<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __________)*
Aviall, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
05366B 10 2
- --------------------------------------------------------------------------------
(CUSIP Number)
Kurt Butenhoff
c/o Bear Stearns & Co. Inc.
245 Park Avenue
New York, N.Y. 10167
(212) 272-6849
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 24, 1996
-----------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement /X/.
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 29 Pages
Exhibit Index on Page 8
SEC 1746(12-91)
<PAGE>
SCHEDULE 13D
CUSIP No. 05366B 10 2 Page 2 of __ Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Mandarin, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /x/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bahamas
7 SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,506,700
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH
10 SHARED DISPOSITIVE POWER
1,506,700
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,506,700
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.74%
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
2 of 7
<PAGE>
SCHEDULE 13D
CUSIP No. 05366B 10 2 Page 3 of __ Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Joseph Lewis
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /x/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United Kingdom
7 SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,506,700
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH
10 SHARED DISPOSITIVE POWER
1,506,700
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,506,700
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.74%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
2 of 7
<PAGE>
SCHEDULE 13D
CUSIP No. 05366B 10 2 Page 4 of __ Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Jane Lewis
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /x/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United Kingdom
7 SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,506,700
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH
10 SHARED DISPOSITIVE POWER
1,506,700
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,506,700
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.74%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
2 of 7
<PAGE>
Item 1. Security and Issuer
This statement relates to shares of the Common Stock, $.01 par value
per share (the "Common Stock"), of Aviall, Inc. (the "Issuer"). The executive
office of the Issuer is located at 20755 Diplomat Drive, Dallas, Texas 75234.
Item 2. Identity and Background
Mandarin, Inc. is a Bahamas corporation ("Mandarin") established as
an investment vehicle. The shareholders and directors of Mandarin are Joseph
Lewis and Jane Lewis. The business address of each of Mandarin, Joseph Lewis and
Jane Lewis (the "Reporting Persons") is c/o Lewis House, P.O. Box N7776, Lyford
Cay, Bahamas, United Kingdom. Mandarin was organized in the Bahamas. Joseph
Lewis and Jane Lewis are permanent residents of the Bahamas and are citizens of
the United Kingdom. The principal business of Mandarin is investments. The
principal occupation of each of Joseph Lewis and Jane Lewis is private
investments and serving as directors of Mandarin.
During the last five years, neither Mandarin, Joseph Lewis or Jane
Lewis (i) have been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) or (ii) were a party to a civil proceeding
of a judicial or administrative body as a result of which any of such persons
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, United States
federal or state securities laws or finding any violation with respect to such
laws.
Item 3. Source and Amount of Funds or Other Consideration
Mandarin has acquired 1,506,700 shares of the Common Stock in open
market purchases at various prices and in varying amounts between February 9,
1996 and May 28, 1996. The source of the funds used to acquire such Common Stock
was working capital of Mandarin.
Item 4. Purpose of Transactions.
The Reporting Persons consider the shares of Common Stock of the
Issuer acquired by them to be an attractive investment at the present time and,
accordingly, subject to the conditions set forth below, currently intend to
continue to purchase or sell Common Stock, as appropriate, through any of the
Reporting Persons or otherwise, either in the open market or in privately
negotiated transactions.
The Reporting Persons' primary interest is to maximize the value of
their investment in the Issuer. To this end, the Reporting Persons intend
continually to review the Issuer's
Page 5 of 29 Pages
<PAGE>
business affairs and financial position and future prospects, as well as
conditions in the securities markets and general economic and industry
conditions. Based on such evaluation and review and other factors, the Reporting
Persons will continue to consider various alternative courses of action and will
in the future take such actions with respect to their investment in the Issuer
as they deem appropriate in light of the circumstances existing from time to
time. Such actions may involve the purchase of additional shares of Common
Stock, or alternatively, may involve the sale of all or a portion of the shares
of Common Stock held by the Reporting Persons in the open market or in privately
negotiated transactions to one or more purchasers.
Except as described above, none of the Reporting Persons has any
plans or proposals which relate to or would result in:
(a) The acquisition by any person of additional
securities of the Issuer, or the disposition of securities of the
Issuer;
(b) An extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Issuer or any
of its subsidiaries;
(c) A sale or transfer of a material amount of assets of
the Issuer or any of its subsidiaries;
(d) Any change in the present board of directors or management of
the Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board of directors of the
Issuer;
(e) Any material change in the present capitalization or
dividend policy of the Issuer;
(f) Any other material change in the Issuer's business or corporate
structure including but not limited to, if the Issuer is a registered closed-end
investment company, any plans or proposals to make any changes in its investment
policy for which a vote is required by Section 13 of the Investment Company Act
of 1940, as amended;
(g) Changes in the Issuer's charter, by-laws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted from
a national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
Page 6 of 29 Pages
<PAGE>
(i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended (the "Act"); or
(j) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer
Mandarin beneficially owns 1,506,700 shares of Common Stock
representing 7.74% of such class of securities. The percentage of shares of
Common Stock reported beneficially owned is based upon 19,468,922 shares
outstanding as of May 3, 1996 as reflected in the Issuer's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1996, as filed with the
Securities Exchange Commission. The Reporting Persons share voting and
dispositive power with respect to all of the shares of Common Stock owned by
Mandarin.
The trading dates, number of shares purchased or sold, price and
manner of trade for Mandarin during the past sixty (60) days, is set forth in
Schedule A hereto. The transactions described above constitute the only
transactions in the shares of Common Stock of the Issuer which have been
effected by any of the Reporting Persons during the past 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer
The shareholders and directors of Mandarin are Joseph Lewis and Jane
Lewis. Each of Joseph Lewis and Jane Lewis have discretionary authority to vote
and dispose of the shares of Common Stock owned by Mandarin.
In addition to the foregoing, on May 9, 1996, Mandarin entered into
an agreement (the "Option Agreement") with Bear Stearns & Co. Inc. pursuant to
which Mandarin was granted 1,000 put options (at 100 shares per option) at a
strike price of $9.28, with respect to the Common Stock. Such options expire on
November 8, 1999. A copy of the Option Agreement is attached hereto as Exhibit 2
and is incorporated herein by reference.
Except as noted above, the Reporting Persons have no contracts,
arrangements, understandings or relationships with respect to the securities of
the Issuer.
Page 7 of 29 Pages
<PAGE>
Item 7. Material to be Filed as Exhibits
1. Joint Acquisition Statement as required Page 9
by Rule 13d-1(f)(1) of the Act.
2. Option Agreement, dated May 9, 1996, Page 10
between Mandarin and Bear Stearns & Co. Inc.
Signature
The undersigned, after reasonable inquiry and to the best of their
knowledge and belief, certify that the information set forth in this statement
is true, complete and correct.
Dated: June 3, 1996
MANDARIN, INC.
By: /s/Joseph Lewis
-----------------------------------
Joseph Lewis, Director
/s/ Joseph Lewis
-----------------------------------
Joseph Lewis, Individually
/s/Jane Lewis
-----------------------------------
Jane Lewis, Individually
Page 8 of 29 Pages
<PAGE>
EXHIBIT 1
JOINT ACQUISITION STATEMENT
PURSUANT TO RULE 13-D-1(F)(1)
The undersigned acknowledge and agree that the foregoing statement on
Schedule 13D is filed on behalf of each of the undersigned and that all
subsequent amendments to this statement of Schedule 13D shall be filed on behalf
of each of the undersigned without the necessity of filing additional joint
acquisition statements. The undersigned acknowledge that each shall be
responsible for the timely filing of such amendments, and for the completeness
and accuracy of the information concerning him or her contained therein, but
shall not be responsible for the completeness and accuracy of the information
concerning the other, except to the extent that he or she knows of or has reason
to believe that such information is not accurate.
Dated: June 3, 1996
MANDARIN, INC.
By:/s/Joseph Lewis
------------------------
Joseph Lewis, Director
/s/Joseph Lewis
------------------------
Joseph Lewis, Individually
/s/Jane Lewis
------------------------
Jane Lewis, Individually
Page 9 of 29 Pages
EXHIBIT 2
BEAR STEARNS BEAR, STEARNS & CO. INC.
245 PARK AVENUE
NEW YORK, NEW YORK 10167
(212)272-2000
ATLANTA o BOSTON
CHICAGO o DALLAS o LOS ANGELES
NEW YORK o SAN FRANCISCO
AMSTERDAM o GENEVA o HONG KONG
LONDON o PARIS o TOKYO
CONFIRMATION
Reference Number: NY1741
May 9, 1996
Coded Account Number: 44874-B
Dear Ladies and Gentlemen:
The purpose of this letter agreement is to confirm the terms and conditions of
the Transaction entered into on the Trade Date specified below (the
"Transaction") between Bear, Stearns & Co. Inc. ("BSC") and Coded Account
Number: 44874-B ("Counterparty"). This letter agreement constitutes a
"Confirmation" as referred to in the Master Agreement specified below.
1. This Confirmation is subject to and incorporates the 1991 ISDA Definitions
(the "Definitions") as published by the International Swaps Dealers Association,
Inc. (which, since June 14, 1993, has been known as the International Swaps and
Derivatives Association, Inc., and which shall be referred to herein as
"ISDA"). Each of us agrees to negotiate in good faith and to use reasonable
efforts to execute and deliver an agreement in the ISDA Master Agreement
(Multicurrency--Cross Border) form (the "ISDA Form Master Agreement"), together
with the schedule thereto (the "ISDA Schedule") and any other additional
documents reasonably requested in connection therewith, each in form and
substance as we shall in good faith agree (such agreement, together with the
completed ISDA Schedule and any other agreed upon exhibits thereto, being
referred to herein as the "Executed Agreement"). Upon the execution and
delivery by both of us of the Executed Agreement, this Confirmation shall
supplement, form a part of and be subject to the Executed Agreement. Until the
Executed Agreement is fully executed and delivered, the ISDA Form Master
Agreement (without any ISDA Schedule attached thereto) shall be deemed to have
been executed by both of us on the trade date on which we entered into the first
"Transaction" (as defined in the ISDA Form Master Agreement), and this
Confirmation shall supplement, form a part of and be subject to the ISDA Form
Master Agreement. All provisions contained in, or incorporated by reference to,
either the Executed Agreement or the ISDA Form Master Agreement (as applicable,
the "Master Agreement") shall govern the Transaction referenced in this
Confirmation except as expressly modified herein. In the event of any
inconsistency between this Confirmation and the Definitions or Master
Agreement, this Confirmation shall prevail.
Reference Number: NY1741
Coded Account Number: 44874-B
May 9, 1996
Page 2 of 14
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
Trade Date: May 9, 1996
Option Style: American
Option Type: Put
Seller: Counterparty
Buyer: BSC
Shares: The common shares of Aviall, Inc. ("AVL")
(the "Issuer").
Number of Options: 1,000, subject to adjustment as set forth
herein (see "Adjustments").
Option Entitlement: 100 Shares per Option, subject to adjustment
as set forth herein (see "Adjustments").
Multiple Exercise: Inapplicable.
Strike Price per Share: USD 9.28, subject to adjustment as set forth
herein (see "Adjustments").
Premium: USD 78,230.40
Premium Payment Date: May 14, 1996, or, if that date is not a
Currency Business Day, the next following
Currency Business Day.
Seller Business Day: Any day on which commercial banks are open
for business (including dealings in foreign
exchange and foreign currency deposits) and
which is a scheduled trading day on local
securities exchanges in New York City.
Currency Business Day: Any day on which commercial banks are open
for business (including dealings in foreign
exchange and foreign currency deposits) in
New York City.
Exchange: NYSE, or any successor thereto.
Reference Number: NY1741
Coded Account Number: 44874-B
May 9, 1996
Page 3 of 14
Related Exchanges: The exchanges or quotation systems, if any,
on which options contracts on the Shares are
traded or quoted, and as may be selected from
time to time by the Calculation Agent.
Exchange Business Day: A day that is a Seller Business Day and is a
trading day on each of the Exchange and the
Related Exchanges other than a day on which
trading on any such exchange is scheduled to
close prior to its regular weekday closing
time.
Clearance System: The clearance system through which a sale of
Shares executed on the Exercise Date
customarily would settle, as selected by the
Calculation Agent.
Clearance System
Business Day: Any Currency Business Day on which the
Clearance System is (or, but for the
occurrence of a Settlement Disruption Event,
would have been) open for the acceptance and
execution of settlement instructions.
Calculation Agent: BSC, whose determinations and calculations
shall be binding in the absence of manifest
error.
Procedure for Exercise:
Exercise Period: Any Exchange Business Day from, and
including, May 9, 1996 and the Expiration
Date between 9:00 a.m. (New York City time)
and 2:00 p.m. (New York City time).
Expiration Date: November 8, 1996 or, if that date is not an
Exchange Business Day, the next following
Exchange Business Day.
Expiration Time: 2:00 p.m. (New York City time).
Notice of Exercise: Buyer must give irrevocable notice (by
telephone, if practicable, and otherwise in
writing) in the Exercise Period to Seller of
its exercise of an Option, specifying in
that notice the number of Options being
exercised on the Exercise Date. Failure
to specify the number of Options being
exercised on the Exercise Date shall be
deemed to be an exercise of all unexercised
Options. If the notice of exercise is given
(a) after the latest permitted time on an
Exchange Business Day during the Exercise
Period or (b) on a day prior to the
Expiration Date that is not an Exchange
Business Day, then that notice will be deemed
given on the next following Exchange Business
Day,
Reference Number: NY1741
Coded Account Number: 44874-B
May 9, 1996
Page 4 of 14
if any, in the Exercise Period. Buyer will
execute and deliver a written notice
confirming the substance of any telephonic
notice of exercise within one Seller Business
Day of that notice. Failure to provide that
written notice will not affect the validity
of the telephonic notice.
Exercise Date: In relation to each Option, the Exchange
Business Day during the Exercise Period on
which that Option is or is deemed to be
exercised.
Automatic Exercise: Inapplicable
Settlement Terms:
Physical Settlement: Applicable; if an Option is exercised
pursuant to the terms set forth in this
Confirmation, on the Settlement Date, Buyer
will pay to Seller the Settlement Price and
Seller will deliver to Buyer the Number of
Shares to be Delivered. Such payment and such
delivery will be made through the Clearance
System at the accounts specified below, in
accordance with customary market practice, on
a delivery versus payment basis.
Settlement Date: The first Clearance System Business
Day on which a sale of the Shares executed on
the Exercise Date customarily would settle
through the Clearance System, unless a
Settlement Disruption Event occurs or is
continuing on that day. If a Settlement
Disruption Event occurs or is continuing on
that day, then the Settlement Date will be
the first succeeding Clearance System
Business Day on which a sale of the Shares
could be settled through the Clearance System
unless a Settlement Disruption Event occurs
or is continuing on each of the ten Clearance
System Business Days immediately following
the original date that, but for the
Settlement Disruption Event, would have been
the Settlement Date. In that case, (a) if
the Calculation Agent determines that the
Shares can be delivered in any other
commercially reasonable manner, then the
Settlement Date will be the first day on
which settlement of a sale of Shares executed
on that tenth Clearance System Business Day
customarily would take place using such other
commercially reasonable manner of delivery
(which other manner of delivery will be
deemed the Clearance System for purposes of
delivery of the relevant Shares), and (b) if
the Calculation Agent determines that the
Shares cannot be delivered in any other
commercially reasonable manner, then
Reference Number: NY1741
Coded Account Number: 44874-B
May 9, 1996
Page 5 of 14
an Additional Termination Event will be
deemed to have occurred on the close of
business on that tenth Clearance System
Business Date (with the party that was
obligated to deliver the number of Shares to
be delivered being the sole Affected Party
and the Transaction (after consideration of
any partial delivery) being the sole Affected
Transaction, as to which Loss will apply for
the purpose of determining any payment to be
made in respect of such Transaction
(irrespective of the payment measure set
forth in the Master Agreement)).
Settlement Price: The Strike Price per Share multiplied
by the Number of Shares to be Delivered.
Number of Shares to
be Delivered: The number of Shares equal to the
number of Options exercised or deemed
exercised on the relevant Exercise Date
multiplied by the Option Entitlement.
Settlement Disruption
Event: An event beyond the control of the
parties as a result of which the Clearance
System cannot clear the transfer of the
Shares.
Adjustments: (a) Subject to subsections (b) and
(c) below, if options on the Shares are then
cleared by the Options Clearing Corporation
(the "OCC"), following each adjustment to the
settlement terms of options on the Shares
cleared by the OCC, the Calculation Agent
will make a corresponding adjustment to any
one or more of the Strike Price per Share,
the Number of Options, the Option Entitlement
and any other variable relevant to the
settlement terms of this Transaction, which
adjustment will be effective as of the date
determined by the Calculation Agent to be the
effective date of the corresponding
adjustment made by the OCC. Subject to
subsections (b) and (c) below, if options on
the Shares are not then cleared by the OCC,
the Calculation Agent will make such
adjustment, if any, to any one or more of the
Strike Price per Share, the Number of
Options, the Option Entitlement and any other
variable relevant to the settlement terms of
this Transaction as the Calculation Agent
determines appropriate, with reference to the
OCC By-Laws, Rules, Interpretations and
Policies (the "OCC Adjustment Rules"), to
account for the diluting or concentrating
effect of any event that, in the
determination of the Calculation Agent, would
have given rise to an adjustment
Reference Number: NY1741
Coded Account Number: 44874-B
May 9, 1996
Page 6 of 14
under the OCC Adjustment Rules if options on
the Shares were then cleared by the OCC. Any
such adjustment will be effective as of the
date determined by the Calculation Agent.
(b) Notwithstanding the OCC Adjustment Rules,
(i) all adjustments to the Strike Price
per Share shall be rounded to the
nearest fourth decimal place, and all
adjustments to the Option Entitlement
and Number of Options shall be rounded
down to eliminate any fraction. If the
Option Entitlement or Number of Options
is rounded down to eliminate a fraction,
the Strike Price per Share shall be
adjusted to the nearest fourth decimal
place, to reflect any diminution in the
value of an Option resulting from the
elimination of such fraction in the
Option Entitlement or Number of Options.
(ii) if an Option is exercised following
any (A) reclassification or change of
the Shares that results in a transfer of
or an irrevocable commitment to transfer
all outstanding Shares or (B)
consolidation, amalgamation or merger of
the Issuer with or into another entity
(other than a consolidation,
amalgamation or merger in which the
Issuer is the continuing entity and
which does not result in any such
reclassification or change of all
outstanding Shares) (any such event
being a "Merger Event"), then the
deliverer will deliver the number of
shares of equity and the amount of other
securities and property (including cash)
to which a holder of the number of
Shares equal to the Option Entitlement
would be entitled upon consummation of
the Merger Event.
(iii) if a tender offer (whether partial
or complete) with respect to the Shares
or a liquidation, bankruptcy, insolvency
or similar proceeding with respect to
the Issuer or any other similar event
with respect to the Shares or the Issuer
occurs, or if the Shares or all or
substantially all of the Issuer's
property is nationalized, expropriated
or otherwise required to be transferred
to any governmental agency, authority or
entity, or if the Exchange ceases to
list or otherwise include the Shares or
if there is no Clearance System with
respect to the Shares, and the
Calculation Agent determines that any
such event changes the expected economic
consequences
Reference Number: NY1741
Coded Account Number: 44874-B
May 9, 1996
Page 7 of 14
of this Transaction in any material
respect, the Calculation Agent, acting
in good faith, shall make such
adjustments to the terms of this
Transaction as are necessary to effect
the intent of the parties with respect
to the expected economic consequences of
this Transaction.
(c) All adjustments hereunder (which may
include cancellation of the Transaction in
whole or in part) shall be made by the
Calculation Agent, which shall notify both
parties of any adjustment pursuant to this
section and the date of its effectiveness.
Miscellaneous:
Delivery Expenses: Following exercise of an Option, all expenses
of transfer of the Shares on delivery (such
as any stamp duty or stock exchange tax) will
be payable by the party that would pay such
expenses according to the customary market
practice for a sale of the Shares executed on
the Exercise Date to be settled through the
Clearance System.
Representation
and Agreement: The party required to deliver the Shares
agrees that it will convey, and, on each date
that it delivers Shares, represents that it
has conveyed, good title to the Shares it is
required to deliver, free and clear of any
lien, charge, claim or encumbrance (other
than a lien routinely imposed on all
securities in the Clearance System).
Failure to
Deliver: If one or more Options are exercised pursuant
to the terms set forth in this Confirmation,
the failure by a party to deliver, when due,
the Number of Shares to be Delivered will
constitute an Event of Default unless such
party (a) notifies the other party within one
Clearance System Business Day following the
Exercise Date that, despite its best efforts,
such party is unable to obtain the Number of
Shares to be Delivered due to market
illiquidity or impossibility and (b) delivers
such number of Shares, if any, as it can
deliver on the Settlement Date, in which
event the party's failure to deliver, when
due, the Number of Shares to be Delivered
shall constitute an Additional Termination
Event (with the party that was obligated to
deliver the Number of Shares to be Delivered
being the sole Affected Party and the
Transaction (after consideration of any
partial delivery) being the sole Affected
Reference Number: NY1741
Coded Account Number: 44874-B
May 9, 1996
Page 8 of 14
Transaction, or if less than all Options have
been exercised (or deemed exercised) on the
relevant Exercise Date, the Termination Event
will occur in respect of a Transaction (after
consideration of any partial delivery)
consisting of the exercised Options only, as
to which Loss will apply for the purpose of
determining any payment to be made in respect
of such Transaction (irrespective of the
payment measure set forth in the Master
Agreement)).
Indemnification
for Failure
to Deliver: If, prior to the occurrence or effective
designation of an Early Termination Date in
respect of this Transaction, a party fails to
deliver the Number of Shares to be Delivered,
it will indemnify the other party on demand
for any costs, losses or expenses (including
the costs of borrowing the Shares, if
applicable) resulting from such failure
incurred during the period from and including
the original due date of delivery to but
excluding the actual date of delivery. A
certificate signed by the deliveree setting
out such costs, losses or expenses in
reasonable detail will be conclusive evidence
that they have been incurred.
Additional Provisions: 1) Each party hereto is hereby advised and
acknowledges that the other party has engaged
in (or refrained from engaging in)
substantial financial transactions and has
taken (or refrained from taking) other
material actions in reliance upon the entry
by the parties into the Transaction to which
this Confirmation relates on the terms and
conditions set forth herein.
2) The parties hereto agree that Section
2(a)(iii) of the Master Agreement is hereby
amended by replacing "and (3)" with the
following language:", (3) with respect to any
payments to be made in connection with this
Transaction, the condition precedent that
this Confirmation has been fully executed by
both BSC and Counterparty and (4)".
3) Each party hereto represents to the other
party that (a) it has not received and is not
relying upon any legal, tax, regulatory,
accounting or other advice (whether written
or oral) of the other party regarding the
Transaction evidenced by this Confirmation,
other than the representations expressly made
by that other party in this Confirmation and
in the Master Agreement and (b) in respect of
the Transaction evidenced by this
Confirmation, (i) it has the capacity to
evaluate (internally
Reference Number: NY1741
Coded Account Number: 44874-B
May 9, 1996
Page 9 of 14
or through independent professional advice)
this Transaction and had made its own
decision to enter into this Transaction and
(ii) it understands the terms, conditions and
risks of this Transaction and is willing to
assume (financially and otherwise) those
risks. Counterparty acknowledges that BSIL
has advised Counterparty to consult its own
tax, accounting and legal advisors in
connection with the Transaction evidenced by
this Confirmation and that the Counterparty
has done so.
4) The parties agree that subparagraph (ii)
of Section 2(c) of the Master Agreement will
not apply to any Transactions entered into
between the parties that are or will be
governed by the Master Agreement.
Collateral Provisions: (a) On any Local Business Day requested by
either party (any such date referred to as a
"Credit Support Valuation Date"), the
Calculation Agent shall determine the
following: (i) the amount that would be
payable at such time by a party ("Pledgor")
to the other party ("Secured Party") to
replace all of the Transactions that are or
may be entered into and governed by the
Master Agreement as if they were terminated
so as to preserve the economic equivalent of
the payment obligations of the parties with
respect thereto (such an amount referred to
herein as Secured Party's "Exposure"), (ii)
the aggregate market value (determined in
accordance with the Eligible Collateral Annex
hereto) of all Collateral (as defined in the
Eligible Collateral Annex), if any, pledged
by any party, and (iii) the Credit Support
Amount for such date. "Credit Support Amount"
means Secured Party's Exposure plus, if
Counterparty is Pledgor, the Initial
Collateral Requirement (as defined in
paragraph (b) below). If the Credit Support
Amount exceeds the aggregate market value of
all Collateral held by Secured Party by an
amount (the "Delivery Amount") equal to or
greater than USD 100,000, then Pledgor shall
transfer to Secured Party Collateral with a
market value equal to or greater than the
Delivery Amount. If the aggregate market
value of all Collateral held by Secured Party
exceeds the Credit Support Amount by an
amount (the "Return Amount") equal to or
greater than USD 100,000, then Secured Party
shall return to Pledgor Collateral with a
market value as close as practicable (but not
greater than) the Reform Amount. Each
delivery or return of Collateral required
under this paragraph shall be made by the
close of business on the
Reference Number: NY1741
Coded Account Number: 44874-B
May 9, 1996
Page 10 of 14
relevant Credit Support Valuation Date if
notice requesting such delivery or return is
received by Noon New York City time, or by
the next Local Business Day if notice is
received after Noon New York City time.
(b) In addition to any Collateral required
to be delivered pursuant to paragraph (a)
above, Counterparty shall deliver to and at
all times maintain with BSC Collateral having
a market value equal to or greater than the
Initial Collateral Requirement. The "Initial
Collateral Requirement" for any Credit
Support Valuation Date shall be equal to the
greater of (i) 30% of the Reference Amount
minus the Out-of-the-Money Amount (if any) or
(ii) 10% of the Reference Amount. The
"Reference Amount" shall be equal to the
product of the Reference Price times the
Number of Options times the Option
Entitlement. The "Reference Price" shall be
the closing offered price per Share on the
Exchange Business Day preceding the related
Credit Support Valuation Date. The
"Out-of-the-Money Amount" shall be equal to
the greater of (i) zero and (ii) the product
of (x) the Reference Price minus the Strike
Price times (y) the Number of Options times
(z) the Option Entitlement. Such Collateral
shall be delivered to BSC on or before the
Local Business Day following the Trade Date.
Any obligation of Counterparty to deliver
Collateral to BSIL in order to maintain the
Initial Collateral Requirement and any
obligation of BSC to return Collateral to
Counterparty pursuant to paragraph (a) hereof
shall not offset.
(c) These Collateral Provisions shall be
deemed a security agreement. Notwithstanding
anything to the contrary set forth in this
Confirmation or the Master Agreement, in the
event of any inconsistency between the Master
Agreement and these Collateral Provisions,
the Master Agreement shall prevail. Any
party pledging Collateral hereunder hereby
grants a first priority continuing security
interest in all Collateral provided hereunder
and in any and all substitutions therefor,
proceeds thereof and distributions thereon.
Monthly interest on any cash Collateral held
hereunder shall be credited at a rate equal
to the Federal Funds Rate for each day. For
purposes of these Collateral Provisions, the
term "Local Business Day" shall have the
meaning given such term in the Master
Agreement, except that references to a
payment in clause (b) thereof will be
Reference Number: NY1741
Coded Account Number: 44874-B
May 9, 1996
Page 11 of 14
deemed to include a delivery or return of
Collateral hereunder.
Governing Law: The laws of the State of New York, without
reference to the choice or conflicts of law
principles thereof.
Documentation Expenses: Each party hereto agrees it shall be
responsible for its own expenses (including
any and all legal fees) relating to the
preparation, execution and delivery of all of
the documents prepared in connection with the
executed Agreement or this Transaction.
Credit Support Document: The Guaranty of The Bear Stearns Companies
Inc. ("Bear Stearns"), which BSC agrees to
provide upon the execution of the Executed
Agreement. Bear Stearns shall be a Credit
Support Provider of BSC.
Transfer: Neither party hereto may transfer this
Transaction, in whole or in part, without the
prior written consent of the non-transferring
party (other than pursuant to a consolidation
or amalgamation with, or merger into, or
transfer of all or substantially all of its
assets to, another entity). Notwithstanding
the above, BSC may transfer its rights and
obligations under this Transaction, in whole
or in part, to any of its Affiliates,
provided that if the Affiliate to which BSC
transfers its obligations is not Bear
Stearns, such Affiliate's obligations with
respect to this Transaction shall be
guaranteed by Bear Stearns to the same extent
that the obligations of BSC are guaranteed by
Bear Stearns.
Reference Number: NY1741
Coded Account Number: 44874-B
May 9, 1996
Page 12 of 14
3. Account Details and
Settlement Information: Payments to BSC:
Citibank, N.A., New York
ABA Number: 021-0000-89, for the account of
Bear, Stearns & Co. Inc.
Account Number: 0925-3186
Sub-account Number: X25-04400-21
Attention: Salvatore DiMaggio
Payments to Counterparty:
Citibank, N.A., New York
ABA Number: 021-0000-89, for the account of
Bear, Stearns & Co. Inc.
Account Number: 0925-3186, for final credit
to Sub-account Number: 220-45384-13
Broker/Arranger: None
This Confirmation may be executed in several counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument.
Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the agreement between the parties
hereto with respect to the Transaction to which this Confirmation relates by
signing in the space provided below and returning to BSIL both a facsimile of
the executed Confirmation and an original of the executed Confirmation.
Reference Number: NY1741
Coded Account Number: 44874-B
May 9, 1996
Page 13 of 14
We are very pleased to have executed this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
BEAR, STEARNS & CO. INC.
By:
----------------------- ------------------------
Name: Bruce Jaeger
Title: Managing Director
Coded Account Number: 44874-B, acting through its duly authorized signatory,
hereby agrees to, accepts and confirms the terms of the foregoing as of the
Trade Date.
CODED ACCOUNT NUMBER: 44874-B
By:
-----------------------
Name:
Title:
(Authorized Signatory)
cc: Mr. Kurt Buttenhoff
Reference Number: NY1741
Coded Account Number: 44874-B
May 9, 1996
Page 14 of 14
ELIGIBLE COLLATERAL ANNEX TO COLLATERAL PROVISIONS
The items described below shall constitute "Collateral":
Type of Collateral Valuation Percentage
------------------ --------------------
U.S. Government Securities/
remaining years to maturity:
-- 2 years and under 100
-- over 2 to 10 years 99
-- over 10 years 98
Fully modified pass-through certificates in
book-entry form, the full and timely payment
of principal and interest of which are
guaranteed by the Government National
Mortgage Association* 97
Mortgage participation certificates in
book-entry form, the full and timely payment
of interest at the applicable certificate rate
and the ultimate collection of principal of
which are guaranteed by the Federal National
Mortgage Association* 97
Mortgage participation certificates in
book-entry form, the full and timely payment
of interest at the applicable certificate rate
and the ultimate collection of principal of
which are guaranteed by the Federal Home Loan
Mortgage Corporation* 97
The market value of each of the foregoing securities shall be the bid price
obtained by the Calculation Agent on a Credit Support Valuation Date, multiplied
by the applicable Valuation Percentage. The Pledgee may also accept other forms
of collateral acceptable to it from time to time, at such Valuation Percentages
as it may determine.
- ------------
* Excluding multi-class REMIC pass-through certificates and pass-through
certificates backed by adjustable rate mortgages and excluding securities
paying interest or principal only.
<PAGE>
SCHEDULE A
==============================================================================
No. of
Name of Shares Price How Trade Was
Security Trade Date Purchased Per Share Total Cost Effected
==============================================================================
- ------------------------------------------------------------------------------
Common Stock 1-Apr-96 9,900 8.9350 88,456.50 Open Market
- ------------------------------------------------------------------------------
Common Stock 23-Apr-96 5,000 9.0600 45,300.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 26-Apr-96 20,000 9.4350 188,700.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 26-Apr-96 5,000 9.4350 47,175.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 26-Apr-96 3,000 9.4350 28,305.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 26-Apr-96 1,000 9.4350 9,435.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 26-Apr-96 1,000 9.4350 9,435.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 29-Apr-96 10,000 9.5600 95,600.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 29-Apr-96 5,000 9.5600 47,800.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 29-Apr-96 5,000 9.5600 47,800.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 29-Apr-96 5,000 9.4350 47,175.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 30-Apr-96 20,000 9.0600 181,200.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 1-May-96 20,000 9.1850 183,700.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 2-May-96 25,000 9.0600 226,500.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 3-May-96 50,000 9.1850 459,250.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 3-May-96 3,500 9.1850 32,147.50 Open Market
- ------------------------------------------------------------------------------
Common Stock 3-May-96 2,100 9.0600 19,026.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 6-May-96 23,850 9.2636 220,936.86 Open Market
- ------------------------------------------------------------------------------
Common Stock 10-May-96 20,000 9.5600 191,200.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 14-May-96 53,400 9.5520 510,076.80 Open Market
- ------------------------------------------------------------------------------
Common Stock 15-May-96 23,450 9.5581 224,137.45 Open Market
- ------------------------------------------------------------------------------
Common Stock 21-May-96 50,000 9.5600 478,000.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 23-May-96 50,000 9.5600 478,000.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 23-May-96 20,000 9.0600 181,200.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 24-May-96 394,000 9.2180 3,631,892.00 Open Market
- ------------------------------------------------------------------------------
Common Stock 28-May-96 134,000 9.7941 1,312,409.40 Open Market
- ------------------------------------------------------------------------------
Common Stock 28-May-96 10,000 9.6850 96,850.00 Open Market
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
1,506,700 8.6622 $13,051,395.09 All Open Market
Average Cost
