive when otherwise
due, but an amount equal to the foregone payment shall instead be
credited to the Covered Executive's Automatic Cash Deferral
Account or Automatic Stock Deferral Account in accordance with
this Section 3. In determining the amounts subject to deferral
under this subsection 3.1, the following shall apply:
(a) To the extent that the compensation is otherwise
payable in cash to a Covered Executive, that cash
shall be deferred under the Automatic Cash Deferral
Account, in accordance with this Section 3.
(b) To the extent that the compensation is otherwise
payable in common stock of the Company ("Company
Stock"), delivery of those shares shall be deferred
under the Automatic Stock Deferral Account, in
accordance with this Section 3.
(c) To the extent necessary in determining whether
amounts payable to a Covered Executive would be non-
deductible for any year, the Committee shall make
the determinations required under this Section 3
based on an estimate of the total compensation to
be paid to the Covered Executive for the year
(including both cash and non-cash compensation and
benefits that would be taken into account in
determining whether the limitations of Code section
162(m) are exceeded).
(d) In estimating a Covered Executive's total
compensation for any year, the Committee may
request that the Covered Executive forecast
whether, for the year, he will be receiving any
compensation the timing of which is in the Covered
Executive's discretion; provided, however, that
such forecast shall not preclude the Covered
Executive from taking action that would change the
time of receipt of such compensation.
(e) Nothing in the Plan shall be construed to require a
deferral of the salary of a Covered Executive.
3.2 Automatic Cash Deferral Account. The Automatic Cash
Deferral Account balance shall be credited with the amount
determined in accordance with subsection 3.1(a), as of the date
on which such amount would otherwise have been paid to the
Covered Executive were it not for deferral under the Plan. The
Automatic Cash Deferral Account shall be adjusted from time to
time in accordance with the following:
(a) Unless a Covered Executive makes an advance
election to have paragraph (b) next below apply,
the Automatic Cash Deferral Account shall be
credited as of the last day of each calendar month
with interest for that month at a rate equal to the
greater of: (a) the prime rate in effect at Chase
Manhattan Bank on the first day of the month plus
four percentage points, or (b) the Company's short-
term borrowing rate.
(b) If a Covered Executive elects application of this
paragraph (b), the Company, after consultation with
the Covered Executive, may invest amounts credited
to his Automatic Cash Deferral Account in
securities and other assets as the Company may
determine. The Company and its agents shall not
incur any liability by reason of purchasing, or
failing to purchase, any security or other asset in
good faith. A Covered Executive's Automatic Cash
Deferral Account shall be charged or credited as of
the last day of each fiscal year of the Company,
and at such other times as the balance in the
Automatic Cash Deferral Account shall be
determined, to reflect (i) dividends, interest or
other earnings on any such investments, reduced by
the cost of funds (for the period of deferral) for
the amount of any taxes incurred by the Company
with respect thereto; (ii) any gains or losses
(whether or not realized) on such investment; (iii)
the cost of funds (for the period of deferral) for
the amount of any taxes incurred with respect to
net gains realized on any such investments, taking
into account any applicable capital loss carryovers
and carrybacks, provided that in computing such
taxes, capital gains and losses on assets of the
Company other than such investments shall be
disregarded; and (iv) any direct expenses incurred
by the Company in such fiscal year or other
applicable period which would not have been
incurred but for the investment of amounts pursuant
to the provisions of this paragraph (b) (provided
that this clause (iv) shall not be construed to
permit a reduction for the cost of taxes).
3.3 Automatic Stock Deferral Account. Automatic Stock
Deferral Account. The Automatic Stock Deferral Account balance
shall be credited with the number of share units equal to number
of shares of Company Stock as of the date on which such shares
would otherwise have been paid to a Covered Executive were it not
for deferral under the Plan. The Automatic Stock Deferral
Account shall be adjusted from time to time to reflect the deemed
reinvestment of dividends in accordance with the terms of the
Company's dividend reinvestment program, as in effect from time
to time.
3.4 Statements. On a quarterly basis, the Committee shall
provide the Covered Executive with statements of the Covered
Executive's Automatic Cash Deferral Account and Automatic Stock
Deferral Account. Upon request of a Covered Executive, the
Committee shall provide the computations of amounts under
Sections 3 and 4.
SECTION 4
Distributions
4.1 Time of Payment of Deferred Amount. Amounts credited
to a Covered Executive's Automatic Cash Deferral Account and
Automatic Stock Deferral Account shall be paid or distributed
upon the earliest of the following:
(a)As soon as practicable after the Committee determines that
such amounts will be deductible
when paid (provided that the Committee
reasonably determines that payment of such amounts
will not cause other amounts (whether cash or non-
cash) to become non-deductible by reason of Code
section 162(m)).
(b)As soon as practicable after the Committee determines that
such amounts will not be deductible
by the Company when paid, and that
further deferral will not result in such amounts
becoming deductible.
(c)As soon as practicable (but not more than 15 days) following
the termination of employment
of a Covered Executive after a Change in
Control.
(d)As soon as practicable after the January 15
(but not later than January 30) of the first
calendar year following the first anniversary
of the date the Covered Executive ceases to be
employed by the Company and all Related Companies.
Payment shall be made under this subsection 4.1 not later than
the date determined under paragraph (d), regardless of whether
such payments are deductible by the Company.
4.2 Form of Payment of Deferred Amount. To the extent that
an amount is payable to or on behalf of a Covered Executive with
respect to the Automatic Cash Deferral Account in accordance with
subsection 3.2, it shall be paid by the Company in a cash lump
sum. To the extent that an amount is payable to or on behalf of
a Covered Executive with respect to the Automatic Stock Deferral
Account in accordance with subsection 3.3, it shall be
distributed by the Company in shares of Company Stock in a lump
sum.
4.3 Beneficiary. Subject to the terms of the Plan, any
benefits payable to a Covered Executive under the Plan that have
not been paid at the time of the Covered Executive's death shall
be paid at the time and in the form determined in accordance with
the foregoing provisions of the Plan, to the beneficiary
designated by the Covered Executive in writing filed with the
Committee in such form and at such time as the Committee shall
require. A beneficiary designation form will be effective only
when the signed form is filed with the Committee while the
Participant is alive and will cancel all beneficiary designation
forms filed earlier. If a Covered Executive fails to designate a
beneficiary, or if the designated beneficiary of the deceased
Covered Executive dies before the Covered Executive or before
complete payment of the Covered Executive's benefits, the amounts
shall be paid to the legal representative or representatives of
the estate of the last to die of the Covered Executive and his
designated beneficiary.
4.4 Distributions to Disabled Persons. Notwithstanding the
provisions of this Section 4, if, in the Committee's opinion, a
Covered Executive or a beneficiary is under a legal disability or
is in any way incapacitated so as to be unable to manage his
financial affairs, the Committee may direct that payment be made
to a relative or friend of such person for his benefit until
claim is made by a conservator or other person legally charged
with the care of his person or his estate, and such payment shall
be in lieu of any such payment to the Covered Executive or the
beneficiary. Thereafter, any benefits under the Plan to which
the Covered Executive or the beneficiary is entitled shall be
paid to such conservator or other person legally charged with the
care of his person or his estate.
4.5 Benefit May Not be Assigned. Neither a Covered
Executive nor any other person shall have any voluntary or
involuntary right to commute, sell, assign, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate or convey
in advance of actual receipt of the amounts, if any, payable
hereunder, or any part hereof, which are expressly declared to be
unassignable and non-transferable. No part of the amounts
payable shall be, prior to actual payment, subject to seizure or
sequestration for payment of any debts, judgements, alimony or
separate maintenance owned by the Covered Executive or any other
person, or be transferred by operation of law in the event of the
Covered Executive's or any other person's bankruptcy or
insolvency. Payments to or on behalf of a Covered Executive
under the Plan are not subject to reduction or offset for amounts
due or alleged to be due from the Company or any Related Company.
SECTION 5
Change in Control
For purposes of the Plan, the term "Change in Control"
means the occurrence of any of the following events:
(a) any Person other than a trustee or other fiduciary
of securities held under an employee benefit plan of the
Company or any of its subsidiaries, is or becomes a
Beneficial Owner, directly or indirectly, of stock of
the Company representing 30% or more of the total voting
power of the Company's then outstanding stock and
securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction
described in Clause (A) of paragraph (d), below
(b) a tender offer (for which a filing has been made
with the Securities and Exchange Commission ("SEC")
which purports to comply with the requirements of
Section 14(d) of the Securities Exchange Act of 1934 and
the corresponding SEC rules) is made for the stock of
the Company, which has not been negotiated and approved
by the Board of Directors of the Company, then the first
to occur of
(i) any time during the offer when the Person
making the offer owns or has accepted for payment
stock of the Company with 25% or more of the total
voting power of the Company's stock, or
(ii) three business days before the offer
is to terminate unless the offer is withdrawn
first if the Person making the offer could own, by
the terms of the offer plus any shares owned by
this Person, stock with 50% or more of the total
voting power of the Company's stock when the offer
terminates;
(c) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent
Board") of the Company, cease for any reason to
constitute a majority thereof; provided, however, that
any individual becoming a director whose election, or
nomination for election by the Company's stockholders,
was approved by a vote of at least 75% of the directors
then comprising the Incumbent Board shall be considered
as though such individual was a member of the Incumbent
Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as
a result of an actual or threatened election contest
with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the
Board of Directors of the Company;
(d) there is consummated a merger or consolidation
of the Company (or any direct or indirect subsidiary of
the Company) with any other corporation, other than (A)
a merger or consolidation which would result in the
voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity
or any parent thereof) at least 75% of the combined
voting power of the stock and securities of the Company
or such surviving entity or any parent thereof
outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected
to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of stock
and securities of the Company representing more than 25%
of the combined voting power of the Company's then
outstanding stock and securities; or
(e) the stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or
disposition by the Company of all or substantially all
of the Company's assets other than a sale or disposition
by the Company of all or substantially all of the assets
to an entity at least 75% of the combined voting power
of the stock and securities which is owned by Persons in
substantially the same proportions as their ownership of
the Company's voting stock immediately prior to such
sale.
(f) The occurrence of events resulting in an Affiliate
(the "Transferred Company") ceasing to satisfy the
definition of an "Affiliate" as set forth in this
Section 5. However, the circumstances described in this
paragraph (f) shall constitute a "Change in Control"
only with respect to individuals who are employed at the
Transferred Company immediately before the events
constituting the Change in Control under this paragraph
(f), and then only with respect to individuals who are
not employed by the Company or an Affiliate at any time
during the 30-day period following the events
constituting the Change in Control. For purposes of
this paragraph (f), shares of the Company that are
beneficially owned by an employee benefit plan
(including a fiduciary of such plan) maintained by the
Company or an Affiliate shall be treated as not
outstanding.
(g) Substantially all of the business and assets of
an Affiliate, or substantially all of the business and
assets of any division of the Company (the "Transferred
Business") are transferred to a business other than the
Company or an Affiliate; provided, however, that the
circumstances described in this paragraph (g) shall
constitute a "Change in Control" only with respect to
individuals who are employed at the Transferred Business
immediately before the events constituting the Change in
Control under this paragraph (g), and then only with
respect to individuals who are not employed by the
Company or an Affiliate at any time during the 30-day
period following the events constituting the Change in
Control.
For purposes of this Section 5:
(I) The term "Person" shall mean any person (as defined
in Section 3(a)(9) of the Exchange Act, as such term
is modified in Sections 13(d) and 14(d) of the
Exchange Act) other than (1) any employee plan
established by the Company, (2) the Company or any
of its affiliates (as defined in Rule 12b-2
promulgated under the Exchange Act), (3) an
underwriter temporarily holding securities pursuant
to an offering of such securities, or (4) a
corporation owned, directly or indirectly by
stockholders of the Company in substantially the
same proportions as their ownership of the Company.
(II) The term "Beneficial Owner" shall mean beneficial
owner as defined in Rule 13d-3 under the Exchange
Act.
(III) The term "Affiliate" means (i) any corporation,
partnership, joint venture or other entity during
any period in which it owns, directly or indirectly,
at least 50% of the voting power of all classes of
stock of the Company (or successor to the Company)
entitled to vote; and (ii) any corporation,
partnership, joint venture or other entity during
any period in which at least a 50% voting or profits
interest is owned, directly or indirectly, by the
Company, by any entity that is a successor to the
Company, or by any entity that is an Affiliate by
reason of clause (i) next above.
SECTION 6
Source of Benefit Payments
The amount of any benefit payable under the Plan shall be
paid from the general assets of the Company. Neither a Covered
Executive nor any other person shall acquire by reason of the
Plan any right in or title to any assets, funds or property of
the Company whatsoever, including, without limiting the
generality of the foregoing, any specific funds, assets, or other
property which the Company, in its sole discretion, may set aside
in anticipation of a liability under the Plan. A covered
Executive shall have only a contractual right to the amounts, if
any, payable under the Plan, unsecured by any assets of the
Company. Nothing contained in the Plan shall constitute a
guarantee by the Company that the assets of the Company shall be
sufficient to pay any benefits to any person.
SECTION 7
Committee
7.1 Powers of Committee. The authority to control and
manage all aspects of the operation and administration of the
Plan shall be vested in the Committee. The Committee is
authorized to interpret the Plan, to establish, amend, and
rescind any rules and regulations relating to the Plan, and to
make all other determinations that may be necessary or advisable
for the administration of the Plan. Except as otherwise
specifically provided by the Plan, any determinations to be made
by the Committee under the Plan shall be decided by the Committee
in its sole discretion. Any interpretation of the Plan by the
Committee and any decision made by it under the Plan is final and
binding on all persons. The amount to be deferred under Section
3 and the amount that is payable under paragraphs 4.1(a) and
4.1(b) shall be based on such estimates as the Committee
determines in good faith to be appropriate.
7.2 Delegation by Committee. The Committee may allocate
all or any portion of its responsibilities and powers to any one
or more of its members and may delegate all or any part of its
responsibilities and powers to any person or persons selected by
it. Any such allocation or delegation may be revoked by the
Committee at any time.
7.3 Information to be Furnished to Committee. The Company
and the Related Companies shall furnish the Committee with such
data and information as may be required for it to discharge its
duties. The records of the Company and the Related Companies as
to a Covered Executive's employment, termination of employment,
leave of absence, reemployment and compensation shall be
conclusive on all persons unless determined to be incorrect.
Covered Executives and other persons entitled to benefits under
the Plan must furnish the Committee such evidence, data or
information as the Committee considers desirable to carry out the
Plan.
7.4 Liability and Indemnification of Committee. No member
or authorized delegate of the Committee shall be liable to any
person for any action taken or omitted in connection with the
administration of the Plan unless attributable to his own fraud
or willful misconduct; nor shall the Company be liable to any
person for any such action unless attributable to fraud or
willful misconduct on the part of a director or employee of the
Company. The Committee, the individual members thereof, and
persons acting as the authorized delegates of the Committee under
the Plan, shall be indemnified by the Company against any and all
liabilities, losses, costs and expenses (including legal fees and
expenses) of whatsoever kind and nature which may be imposed on,
incurred by or asserted against the Committee or its members or
authorized delegates by reason of the performance of a Committee
function if the Committee or its members or authorized delegates
did not act dishonestly or in willful violation of the law or
regulation under which such liability, loss, cost or expense
arises. This indemnification shall not duplicate but may
supplement any coverage available under any applicable insurance.
SECTION 8
Amendment and Termination
The Committee may, at any time, amend or terminate the Plan,
subject to the following:
(a) Subject to the provisions of subsection 1.2
(relating to changes in the Code), no amendment or
termination may materially adversely affect the rights
of any Covered Executive or beneficiary under the Plan.
(b) The Committee, with the approval of the
Board, may amend the Plan to accelerate the date on
which Plan benefits are otherwise payable under the
Plan.
(c) The Committee, with the approval of the Board, may
amend the Plan to accelerate the date on which Plan
benefits are otherwise payable under the Plan, and
eliminate all future deferrals under the Plan, thereby
terminating the Plan.
(d) Notwithstanding any other provision of the Plan to
the contrary, neither the Committee nor the Board may delegate
its rights and responsibilities under this Section 8; provided,
however, that, the Board may, from time to time, substitute
itself, or another committee of the Board, for the Human
Resources and Compensation Committee under this Section 8.
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