<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 35,100
<SECURITIES> 0
<RECEIVABLES> 180,900
<ALLOWANCES> 12,800
<INVENTORY> 217,600
<CURRENT-ASSETS> 470,400
<PP&E> 567,200
<DEPRECIATION> 343,400
<TOTAL-ASSETS> 877,300
<CURRENT-LIABILITIES> 230,700
<BONDS> 177,500
<COMMON> 3,000
0
0
<OTHER-SE> 238,500
<TOTAL-LIABILITY-AND-EQUITY> 877,300
<SALES> 285,500
<TOTAL-REVENUES> 285,500
<CGS> 224,200
<TOTAL-COSTS> 224,200
<OTHER-EXPENSES> 54,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,100
<INCOME-PRETAX> 2,900
<INCOME-TAX> 1,800
<INCOME-CONTINUING> 1,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,100
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1996.
or
( ) Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-2883
OUTBOARD MARINE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-1589715
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
100 Sea Horse Drive
Waukegan, Illinois 60085
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 847-689-6200
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
------- -------
Number of shares of Common Stock of $0.15 par value outstanding at April 30,
1996 were 20,146,077 shares (not including 129,716 treasury shares).
Exhibit Index Page 14.
-1-
<PAGE> 2
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 1
FINANCIAL INFORMATION
FINANCIAL STATEMENTS
March 31, 1996
Financial statements required by this form:
Page
----
Statements of Consolidated Earnings 3
Condensed Statements of Consolidated Financial Position 4
Statements of Consolidated Cash Flows 6
Notes to Consolidated Financial Statements 7
-2-
<PAGE> 3
OUTBOARD MARINE CORPORATION
Statements of Consolidated Earnings
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Mar. 31 Mar. 31
(In millions except amounts per share) 1996 1995 1996 1995
- -------------------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 285.5 $ 318.8 $ 517.6 $ 561.4
Cost of Goods Sold 224.2 233.0 416.9 424.4
--------------------- ---------------------
Gross Earnings 61.3 85.8 100.7 137.0
Selling, General & Administrative Expenses 54.5 60.9 100.2 111.0
--------------------- ---------------------
Earnings from Operations 6.8 24.9 .5 26.0
Non-Operating Expense (Income)
Interest 4.1 5.4 9.5 10.4
Other, Net (.2) (.8) (.5) (2.4)
--------------------- ---------------------
3.9 4.6 9.0 8.0
--------------------- ---------------------
Earnings (Loss) Before Provision for Income Taxes 2.9 20.3 (8.5) 18.0
Provision for Income Taxes 1.8 2.3 2.8 3.1
--------------------- ---------------------
Net Earnings (Loss) $ 1.1 $ 18.0 $ (11.3) $ 14.9
===================== =====================
Net Earnings (Loss) Per Share of Common Stock
Primary $ .05 $ .90 $ (.56) $ .74
===================== =====================
Fully Diluted $ .05 $ .81 $ (.56) $ .71
===================== =====================
Dividends Paid Per Share $ .10 $ .10 $ .20 $ .20
===================== =====================
Average Shares of Common Stock and Common
Stock Equivalents Outstanding 20.2 20.1 20.1 20.1
</TABLE>
The accompanying notes are an integral part of these statements.
-3-
<PAGE> 4
OUTBOARD MARINE CORPORATION
Condensed Statements of Consolidated Financial Position
<TABLE>
<CAPTION>
(Unaudited)
-------------------
Mar. 31 Mar. 31 Sept. 30 Sept. 30
(In Millions) 1996 1995 1995* 1994*
- ------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Assets
- ------
Current Assets
Cash & Cash Equivalents $ 35.1 $ 37.1 $ 58.3 $ 80.3
Receivables 168.1 211.0 200.9 150.5
Inventories
Finished Products 92.1 90.5 69.9 58.7
Raw Material, Work In
Process & Service Parts 125.5 143.9 124.2 105.0
--------------------- --------------------
Total Inventories 217.6 234.4 194.1 163.7
Other Current Assets 49.6 37.2 48.9 35.3
--------------------- ---------------------
Total Current Assets 470.4 519.7 502.2 429.8
Product Tooling, Net 53.0 52.4 52.0 48.3
Intangibles 39.4 31.5 40.6 32.1
Other Assets 90.7 95.4 87.9 89.8
Plant & Equipment 567.2 548.0 558.9 535.6
Accumulated Depreciation (343.4) (326.5) (334.6) (318.5)
--------------------- ---------------------
Plant & Equipment, Net 223.8 221.5 224.3 217.1
--------------------- ---------------------
Total Assets $ 877.3 $ 920.5 $ 907.0 $ 817.1
===================== =====================
-4-
<PAGE> 5
Liabilities and Shareholders' Investment
- ----------------------------------------
Current Liabilities
Notes Payable $ - $ 90.0 $ - $ -
Accounts Payable 86.7 101.7 99.6 102.9
Accrued and Other 144.0 132.3 149.2 130.7
--------------------- ---------------------
Total Current Liabilities 230.7 324.0 248.8 233.6
Long-Term Debt 177.5 177.3 177.4 178.2
Postretirement Benefits Other
Than Pensions 101.0 100.8 102.6 102.3
Other Non-Current Liabilities 126.6 96.1 122.4 94.0
Shareholders' Investment
Common Stock & Capital Surplus 113.8 110.9 111.6 109.3
Retained Earnings 134.4 117.2 149.7 106.3
Cumulative Translation
Adjustments (6.7) (5.8) (5.5) (6.6)
--------------------- ---------------------
Total Shareholders' Investment 241.5 222.3 255.8 209.0
--------------------- ---------------------
Total Liabilities and
Shareholders' Investment $ 877.3 $ 920.5 $ 907.0 $ 817.1
===================== =====================
Shares of Common Stock
Outstanding 20.1 20.0 20.0 20.0
</TABLE>
The accompanying notes are an integral part of these statements.
* Condensed from audited financial statements.
-5-
<PAGE> 6
OUTBOARD MARINE CORPORATION
Statements of Consolidated Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31
(In millions) 1996 1995
- ------------- ---- ----
<S> <C> <C>
Cash Cash Flows from Operating Activities
Net earnings (loss) $ (11.3) $ 14.9
Adjustments to reconcile net earnings to net cash
provided by operations:
Depreciation and amortization 25.4 21.8
Changes in current accounts excluding the
effects of noncash transactions:
Decrease (Increase) in receivables 32.1 (58.0)
(Increase) in inventories (23.5) (68.8)
(Increase) in other current assets (.9) (1.4)
(Decrease) in accounts payable and accrued liabilities (17.7) (1.6)
Other, net 2.5 (3.0)
-------------------
Net cash provided by (used for) operating activities 6.6 (96.1)
Cash Flows from Investing Activities
Expenditures for plant and equipment, and tooling (28.2) (31.9)
Other, net .4 (1.5)
-------------------
Net cash used for investing activities (27.8) (33.4)
Cash Flows from Financing Activities
Net increase in short-term debt - 90.0
Cash dividends paid (4.0) (4.0)
Other, net 2.2 .7
-------------------
Net cash provided by (used for) financing activities (1.8) 86.7
Exchange Rate Effect on Cash (.2) (.4)
-------------------
Net Decrease in Cash and Cash Equivalents (23.2) (43.2)
Cash and Cash Equivalents at Beginning of Period 58.3 80.3
-------------------
Cash and Cash Equivalents at End of Period $ 35.1 $ 37.1
===================
Supplemental Cash Flow Disclosures
Interest paid $ 8.4 $ 3.6
Income taxes paid 7.0 1.4
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
- -------------------------
The accompanying unaudited consolidated condensed financial statements
present information in accordance with generally accepted accounting
principles for interim financial information and have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all information or
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, the
information furnished reflects all adjustments necessary for a fair
statement of the results of the interim periods and all such adjustments
are of a normal recurring nature. These financial statements should be
read in conjunction with the financial statements and notes thereto
included in the company's Annual Report on Form 10-K for the year ended
September 30, 1995. The 1996 interim results are not necessarily
indicative of the results which may be expected for the remainder of the
year.
2. SHORT-TERM BORROWINGS AND ACCOUNTS RECEIVABLE
- -------------------------------------------------
The company's Second Amended and Restated Revolving Credit Agreement,
dated as of March 29, 1996, provides for loans of up to $200 million and
terminates December 31, 1998.
Also in December 1995, the company entered into receivables sales
agreements amended as of March 31, 1996 and expiring December 20, 1996
whereby the company agreed to sell an ownership interest in a designated
pool of domestic trade accounts receivable ("Receivables"). In order to
maintain the balance in the designated pool of Receivables sold, the
company is obligated to sell undivided percentage interests in new
Receivables as existing Receivables are collected.
The company retains a residual interest in the Receivables sold, thus
receivables in the accompanying Condensed Statement of Consolidated
Financial Position at March 31, 1996 are only reduced by the net
outstanding proceeds from the sales. At March 31, 1996, the company had
net outstanding proceeds of $51 million and may receive up to $4 million
of additional proceeds on a revolving basis. The company has retained
substantially the same credit risk as if the Receivables had not been
sold. The costs associated with the receivables sales agreements are
included in non-operating expense - other, net in the Statement of
Consolidated Earnings for the three and six months ended March 31, 1996.
Under both the revolving credit agreement and the receivable sales
agreements, as amended, the company is required to meet certain financial
covenants throughout the year. At March 31, 1996, the company is in
compliance with these financial covenants.
3. CONTINGENT LIABILITIES
- --------------------------
As a normal business practice, the company has made arrangements with
financial institutions by which qualified retail dealers may obtain
inventory financing. Under these arrangements, the company will
repurchase its products in the event of repossession upon a retail
dealer's default. These arrangements contain provisions which limit the
company's repurchase obligation to $30 million per model year for a
period not to exceed 30 months from the date of invoice. The company
resells any repurchased products. Losses incurred under this program
have not been material. The company accrues for losses which are
anticipated in connection with expected repurchases.
-7-
<PAGE> 8
The company is engaged in a substantial number of legal proceedings
arising in the ordinary course of business. While the result of these
proceedings, as well as those discussed below, cannot be predicted with
any certainty, based upon the information presently available,
management is of the opinion that the final outcome of all such
proceedings should not have a material effect upon the company's
Consolidated Financial Position or the Consolidated Earnings of the
company.
Under the requirements of Superfund and certain other laws, the company
is potentially liable for the cost of clean-up at various contaminated
sites identified by the United States Environmental Protection Agency
and other agencies. The company has been notified that it is named a
potentially responsible party ("PRP") at various sites for study and
clean-up costs which the company does not believe to be material. In
some cases there are several named PRPs and in others there are
hundreds. The company generally participates in the investigation or
clean-up of these sites through cost sharing agreements with terms which
vary from site to site. Costs are typically allocated based upon the
volume and nature of the materials sent to the site. However, under
Superfund, and certain other laws, as a PRP the company can be held
jointly and severally liable for all environmental costs associated with
a site.
The company has experience in the remediation of contaminated sites.
Once the company becomes aware of its potential liability at a
particular site, it uses this experience to determine if it is probable
that a liability has been incurred and whether or not the amount of the
loss can be reasonably estimated. Once the company has sufficient
information necessary to support a reasonable estimate or range of loss
for a particular site, an amount is added to the company's aggregate
environmental contingent liability accrual. The amount added to the
accrual for the particular site is determined by analyzing the site as a
whole and reviewing the probable outcome for the remediation of the
site. This is not necessarily the minimum or maximum liability at the
site but, based upon the company's experience, most accurately reflects
the company's liability based on the information currently available.
The company takes into account the number of other participants involved
in the site, their experience in the remediation of sites, and the
company's knowledge of their ability to pay.
As a general rule, the company accrues remediation costs for continuing
operations on an undiscounted basis and does not accrue for normal
operating and maintenance costs for site monitoring and compliance
requirements. However, the company does accrue for environmental
close-down costs associated with discontinued operations or facilities,
including the environmental costs of operation and maintenance until
disposition. At March 31, 1996, the company has accrued approximately
$11 million for costs related to remediation at contaminated sites
including continuing and closed-down operations. The possible recovery
of insurance proceeds has not been considered in estimating contingent
environmental liabilities.
Each site, whether or not remediation studies have commenced, is
reviewed on a quarterly basis and the aggregate environmental contingent
liability accrual is adjusted accordingly. Because the sites are
reviewed and the accrual adjusted quarterly, the company is confident
the accrual accurately reflects the company's liability based upon the
information available at the time.
4. STOCKHOLDER RIGHTS PLAN
- ---------------------------
On April 24, 1996, the company adopted a stockholder rights plan to replace
-8-
<PAGE> 9
the one which will expire on June 23, 1996. The rights associated with the
new plan will expire on June 23, 2006. All shareholders of record today
continue to have one right per share of the company's common stock held.
The new plan, like the existing plan, is intended to promote continuity and
stability, deter coercive or partial offers which will not provide fair
value to all shareholders and enhance the board of director's ability to
represent all shareholders and thereby maximize shareholder value.
Each right will entitle its holder to buy 1/1,000 of a newly-issued share
of the company's preferred stock at an exercise price of $115. The rights
will be exercisable only if a person or group acquires beneficial ownership
of 15% or more of the company's common stock, commences a tender or
exchange offer that would, if successful, result in such person or group
owning beneficially 15% or more of the company's common stock, or the board
of directors determines that any person owning beneficially 10% or more of
the company's common-stock is an adverse person.
If a 15%-or-more shareholder or adverse person (an "Acquiring Person")
engages in certain transactions in which the company survives, each right
not owned by the Acquiring Person or related parties will entitle its
holder to purchase, at the right's then current exercise price, shares of
the company's common stock having a value of twice the right's then current
exercise price. In addition, if after any person has become an Acquiring
Person, the company is involved in certain transactions with another
person, after which the company ceases to exist, each right will entitle
its holder to purchase, at the right's then current exercise price, shares
of common stock of such other person having a value of twice the right's
then current exercise price.
The company will generally be entitled to redeem the rights at $.01 per
right at any time until 10 days (subject to extension) following a public
announcement that a 15% position has been acquired or that an adverse
person has acquired 10%.
Under the new stockholder rights plan, there have been reserved for
issuance 90,000 shares of the company's preferred stock.
-9-
<PAGE> 10
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 2
FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 1996
RESULTS OF OPERATIONS
- ---------------------
The second quarter of fiscal 1996 was one in which the company's
performance fell below expectations. The company achieved net earnings of
$1.1 million, or five cents per share (primary and fully diluted), on sales
of $285.5 million for the quarter, compared with net earnings of $18
million, or 90 cents per share (81 cents, fully diluted), on sales of
$318.8 million for last year's second quarter. U.S. sales declined 14.4
percent, while sales outside the U.S. increased 1.3 percent.
U.S. sales declined in the second quarter because of a drop in market
demand for marine products, exacerbated by higher dealer field inventories
of outboards. Additionally, the year-to-year sales comparison was made
more difficult by the fact that last year's second quarter benefitted from
as much as $15 million in sales from engine backorders carried into the
period.
Sales in all of the company's U.S. product lines were down, with the
exception of the Recreational Boat Group, which achieved a small sales
gain. This reduced sales performance was similar to the overall U.S.
marine industry's performance in the quarter. Unusually cold weather early
this spring may have negatively impacted industry sales. Some short-term
softness in employment and consumer confidence in the quarter also may have
played a role.
Second quarter earnings this year were depressed by lower sales and
also by lower manufacturing efficiencies which resulted from reduced
production schedules in engine plants. The company reduced manufacturing
schedules because of reduced market demand and a commitment to better
manage factory inventories. By comparison, last year's second quarter
benefitted from higher manufacturing efficiencies due to increased
production levels which resulted from the engine order backlog carried into
the quarter. The lower manufacturing efficiencies in this year's second
quarter accounted for the reduction in our gross margin to 21.5 percent
from 26.9 percent in the second quarter last year.
Although the company reduced operating expense by 10.5 percent, or $6.4
million, in the past quarter, operating earnings still declined to $6.8
million from $24.9 million, and pre-tax earnings fell to $2.9 million from
$20.3 million in the second quarter of 1995.
For the first six months of fiscal 1996, the company incurred a net
loss of $11.3 million, or 56 cents per share (primary and fully-diluted),
on sales of $517.6 million compared with net earnings of $14.9 million, or
74 cents per share (71 cents, fully diluted), on sales of $561.4 million
for the first half of 1995.
The company also limited production in the first quarter to control
factory inventories. That further contributed to the reduction in gross
margin to 19.5 percent in the first half of 1996, down from 24.4 percent in
the first half of last year. Operating expense was reduced by almost 11
percent in the first half, as well; however, operating earnings fell to $.5
million from $26 million in the first half of 1995. On a pre-tax basis,
-10-
<PAGE> 11
the company incurred a loss of $8.5 million for this year's first half
compared with pre-tax earnings of $18 million for the first half last year.
The provision for income taxes for the three and six months ended March
31, 1996 and 1995, resulted from expected taxes payable relating to certain
international subsidiaries.
It is not appropriate to compare the results of operations for the
current quarter with those of the preceding quarter because of the seasonal
nature of the company's business.
FINANCIAL CONDITION
- -------------------
Due to the seasonal nature of the company's business, it is more
appropriate to compare the March 31, 1996 Condensed Statement of Financial
Position with March 31, 1995. The company's ratio of current assets to
current liabilities was 2.0 at March 31, 1996 compared to 1.6 at March 31,
1995. Current assets of $470.4 million at March 31, 1996 decreased $49.3
million as compared to current assets of $519.7 million at March 31, 1995.
Receivables were $42.9 million lower at March 31, 1996 after deducting
$51.0 million sold in the current fiscal year through a receivables sales
agreement (see Note 2 of Notes to Consolidated Financial Statements).
Without this receivables sale, receivables would have been $8.1 million
higher due primarily to extended credit terms offered as part of specific
marketing programs. Inventories decreased $16.8 million to $217.6 million
at March 31, 1996 as compared to $234.4 million at March 31, 1995 due
primarily to reduced production in engine plants to bring inventories more
in line with sales. Other current assets increased $12.4 million due
primarily to deferred income tax benefits.
Other assets decreased $4.7 million due primarily to redemption of the
company's investment in I.J. Holdings, Inc. offset by increases in
deferred income tax benefits and increased pension assets.
Current liabilities decreased by $93.3 million to $230.7 million as of
March 31, 1996 compared to $324.0 million at March 31, 1995. Notes payable
decreased $90.0 million at March 31, 1996. The $15.0 million decrease in
accounts payable resulted primarily from decreased manufacturing activity.
Accrued liabilities increased $11.7 million due primarily to increased
participation levels in dealer programs and increased warranty accruals
partially offset by lower restructuring accrual balances. Other
non-current liabilities increased $30.5 million due primarily to an
increase in tax liabilities.
The company's total debt to total capitalization at March 31, 1996 was
42 percent compared to 56 percent at March 31, 1995.
Based on the company's performance since the 1993 restructuring,
improved operating results, an improved balance sheet, a $200 million
revolving credit agreement and other available sources of capital, the
company believes it has available sufficient internal and external
financial resources to invest in low emission engines and to continue
making long term investments for future growth through the next few years.
TRENDS AND FORWARD-LOOKING DATA
- -------------------------------
The company's current level of performance is not acceptable, and it is
taking action to improve that performance. Immediate cost-cutting measures
have been implemented to improve earnings for the balance of fiscal 1996.
Additionally, the company is taking steps to improve earnings and returns
-11-
<PAGE> 12
in future years.
Last fall the company combined its U.S. Marine Power Products Group
and its former International Group and began a study of how to achieve
efficiencies and improve service to its customers through a strategic
consolidation of the two units. That work is nearly complete, and the
company is beginning to implement its plans. The first step is the
re-engineering of the U.S. and Canadian sales and marketing operations
into one streamlined, North American unit. The company will gain the
benefits of superior coordination and consistent brand positioning by
unifying its marketing efforts for both countries. It will also gain
efficiencies by consolidating back-room operations: functions such as
warehousing, order processing and warranty administration. This North
American and European re-engineering effort should result in costs of $8
million to $12 million and annualized savings, beginning in fiscal 1997, of
a like amount. The company is studying similar initiatives in its markets
around the globe.
The company also has begun a study of its boat operations to determine
whether it can increase efficiencies by consolidating its boat groups in
order to streamline both manufacturing and support functions. The plan
which grows out of that effort will be implemented in fiscal 1997.
Additionally, the company is conducting a study of its corporate staff
organization to determine the most effective structure for the staff group
and to reduce its corporate overhead cost. And, it is evaluating critical
issues in the areas of sales, manufacturing and information systems with
the aim of improving sales margins, reducing product costs and increasing
competitiveness. The company intends to establish its base operational
costs at levels which will support the achievement of consistently higher
returns on the assets invested in the business.
In addition to those activities which are focused on consolidation and
cost cutting, the company is also introducing new products. In the third
quarter, it will begin to ship the first models of a new generation of
outboards -- the FICHT Fuel Injection engines. The first model it will
introduce will be a 150-horsepower engine designed primarily for the
high-volume bass boat market. These engines incorporate a revolutionary
computerized fuel injection technology which will be unique to its
outboards. Supported by high quality manufacturing and effective
marketing, the company believes FICHT Fuel Injection can establish
important product differentiation for its engines and boat packages.
The company is also making progress on its visioning effort, which it
will be reviewing with its employees and fine-tuning in the third quarter.
This effort is helping the company clarify its direction and its areas of
opportunity.
Some of the information contained herein may be forward looking in
nature. You are encouraged to review the risk factors associated therewith
contained in Exhibit 99 to this 10-Q.
-12-
<PAGE> 13
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART II - OTHER INFORMATION
Item 5. Other information.
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the company is hereby
filing, as Exhibit 99, cautionary statements identifying important
factors which could cause the company's actual results to differ
materially from those projected in forward looking statements.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits reference is made to the Exhibit Index on Page 14.
(b) Reports on Form 8-K. The Registrant did not file any reports on
Form 8-K for the fiscal quarter ended March 31, 1996.
S I G N A T U R E
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.
OUTBOARD MARINE CORPORATION
Signature Title Date
_________________________ ___________________________ ________________
By: /s/: JAMES R. MAURICE Vice President & Controller May 15, 1996
_________________________ ___________________________ ________________
James R. Maurice
-13-
<PAGE> 14
OUTBOARD MARINE CORPORATION
EXHIBIT INDEX
Exhibit 3: Articles of Incorporation and By-Laws:
(A) With respect to the Registrant's Certificate of Incorporation,
reference is made to Exhibit 4 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1984; to
Exhibit 4 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended December 31, 1987 and to Exhibit 4 to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1988, all of which are incorporated herein by
reference.
(B) With respect to the Registrant's By-Laws as amended September
20, 1995, reference is made to Exhibit 3(B) to the Registrant's
Annual Report on Form 10-K for the fiscal year ended September
30, 1995, which is incorporated herein by reference.
Exhibit 4: Instruments defining the rights of security holders including
indentures:
(A) With respect to the Agreement of Outboard Marine Corporation,
reference is made to Exhibit 4(A) to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September 30,
1995, which is incorporated herein by reference.
(B) With respect to rights of Series A Junior Participating
Preferred Stock, reference is made to the Registrant's report
on Form 8-K filed on October 17, 1990, which is incorporated
herein by reference.
(C) With respect to rights of holders of the Registrant's 9-1/8%
Sinking Fund Debentures due 2017, reference is made to Exhibit
4(A) in the Registrant's Registration Statement Number 33-12759
filed on March 20, 1987, which is incorporated herein by
reference.
(D) With respect to rights of holders of Registrant's 7%
Convertible Subordinated Debentures due 2002, reference is made
to Registrant's Registration Statement Number 33-47354 filed on
April 28, 1992, which is incorporated herein by reference.
(E) With respect to Rights Agreement dated April 24, 1996, to be
effective June 23, 1996, a copy is attached hereto as Exhibit 4
(E).
Exhibit 10: Material contracts:
(A) With respect to the Registrant's 1987 Stock Option and
Performance Unit Plan, reference is made to Exhibit 10(D) to
the Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1987, which is incorporated herein by
reference.
(B) With respect to the OMC Executive Bonus Plan, reference is made
to Exhibit 10(C) to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1990, which is
incorporated herein by reference.
-14-
<PAGE> 15
(C) With respect to the OMC Executive Equity Incentive Plan,
reference is made to Exhibit 10(D) to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September 30,
1990, which is incorporated herein by reference.
(D) With respect to the OMC 1994 Long-Term Incentive Plan,
reference is made to Exhibit C, to Outboard Marine
Corporation's Notice of Annual Meeting and Proxy Statement
prepared in connection with the January 20, 1994 Annual Meeting
of Shareholders, which is incorporated herein by reference.
(E) With respect to Severance Agreements for all elected officers
of the Registrant (except Mr. Bowman), reference is made to
Exhibit 10(E) of the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1988, which is
incorporated herein by reference.
(F) With respect to the Employment Agreement for Mr. Bowman,
reference is made to Exhibit 10(F) of the Registrant's Annual
Report on Form 10-K for the fiscal year ended September 30,
1995, which is incorporated herein by reference.
(G) With respect to the Severance Agreement for Mr. Bowman,
reference is made to Exhibit 10(G) of the Registrant's Annual
Report on Form 10-K for the fiscal year ended September 30,
1995, which is incorporated herein by reference.
(H) With respect to the Second Amended and Restated Revolving
Credit Agreement dated as of March 29, 1996, a copy is attached
hereto as Exhibit 10(H).
(I) With respect to the Registrant's Receivables Purchase Agreement
dated as of December 22, 1995, reference is made to Exhibit
10(I) of the Registrant's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1995, which is incorporated herein
by reference.
Exhibit 11: Statements regarding computation of per share earnings:
A statement regarding the computation of per share earnings is
attached hereto as Exhibit 11.
Exhibit 19: Report furnished to security holders:
A copy of the Registrant's Shareholders Report for the fiscal
quarter ended March 31, 1996, is attached hereto as
Exhibit 19.
Exhibit 27: Financial data schedules:
This information is filed only in the electronic filing.
Exhibit 99: Additional Exhibits:
"Safe Harbor" Statement under Private Securities Litigation
Reform Act of 1995.
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<PAGE> 16
EXHIBIT 4 (E)
OUTBOARD MARINE CORPORATION
and
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
Rights Agent
Rights Agreement
Dated as of April 24, 1996
Table of Contents
-----------------
Section
-------
1. Certain Definitions. . . . . . . . . . . . . . .
2. Appointment of Rights Agent. . . . . . . . . . .
3. Issue of Rights Certificates . . . . . . . . . .
4. Form of Rights Certificates. . . . . . . . . . .
5. Countersignature and Registration. . . . . . . .
6. Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates . . . . . . .
7. Exercise of Rights; Purchase Price; Expiration
Date of Rights. . . . . . . . . . . . . . . . . .
8. Cancellation and Destruction of Rights
Certificates . . . . . . . . . . . . . . . . . .
9. Reservation and Availability of Capital Stock . .
10. Preferred Stock Record Date. . . . . . . . . . .
11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights . . . . . . . . . . .
12. Certificate of Adjusted Purchase Price or Number
of Shares. . . . . . . . . . . . . . . . . . . .
13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power . . . . . . . . . . .
14. Fractional Rights and Fractional Shares. . . . .
15. Rights of Action . . . . . . . . . . . . . . . .
16. Agreement of Rights Holders. . . . . . . . . . .
17. Rights Certificate Holder Not Deemed a
Stockholder. . . . . . . . . . . . . . . . . . .
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<PAGE> 17
18. Concerning the Rights Agent. . . . . . . . . . .
19. Merger or Consolidation or Change of Name of
Rights Agent . . . . . . . . . . . . . . . . . .
20. Duties of Rights Agent . . . . . . . . . . . . .
21. Change of Rights Agent . . . . . . . . . . . . .
22. Issuance of New Rights Certificates. . . . . . .
23. Redemption and Termination . . . . . . . . . . .
24. Exchange . . . . . . . . . . . . . . . . . . . .
25. Notice of Certain Events . . . . . . . . . . . .
26. Notices. . . . . . . . . . . . . . . . . . . . .
27. Supplements and Amendments . . . . . . . . . . .
28. Successors . . . . . . . . . . . . . . . . . . .
29. Determinations and Actions by the Board of
Directors, etc.. . . . . . . . . . . . . . . . .
30. Benefits of This Agreement . . . . . . . . . . .
31. Severability . . . . . . . . . . . . . . . . . .
32. Governing Law. . . . . . . . . . . . . . . . . .
33. Counterparts . . . . . . . . . . . . . . . . . .
34. Descriptive Headings . . . . . . . . . . . . . .
Exhibit A -- Certificate of Designation,
Preferences and Rights
Exhibit B -- Form of Rights Certificate
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<PAGE> 18
RIGHTS AGREEMENT
----------------
RIGHTS AGREEMENT, dated as of April 24, 1996 (the "Agreement"), between
Outboard Marine Corporation, a Delaware corporation (the "Company"), and
First Chicago Trust Company of New York, a New York corporation (the
"Rights Agent").
W I T N E S S E T H
WHEREAS, on April 24, 1996 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of common stock, par value $0.15
per share, of the Company (the "Common Stock") outstanding at the close
of business on June 23, 1996 (the "Record Date"), and has authorized the
issuance of one Right (as such number may hereinafter be adjusted pursu-
ant to the provisions of Section 11(p) hereof) for each share of Common
Stock of the Company issued between the Record Date (whether originally
issued or delivered from the Company's treasury) and the Distribution Date,
each Right initially representing the right to purchase one one-thousandth
(1/1000th) of a share of Series A Junior Participating Preferred Stock (the
"Preferred Stock") of the Company having the rights, powers and preferences
set forth in the form of Certificate of Designation, Preferences and Rights
attached hereto as Exhibit A, upon the terms and subject to the conditions
hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, but shall not include (i) the Company, (ii) any Subsidiary
of the Company, (iii) any employee benefit plan of the Company or of
any Subsidiary of the Company, (iv) any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of
any such plan or (v) any such Person who has reported or is required to
report such ownership (but less than 25%) on Schedule 13G under the
Exchange Act (or any comparable or successor report) or on Schedule 13D
under the Exchange Act (or any comparable or successor report) which
Schedule 13D does not state any intention to or reserve the right to
control or influence the management or policies of the Company or
engage in any of the actions specified in Item 4 of such Schedule
(other than the disposition of the Common Stock) and, within 10
Business Days of being requested by the Company to advise it regarding
the same, certifies to the Company that such Person acquired shares of
Common Stock representing in excess of 14.9% of the outstanding Common
Stock inadvertently or without knowledge of the terms of the Rights and
who, together with all Affiliates and Associates, thereafter does not
acquire additional shares of Common Stock while the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding; provided,
however, that if the Person requested to so certify fails to do so
within 10 Business Days, then such Person shall become an Acquiring
Person immediately after such 10 Business Day Period. Notwithstanding
the foregoing, no Person shall become an "Acquiring Person" solely as
the result of an acquisition of Common Stock by the Company which, by
reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by a Person to 15% or more of the
Common Stock of the Company then outstanding as determined above;
provided, however, that if a Person becomes the Beneficial Owner of 15%
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<PAGE> 19
or more of the Common Stock of the Company then outstanding (as
determined above) solely by reason of purchases of Common Stock by the
Company and shall, after such purchases by the Company, become the
Beneficial Owner of any additional shares of Common Stock by any means
whatsoever, then such Person shall be deemed to be an "Acquiring
Person."
(b) "Adverse Person" shall mean any Person declared to be an Adverse
Person by the Board of Directors upon determination that the criteria
set forth in Section 11(a)(ii)(B) apply to such Person; provided,
however, that the Board of Directors shall not declare any Person who
is the Beneficial Owner of 10% or more of the outstanding Common Stock
of the Company to be an Adverse Person if such Person has reported or
is required to report such ownership on Schedule 13G under the Exchange
Act (or any comparable or successor report) or on Schedule 13D under
the Exchange Act (or any comparable or successor report) which Schedule
13D does not state any intention to or reserve the right to control or
influence the management or policies of the Company or engage in any of
the actions specified in Item 4 of such Schedule (other than the
disposition of the Common Stock) so long as such Person neither reports
nor is required to report such ownership other than as described in
this paragraph (b).
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended and
in effect on the date of this Agreement (the "Exchange Act").
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person
or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, or (B)
securities issuable upon exercise of Rights at any time prior to
the occurrence of a Triggering Event, or (C) securities issuable
upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any
of such Person's Affiliates or Associates prior to the Distribution
Date or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof in
connection with an adjustment made with respect to any Original
Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as
a result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding: (A)
-19-
<PAGE> 20
arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not also then
reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (c)) or disposing of any voting
securities of the Company;
provided, however, that nothing in this paragraph (c) shall cause a
person engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any securities acquired
through such person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
(e) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(f) "Close of business" on any given date shall mean 5:00 P.M., New
York City time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., New York City time, on the
next succeeding Business Day.
(g) "Common Stock" shall mean the common stock, par value $0.15 per
share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital
stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct
the management, of such Person.
(h) "Person" shall mean any individual, firm, corporation, partnership
or other entity.
(i) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, par value $10.00 per share, of the
Company, and, to the extent that there are not a sufficient number of
shares of Series A Junior Participating Preferred Stock authorized to
permit the full exercise of the Rights, any other series of Preferred
Stock of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior Participating
Preferred Stock.
(j) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii) hereof.
(k) "Section 13 Event" shall mean any event described in clauses (x),
(y) or (z) of Section 13(a) hereof.
(l) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such.
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<PAGE> 21
(m) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect
at least a majority of the directors of such corporation is
beneficially owned, directly or indirectly, by such Person, or
otherwise controlled by such Person.
(n) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution
Date also be the holders of the Common Stock) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights
Agents as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earliest of (i) the close of business on the tenth day
after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the close of business
on the Record Date), (ii) the close of business on the tenth business
day (or such later date as the Board shall determine) after the date
that a tender or exchange offer by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of
any such plan) is first published or sent or given within the meaning
of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, if upon consummation thereof, such Person would be the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding or (iii) the close of business on the tenth Business Day
after the Board of Directors determines, pursuant to the criteria set
forth in Section 11(a)(ii)(B) hereof, that a Person is an Adverse
Person (the earliest of (i), (ii) and (iii) being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced (subject to
the provisions of paragraph (b) of this Section 3) by the certificates
for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates, and
(y) the Rights will be transferable only in connection with the
transfer of the underlying shares of Common Stock (including a transfer
to the Company). As soon as practicable after the Distribution Date,
the Rights Agent will send by first-class, insured, postage prepaid
mail, to each record holder of the Common Stock as of the close of
business on the Distribution Date, at the address of such holder shown
on the records of the Company, one or more right certificates, in
substantially the form of Exhibit B hereto (the "Rights Certificates"),
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to
Section 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of
and after the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates.
(b) With respect to certificates for the Common Stock outstanding as of
the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates for the Common Stock and the registered
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<PAGE> 22
holders of the Common Stock shall also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date or the
Expiration Date (as such term is defined in Section 7 hereof), the
transfer of any certificates representing shares of Common Stock in
respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock
which are issued (whether originally issued or from the Company's
treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date or in certain circumstances
provided in Section 22 hereof, after the Distribution Date.
Certificates representing such shares of Common Stock shall also be
deemed to be certificates for Rights, and shall bear the following
legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Outboard
Marine Corporation (the "Company") and First Chicago Trust Company of
New York (the "Rights Agent") dated as of April 24, 1996, as amended
from time to time (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal offices of the Company. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate a
copy of the Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an Acquiring
Person or an Adverse Person or any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), whether currently held
by or on behalf of such Person or by any subsequent holder, may
become null and void.
With respect to such certificates containing the foregoing legend,
until the earlier of (i) the Distribution Date or (ii) the Expiration Date,
the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone and registered
holders of Common Stock shall also be the registered holders of the
associated Rights, and the transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this Agreement, or as
may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever distributed, shall
be dated as of the Record Date and on their face shall entitle the
holders thereof to purchase such number of one one-thousandths
(1/1000ths) of a share of Preferred Stock as shall be set forth therein
at the price set forth therein (such exercise price per one
one-thousandth (1/1000th) of a share, the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of each
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<PAGE> 23
Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or Adverse Person or any Associate or Affiliate of an
Acquiring Person or Adverse Person, (ii) a transferee of an Acquiring
Person or Adverse Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person or Adverse Person
becomes such, or (iii) a transferee of an Acquiring Person or Adverse
Person (or of any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person or Adverse Person
becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person
or Adverse Person to holders of equity interests in such Acquiring
Person or Adverse Person or to any Person with whom such Acquiring
Person or Adverse Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which
the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect
avoidance of Section 7(e) hereof, and any Rights Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible) the following
legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
Adverse Person or an Affiliate or Associate of an Acquiring Person or
Adverse Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented hereby
may become null and void in the circumstances specified in Section 7(e)
of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates
shall be countersigned by the Rights Agent, either manually or by
facsimile signature, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance
and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by
the Company with the same force and effect as though the person who
signed such Rights Certificates had not ceased to be such officer of
the Company; and any Rights Certificates may be signed on behalf of the
Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign
such Rights Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the
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<PAGE> 24
number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14 hereof, at any time after the close of business on the Distribution
Date, and at or prior to the close of business on the Expiration Date,
any Rights Certificate or Certificates (other than Rights Certificates
representing Rights that have been exchanged pursuant to Section 24
hereof) may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to
purchase a like number of one one-thousandths (1/1000ths) of a share of
Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such Rights
Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably
request. Thereupon the Rights Agent shall, subject to Section 4(b),
Section 7(e), Section 14 and Section 24 hereof, countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them,
and reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the
Rights Agent for countersignature and delivery to the registered owner
in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a) hereof) in whole or in part at any time
after the Distribution Date upon surrender of the Rights Certificate,
with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with
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<PAGE> 25
respect to the total number of one one-thousandths (1/1000ths) of a
share (or other securities, cash or other assets, as the case may be)
as to which such surrendered Rights are then exercisable, at or prior
to the earliest of (i) the close of business on June 23, 2006 (the
"Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof or (iii) the time at which
such Rights are exchanged pursuant to Section 24 hereof (the earliest
of (i), (ii) and (iii) being herein referred to as the "Expiration
Date").
(b) The Purchase Price for each one one-thousandth (1/1000th) of a
share of Preferred Stock pursuant to the exercise of a Right shall
initially be $115, and shall be subject to adjustment from time to time
as provided in Sections 11 and 13(a) hereof and shall be payable in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment, with respect to each Right so
exercised, of the Purchase Price per one one-thousandth (1/1000th) of a
share of Preferred Stock (or other shares, securities, cash or other
assets, as the case may be) to be purchased as set forth below and an
amount equal to any applicable transfer tax, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the shares of Preferred Stock (or make
available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of one one-thousandths (1/1000ths) of
a share of Preferred Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total
number of shares of Preferred Stock issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one
one-thousandths (1/1000ths) of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company will direct the depositary
agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder,
and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate. The
payment of the Purchase Price (as such amount may be reduced pursuant
to Section 11(a)(iii) hereof) shall be made in cash or by certified
bank check or bank draft payable to the order of the Company. In the
event that the Company is obligated to issue other securities
(including Common Stock) of the Company, pay cash and/or distribute
other property pursuant to Section 11(a) hereof, the Company will make
all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if
and when appropriate. The Company reserves the right to require prior
to the occurrence of a Triggering Event that, upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of
Preferred Stock would be issued.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or
upon the order of, the registered holder of such Rights Certificate,
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<PAGE> 26
registered in such name or names as may be designated by such holder,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or Adverse Person or an
Associate or Affiliate of an Acquiring Person or Adverse Person, (ii) a
transferee of an Acquiring Person or Adverse Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring
Person or Adverse Person becomes such, or (iii) a transferee of an
Acquiring Person or Adverse Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person or Adverse Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person to holders
of equity interests in such Acquiring Person or Adverse Person or to
any Person with whom the Acquiring Person or Adverse Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of
the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of
this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts
to insure that the provisions of this Section 7(e) and Section 4(b)
hereof are complied with, but shall have no liability to any holder of
Rights Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or Adverse
Person or any of their respective Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate
contained in the form of election to purchase set forth on the reverse
side of the Rights Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof
as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or
any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled
by it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company, or shall, at the written request of the
Company, destroy such cancelled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
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Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event,
out of its authorized and unissued shares of Common Stock and/or other
securities or out of its authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
that, as provided in this Agreement including Section 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of the Rights may be listed
on any national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by
the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) hereof, a registration statement
under the Securities Act of 1933 (the "Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the earlier of (A)
the date as of which the Rights are no longer exercisable for such
securities, and (B) the date of the expiration of the Rights. The
Company will also take such action as may be appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed
ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. In addition, if the
Company shall determine that a registration statement is required
following the Distribution Date, the Company may temporarily suspend
the exercisability of the Rights until such time as a registration
statement has been declared effective. Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction
shall not have been obtained, the exercise thereof shall not be
permitted under applicable law or a registration statement shall not
have been declared effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all one one-thousandths (1/1000ths)
of a share of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable.
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<PAGE> 28
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the
Rights Certificates and of any certificates for a number of one
one-thousandths (1/1000ths) of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than, or the issuance
or delivery of a number of one one-thousandths (1/1000ths) of a share
of Preferred Stock (or Common Stock and/or other securities, as the
case may be) in respect of a name other than that of, the registered
holder of the Rights Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of one
one-thousandths (1/1000ths) of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in a name other than
that of the registered holder upon the exercise of any Rights until
such tax shall have been paid (any such tax being payable by the holder
of such Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for a number of one one-thousandths (1/1000ths) of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of such fractional shares of Preferred
Stock (or Common Stock and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment is
a date upon which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are closed,
such Person shall be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings
of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock
or capital stock, as the case may be, issuable on such date, shall be
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<PAGE> 29
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares
of Preferred Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time
when the Preferred Stock transfer books of the Company were open, he or
she would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification.
If an event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event that:
(A) any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan), alone or together with its Af-
filiates and Associates, shall, at any time after the Rights
Dividend Declaration Date, become an Acquiring Person, unless
the event causing the Person to become an Acquiring Person is
(1) a transaction set forth in Section 13(a) hereof or (2) an
acquisition of shares of Common Stock pursuant to a tender
offer or an exchange offer for all outstanding shares of Common
Stock at a price and on terms determined by at least a majority
of the members of the Board of Directors who are not officers
of the Company and who are not representatives, nominees,
Affiliates or Associates of an Acquiring Person, after
receiving advice from one or more investment banking firms, to
be (a) at a price which is fair to stockholders (taking into
account all factors which such members of the Board deem
relevant including, without limitation, prices which could
reasonably be achieved if the Company or its assets were sold
on an orderly basis designed to realize maximum value) and
(b) otherwise in the best interests of the Company and its
stockholders (a "Qualifying Offer") or
(B) The Board of Directors of the Company shall declare any
Person to be an Adverse Person, upon a determination that
such Person, alone or together with its Affiliates and
Associates, has, at any time after this Agreement has been
filed with the Securities and Exchange Commission as an exhibit
to a filing under the Exchange Act, become the Beneficial
Owner of a number of shares of Common Stock which the Board of
Directors of the Company determines to be substantial (which
number of shares shall in no event represent less than 10% of
the outstanding shares of Common Stock) and a determination by
the Board of Directors of the Company, after reasonable inquiry
and investigation, including consultation with such persons as
such directors shall deem appropriate and consideration of
such factors as are permitted by applicable law, that (a) such
Beneficial Ownership by such Person is intended to cause the
Company to repurchase the shares of Common Stock beneficially
owned by such Person or to cause pressure on the Company to
take action or enter into a transaction or series of
transactions intended to provide such Person with short-term
financial gain under circumstances where the Board of Directors
determines that the best long-term interests of the Company
would not be served by taking such action or entering into such
transaction or series of transactions at the time or (b) such
Beneficial Ownership is causing or reasonably likely to cause a
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<PAGE> 30
material adverse impact (including, but not limited to,
impairment of relationships with customers or impairment of the
Company's ability to maintain its competitive position) on
the business or prospects of the Company;
then, promptly following the occurrence of any event described
in Section 11(a)(ii)(A) or (B) hereof, proper provision shall
be made so that each holder of a Right (except as provided
below and in Section 7(e) hereof) shall thereafter have the
right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement,
in lieu of a number of one one-thousandths (1/1000ths) of a
share of Preferred Stock, such number of shares of Common Stock
of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number
of one one-thousandths (1/1000ths) of a share of Preferred
Stock for which a Right was exercisable immediately prior to
the first occurrence of a Section 11(a)(ii) Event, and (y)
dividing that product (which, following such first occurrence,
shall thereafter be referred to as the "Purchase Price" for
each Right and for all purposes of this Agreement) by 50% of
the current market price (determined pursuant to Section
11(d) hereof) per share of Common Stock on the date of such
first occurrence (such number of shares, the "Adjustment
Shares").
(iii) In the event that the number of shares of Common Stock which
are authorized by the Company's Certificate of Incorporation but
not outstanding or reserved for issuance for purposes other than
upon exercise of the Rights are not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall (A)
determine the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value"), and (B) with respect to
each Right (subject to Section 7(e) hereof), make adequate
provision to substitute for the Adjustment Shares, upon the
exercise of a Right and payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3) Common Stock
or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock, such as
the Preferred Stock, which the Board has deemed to have essentially
the same value or economic rights as shares of Common Stock (such
shares of preferred stock being referred to as "Common Stock
Equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value (less the amount of any
reduction in the Purchase Price), where such aggregate value has
been determined by the Board based upon the advice of a nationally
recognized investment banking firm selected by the Board; provided,
however, that if the Company shall not have made adequate provision
to deliver value pursuant to clause (B) above within thirty (30)
days following the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and
(y) being referred to herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of
the Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or cash
have an aggregate value equal to the Spread. For purposes of the
preceding sentence, the term "Spread" shall mean the excess of (i)
the Current Value over (ii) the Purchase Price. If the Board
determines in good faith that it is likely that sufficient
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<PAGE> 31
additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, the thirty (30) day period set
forth above may be extended to the extent necessary, but not more
than ninety (90) days after the Section 11(a)(ii) Trigger Date, in
order that the Company may seek shareholder approval for the
authorization of such additional shares (such thirty (30) day
period, as it may be extended, is herein called the "Substitution
Period"). To the extent that action is to be taken pursuant to the
first and/or third sentences of this Section 11(a) (iii), the
Company (1) shall provide, subject to Section 7(e) hereof, that
such action shall apply uniformly to all outstanding Rights, and
(2) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek such
shareholder approval for such authorization of additional shares
and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof.
In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of each Adjustment Share
shall be the Current Market Price per share of the Common Stock on
the Section 11(a)(ii) Trigger Date and the per share or per unit
value of any Common Stock Equivalent shall be deemed to equal the
Current Market Price per share of the Common Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of
Preferred Stock entitling them to subscribe for or purchase (for a
period expiring within forty-five (45) calendar days after such record
date) Preferred Stock (or shares having the same rights, privileges and
preferences as the shares of Preferred Stock ("equivalent preferred
stock")) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or per share of
equivalent preferred stock (or having a conversion price per share, if
a security convertible into Preferred Stock or equivalent preferred
stock) less than the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date,
the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be
offered) would purchase at such current market price, and the
denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional shares
of Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so
to be offered are initially convertible). In case such subscription
price may be paid by delivery of consideration part or all of which may
be in a form other than cash, the value of such consideration shall be
as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights
or warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such record date
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<PAGE> 32
had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than
a regular quarterly cash dividend out of the earnings or retained
earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in
effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of the
Rights) of the portion of the cash, assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which
shall be such current market price (as determined pursuant to Section
11(d) hereof) per share of Preferred Stock. Such adjustments shall be
made successively whenever such a record date is fixed, and in the
event that such distribution is not so made, the Purchase Price shall
be adjusted to be the Purchase Price which would have been in effect if
such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the Current
Market Price per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common
Stock for the thirty (30) consecutive Trading Days immediately prior to
such date, and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the Current Market Price per share of Common Stock
on any date shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the ten (10) consecutive
Trading Days immediately following such date; provided, however, that
in the event that the Current Market Price per share of the Common
Stock is determined during a period following the announcement by the
issuer of such Common Stock of (A) a dividend or distribution on such
Common Stock payable in shares of such Common Stock or securities
convertible into shares of such Common Stock (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common
Stock, and the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification
shall not have occurred prior to the commencement of the requisite
thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, then, and in each such case, the Current Market Price shall be
properly adjusted to take into account ex-dividend trading. The
closing price for each day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted
to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so
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<PAGE> 33
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such
other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market
maker making a market in the Common Stock selected by the Board. If on
any such date no market maker is making a market in the Common Stock,
the fair value of such shares on such date as determined in good faith
by the Board shall be used. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so
listed or traded, Current Market Price per share shall mean the fair
value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the Current
Market Price per share of Preferred Stock shall be determined in
the same manner as set forth above for the Common Stock in clause
(i) of this Section 11(d) (other than the last sentence thereof).
If the Current Market Price per share of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock
is not publicly held or listed or traded in a manner described in
clause (i) of this Section 11(d), the Current Market Price per
share of Preferred Stock shall be conclusively deemed to be an
amount equal to 1,000 (as such number may be appropriately adjusted
for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the Current Market Price
per share of the Common Stock. If neither the Common Stock nor the
Preferred Stock is publicly held or so listed or traded, Current
Market Price per share of the Preferred Stock shall mean the fair
value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the Current Market Price of a Unit
shall be equal to the Current Market Price of one share of
Preferred Stock divided by 1,000.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the
Purchase Price; provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or
to the nearest ten-thousandth of a share of Common Stock or other share
or one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof
shall be subject to adjustment from time to time in a manner and on
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terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Sections 11(a), (b), (c),
(e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7,
9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply
on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-thousandths (1/1000ths) of a share of Preferred Stock purchasable
from time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase
Price, that number of one one-thousandths (1/1000ths) of a share of
Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-thousandths (1/1000ths) of a
share covered by a Right immediately prior to this adjustment, by (y)
the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of one one-thousandths (1/1000ths) of a share
of Preferred Stock purchasable upon the exercise of a Right. Each of
the Rights outstanding after the adjustment in the number of Rights
shall be exercisable for the number of one one-thousandths (1/1000ths)
of a share of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior
to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one-ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment
of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least ten
(10) days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly
as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates held
by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Rights Certificates evidencing
all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
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<PAGE> 35
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths (1/1000ths) of a share of Preferred
Stock issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per one one-thousandths (1/1000ths) of a share and the number of
one one-thousandths (1/1000ths) of a share which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then stated value, if any, of the number
of one one-thousandths (1/1000ths) of a share of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable such number of one one-thousandths (1/1000ths) of a share
of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of one one-thousandths
(1/1000ths) of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and
above the number of one one-thousandths (1/1000ths) of a share of
Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the
Board of Directors of the Company shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Stock,
(ii) issuance wholly for cash of any shares of Preferred Stock at less
than the current market price, (iii) issuance wholly for cash of shares
of Preferred Stock or securities which by their terms are convertible
into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders of its
Preferred Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
related transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each
of which complies with Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y)
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prior to, simultaneously with or immediately after such consolidation,
merger or sale, the shareholders of the Person who constitutes, or
would constitute, the "Principal Party" for purposes of Section 13(a)
hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23 or Section 27 hereof,
take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to
be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a
dividend on the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding shares of Common
Stock, or (iii combine the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights associated with each
share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately
adjusted so that the number of Rights thereafter associated with each
share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share
of Common Stock immediately prior to such event by a fraction the
numerator which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common
Stock outstanding immediately following the occurrence of such event.
(q) The failure of the Board of Directors to declare a Person to be an
Adverse Person following such Person becoming the Beneficial Owner of
shares of Common Stock representing 10% or more of the outstanding
shares of Common Stock shall not imply that such Person is not an
Adverse Person or limit the Board of Directors' right at any time in
the future to declare such Person to be an Adverse Person.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred Stock and the Common Stock, a copy of such
certificate, and (c) mail a brief summary thereof to each holder of a
Rights Certificate (or, if prior to the Distribution Date, to each holder
of a certificate representing shares of Common Stock) in accordance with
Section 26 hereof. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof)
shall consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or
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<PAGE> 37
merger, all or part of the outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case
(except as may be contemplated by Section 13(d) hereof), proper
provision shall be made so that: (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid, non-assessable and freely
tradeable shares of Common Stock of the Principal Party (as such term
is hereinafter defined), not subject to any liens, encumbrances, rights
of first refusal or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by
the number of one one-thousandths (1/1000ths) of a share of Preferred
Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-thousandths (1/1000ths) of a
share for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that
product (which, following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by (2) 50% of the current market price
(determined pursuant to Section 11(d)(i) hereof) per share of the
Common Stock of such Principal Party on the date of consummation of
such Section 13 Event; (ii) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such Section 13 Event, all
the obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following
the first occurrence of a Section 13 Event; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation
of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect following
the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to
such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
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<PAGE> 38
provided, however, that in any such case, (1) if the Common Stock
of such Person is not at such time and has not been continuously
over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such
other Person; and (2) in case such Person is a Subsidiary, directly
or indirectly, of more than one Person, the Common Stocks of two or
more of which are and have been so registered, "Principal Party"
shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior thereto the
Company and such Principal Party shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set
forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of
this Section 13, the Principal Party will
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its
best efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the re-
quirements of the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on
Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of
a Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described
in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired shares of Common
Stock pursuant to a Qualifying Offer (or a wholly owned subsidiary of
any such Person or Persons), (ii) the price per share of Common Stock
offered in such transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common Stock whose shares
were purchased pursuant to such tender offer or exchange offer and
(iii) the form of consideration being offered to the remaining
holders of shares of Common Stock pursuant to such transaction is the
same as the form of consideration paid pursuant to such tender offer or
exchange offer. Upon consummation of any such transaction contemplated
by this Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p)
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<PAGE> 39
hereof, or to distribute Rights Certificates which evidence frac-
tional Rights. In lieu of such fractional Rights, there shall be paid
to the registered holders of the Rights Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole
Right. For purposes of this Section 14(a), the current market value of
a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any
day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted
to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights the fair value of
the Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of
one one-thousandth (1/1000th) of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth (1/1000th) of a share of
Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth (1/1000th) of a share
of Preferred Stock, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current
market value of one one-thousandth (1/1000th) of a share of Preferred
Stock. For purposes of this Section 14(b), the current market value of
one one-thousandth (1/1000th) of a share of Preferred Stock shall be
one one-thousandth (1/1000th) of the closing price of a share of
Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof)
for the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market
value of one (1) share of Common Stock. For purposes of this Section
14(c), the current market value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined pursuant
to Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his or her right to receive any fractional Rights or any
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<PAGE> 40
fractional shares upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders
of the Common Stock); and any registered holder of any Rights Certificate
(or, prior to the Distribution Date, of the Common Stock), without the
consent of the Rights Agent or of the holder of any other Rights Cer-
tificate (or, prior to the Distribution Date, of the Common Stock), may, in
his or her own behalf and for his or her own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
to enforce, or otherwise act in respect of, his or her right to exercise
the Rights evidenced by such Rights Certificate in the manner provided in
such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance of the obligations hereunder and injunc-
tive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates
fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated
Common Stock certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent, subject to the last sentence of Section 7(e) hereof,
shall be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any
of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court
of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation
or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to
have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of
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<PAGE> 41
one one-thousandths (1/1000ths) of a share of Preferred Stock or any other
securities of the Company which may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained herein or
in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in Section 25
hereof), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate shall have
been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon
any Rights Certificate or certificate for Common Stock or for other
securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by
it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust or shareholder services
business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any
of the parties hereto; provided, however, that such corporation would
be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any
of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, any succes-
sor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent;
and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
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<PAGE> 42
and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Cer-
tificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have
the full force provided in the Rights Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring
Person or Adverse Person and the determination of "current market
price") be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the Chief Executive Officer, the
President, the Treasurer, the Secretary or any Assistant Secretary of
the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements
and recitals are and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach
by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any
adjustment required under the provisions of Section 11, Section 13 or
Section 24 hereof or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise
of Rights evidenced by Rights Certificates after actual notice of any
such adjustment); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation
of any shares of Common Stock or Preferred Stock to be issued pursuant
to this Agreement or any Rights Certificate or as to whether any shares
of Common Stock or Preferred Stock will, when so issued, be validly
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<PAGE> 43
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, the Chief Executive Officer, the
President, the Secretary, any Assistant Secretary or the Treasurer of
the Company, and to apply to such officers for advice or instructions
in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall
not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the
Company resulting from any such act, default, neglect or misconduct;
provided, however, reasonable care was exercised in the selection and
continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk
or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may
be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take
any further action with respect to such requested exercise of transfer
without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company,
and to each transfer agent of the Common Stock and Preferred Stock, by
registered or certified mail, and to the holders of the Rights Certificates
by first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor
to the Rights Agent. If the Company shall fail to make such appointment
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<PAGE> 44
within a period of thirty (30) days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights Certificate for
inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or of the
State of New York (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution in
the State of New York), in good standing, which is authorized under such
laws to exercise corporate trust powers or stock transfer powers and is
subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capi-
tal and surplus of at least $100,000,000 or (b) an affiliate of such
corporation as described in (a). After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent with-
out further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of
any such appointment, the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the Common Stock
and the Preferred Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class
of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration
of the Rights, the Company (a) shall, with respect to shares of Common
Stock so issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, granted or awarded as of the Distribution
Date, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors of the Company,
issue Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no such
Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant
risk of material adverse tax consequences to the Company or the Person to
whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the close of business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date
shall have occurred prior to the Record Date, the close of business on
the tenth day following the Record Date), or (ii) the Final Expiration
Date, redeem all but not less than all the then outstanding Rights at a
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redemption price of $0.01 per Right, as such amount may be appro-
priately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price"). The Board of
Directors may not redeem any Rights following a determination pursuant
to Section 11(a)(ii)(B) that any Person is an Adverse Person.
Notwithstanding anything contained in this Agreement to the contrary,
the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event until such time as the Company's right of
redemption hereunder has expired. The Company may, at its option,
pay the Redemption Price in cash, shares of Common Stock (based on the
"current market price", as defined in Section 11(d)(i) hereof, of the
Common Stock at the time of redemption) or any other form of con-
sideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall
have been filed with the Rights Agent and without any further action
and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. Promptly after
the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the Rights
Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it appears
upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person or is determined to
be an Adverse Person pursuant to Section 11(a)(ii)(B), exchange all or
part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of
Section 7(e) hereof) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board
of Directors shall not be empowered to effect such exchange at any time
after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Stock for or pursuant to the
terms of any such plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of fifty percent (50%) or
more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a)
of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only
right thereafter of a holder of such Rights shall be to receive that
number of shares of Common Stock equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights
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at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the
exchange of the Common Stock for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on
the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute shares of Preferred Stock (or equivalent
preferred stock, as such term is defined in paragraph (b) of Section 11
hereof) for shares of Common Stock exchangeable for Rights, at the
initial rate of one one-thousandth (1/1000th) of a share of Preferred
Stock (or equivalent preferred stock) for each share of Common Stock,
as appropriately adjusted to reflect adjustments in the voting rights
of the Preferred Stock pursuant to the terms thereof, so that the
fraction of a share of Preferred Stock delivered in lieu of each
share of Common Stock shall have the same voting rights as one share of
Common Stock.
(d) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be necessary
to authorize additional shares of Common Stock for issuance upon
exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common
Stock, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional share of Common Stock
would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole share of Common Stock.
For the purposes of this subsection (e), the current market value of a
whole share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the
Company), or (ii) to offer to the holders of Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclas-
sification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred
Stock), or (iv) to effect any consolidation or merger into or with
any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one transaction or a series of
related transactions, of more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other
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Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall
give to each holder of a Rights Certificate, to the extent feasible and
in accordance with Section 26 hereof, a notice of such proposed action,
which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock,
if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least
twenty (20) days prior to the record date for determining holders of
the shares of Preferred Stock for purposes of such action, and in the
case of any such other action, at least twenty (20) days prior to the
date of the taking of such proposed action or the date of participation
therein by the holders of the shares of Preferred Stock whichever shall
be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to
the extent feasible and in accordance with Section 26 hereof, a notice
of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii)
hereof, and (ii) all references in the preceding paragraph to Preferred
Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Rights Agent) as follows:
Outboard Marine Corporation
100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
First Chicago Trust Company of New York
525 Washington Boulevard, Suite 4660
Jersey City, New Jersey 07310
Attention: Tenders and Exchanges Administration
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate
(or, if prior to the Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution
Date and subject to the penultimate sentence of this Section 27, the
Company and the Rights Agent shall, if the Company so directs, supplement
or amend any provision of this Agreement without the approval of any
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holders of certificates representing shares of Common Stock. From and
after the Distribution Date and subject to the penultimate sentence of this
Section 27, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any
holders of Rights Certificates in order (i) to cure any ambiguity, (ii)
to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder or (iv) to change or
supplement the provisions hereunder in any manner which the Company may
deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring
Person or Adverse Person or an Affiliate or Associate of an Acquiring
Person or Adverse Person); provided this Agreement may not be sup-
plemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (B) any other time
period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights
(other than an Acquiring Person or Adverse Person and its Affiliates and
Associates). Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights
Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Exchange Act. The Board of Directors of
the Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary or advisable for the administration of
this Agreement (including a determination to redeem or not redeem the
Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made
by the Board in good faith, shall (x) be final, conclusive and binding on
the Company, the Rights Agent, the holders of the Rights and all other
parties, and (y) not subject the Board to any liability to the holders of
the Rights.
Section 30. Benefits of This Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to
the Distribution Date, registered holders of the Common Stock).
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
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<PAGE> 49
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its
good faith judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right
of redemption set forth in Section 23 hereof shall be reinstated and shall
not expire until the close of business on the tenth day following the date
of such determination by the Board of Directors. Without limiting the
foregoing, if any provision requiring a majority of the members of the
Board of Directors who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates of an Acquiring Person
to act is held by any court of competent jurisdiction or other authority to
be invalid, void or unenforceable, such determination shall be made by the
Board of Directors of the Company in accordance with applicable law and the
Company's Certificate of Incorporation and bylaws.
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to
contracts made and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but
one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above
written.
Attest: OUTBOARD MARINE CORPORATION
By HOWARD MALOVANY By HARRY W. BOWMAN
--------------- ---------------
Name: Howard Malovany Name: Harry W. Bowman
Title: Secretary and Title: President and Chief
Senior Counsel Executive Officer
Attest: FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By JOANNE GOROSTILA By RALPH P. PERSICO
---------------- ----------------
Name: Joanne Gorostila Name: Ralph P. Persico
Title: Title: Customer Service Officer
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Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
of
OUTBOARD MARINE CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned officers of Outboard Marine Corporation, a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation, as amended, of the said Corporation,
the said Board of Directors on April 24, 1996 adopted the following
resolution creating a series of 90,000 shares of Preferred Stock
designated as Series A Junior Participating Preferred Stock:
BE IT FURTHER RESOLVED, that pursuant to the authority vested in the
Board of Directors of this Corporation in accordance with the provisions
of its Restated Certificate of Incorporation, as amended, a series of
Preferred Stock of the Corporation be and it is hereby created, and that
the designation and amount thereof and the voting powers, preferences and
relative, participating, optional and other special rights of the shares
of such series, and the qualifications, limitations or restrictions thereof
are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the
number of shares constituting such series shall be 90,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the last day of [March, June,
September and December] in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $0.01 or (b) subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions
other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, par value
$0.15 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Junior Participating
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<PAGE> 51
Preferred Stock. In the event the Corporation shall at any time after
April 24, 1996 (the "Rights Declaration Date") (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the amount to
which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event under clause (b) of
the preceding sentence shall be adjusted by multiplying such amount by
a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in Paragraph
(A) above immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $0.01 per share on the Series A
Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of
such shares of Series A Junior Participating Preferred Stock, unless
the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares
of Series A Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares
of Series A Junior Participating Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board of Directors may
fix a record date for the determination of holders of shares of Series
A Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be
no more than 30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Junior Participating Preferred Stock shall entitle
the holder thereof to 1,000 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case the number of votes per share to which holders of shares of
Series A Junior Participating Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
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<PAGE> 52
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders
of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six (6)
quarterly dividends thereon, the occurrence of such contingency shall
mark the beginning of a period (herein called a "default period") which
shall extend until such time when all accrued and unpaid dividends for
all previous quarterly dividend periods and for the current quarterly
dividend period on all shares of Series A Junior Participating
Preferred Stock then outstanding shall have been declared and paid or
set apart for payment. During each default period, all holders of
Preferred Stock (including holders of the Series A Junior Participating
Preferred Stock) with dividends in arrears in an amount equal to six
(6) quarterly dividends thereon, voting as a class, irrespective of
series, shall have the right to elect two (2) Directors.
(ii) During any default period, such voting right of the holders of
Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph
(iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders,
provided that such voting right shall not be exercised unless the
holders of ten percent (10%) in number of shares of Preferred Stock
outstanding shall be present in person or by proxy. The absence of
a quorum of the holders of Common Stock shall not affect the
exercise by the holders of Preferred Stock of such voting right.
At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default
period, they shall have the right, voting as a class, to elect
Directors to fill such vacancies, if any, in the Board of Directors
as may then exist up to two (2) Directors or, if such right is
exercised at an annual meeting, to elect two (2) Directors. If the
number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock
shall have the right to make such increase in the number of
Directors as shall be necessary to permit the election by them of
the required number. After the holders of the Preferred Stock
shall have exercised their right to elect Directors in any default
period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the
holders of Preferred Stock as herein provided or pursuant to the
rights of any equity securities ranking senior to or pari passu
with the Series A Junior Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than
ten percent (10%) of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of
special meeting of the holders of Preferred Stock, which meeting
shall thereupon be called by the President, a Vice-President or the
Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Preferred Stock are entitled to
vote pursuant to this Paragraph (C)(iii) shall be given to each
holder of record of Preferred Stock by mailing a copy of such
notice to him or her at his or her last address as the same appears
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<PAGE> 53
on the books of the Corporation. Such meeting shall be called for
a time not earlier than 10 days and not later than 50 days after
such order or request or in default of the calling of such meeting
within 50 days after such order or request, such meeting may be
called on similar notice by any stockholder or stockholders owning
in the aggregate not less than ten percent (10%) of the total
number of shares of Preferred Stock outstanding. Notwithstanding
the provisions of this Paragraph (C)(iii), no such special meeting
shall be called during the period within 50 days immediately
preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue
to be entitled to elect the whole number of Directors until the
holders of Preferred Stock shall have exercised their right to
elect two (2) Directors voting as a class, after the exercise of
which right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their successors
shall have been elected by such holders or until the expiration of
the default period, and (y) any vacancy in the Board of Directors
may (except as provided in Paragraph (C)(ii) of this Section 3) be
filled by vote of a majority of the remaining Directors theretofore
elected by the holders of the class of stock which elected the
Director whose office shall have become vacant. References in this
Paragraph (C) to Directors elected by the holders of a particular
class of stock shall include Directors elected by such Directors to
fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the
holders of Preferred Stock as a class shall terminate, and (z) the
number of Directors shall be such number as may be provided for in
the certificate of incorporation or by-laws irrespective of any
increase made pursuant to the provisions of Paragraph (C)(ii) of
this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the certificate of
incorporation or by-laws). Any vacancies in the Board of Directors
effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on
shares of Series A Junior Participating Preferred Stock outstanding
shall have been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
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<PAGE> 54
any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, except dividends paid ratably
on the Series A Junior Participating Preferred Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Junior
Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series A Junior Participating
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock
of the Corporation unless the Corporation could, under Paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time
and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Stock unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received an amount equal to 1,000
times the Exercise Price, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date
of such payment (the "Series A Liquidation Preference"). Following the
payment of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series A
Junior Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set
forth in subparagraph (C) below to reflect such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock)
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<PAGE> 55
(such number in clause (ii), the "Adjustment Number"). Following the
payment of the full amount of the Series A Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of Series A Junior
Participating Preferred Stock and Common Stock, respectively, holders of
Series A Junior Participating Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number to
1 with respect to such Preferred Stock and Common Stock, on a per share
basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of
preferred stock, if any, which rank on a parity with the Series A
Junior Participating Preferred Stock, then such remaining assets shall
be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets
shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
the shares of Series A Junior Participating Preferred Stock shall at the
same time be similarly exchanged or changed in an amount per share (subject
to the provision for adjustment hereinafter set forth) equal to 1,000 times
the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share
of Common Stock is changed or exchanged. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of
shares of Series A Junior Participating Preferred Stock shall be adjusted
by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Amendment. The Amended and Restated Certificate of
Incorporation of the Corporation shall not be further amended in any manner
which would materially alter or change the powers, preferences or special
rights of the Series A Junior Participating Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of a majority or
more of the outstanding shares of Series A Junior Participating Preferred
Stock, voting separately as a class.
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<PAGE> 56
Section 10. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder,
in proportion to such holders fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of
all other rights of holders of Series A Junior Participating Preferred
Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this
____ day of , 1996.
OUTBOARD MARINE CORPORATION
___________________________
Name:
Title:
Attest:
____________________________
Secretary
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<PAGE> 57
Exhibit B
[Form of Rights Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER JUNE 23, 2006 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR ADVERSE PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENE-
FICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR ADVERSE
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR ADVERSE
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL
AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]
Rights Certificate
OUTBOARD MARINE CORPORATION
This certifies that _____________________________ , or registered
assigns, is the registered owner
of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of April 24, 1996 (the "Rights Agreement"), between
Outboard Marine Corporation, a Delaware corporation (the "Company"), and
[Name and place of Incorporation of Rights Agent] (the "Rights Agent"), to
purchase from the Company at any time prior to 5:00 P.M. (New York City
time) on June 23, 2006 at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-thousandth (1/1000th) of a fully paid, non-assessable share of Series A
Junior Participating Preferred Stock (the "Preferred Stock") of the
Company, at a purchase price of $ per one one-thousandth (1/1000th) of a
share (the "Purchase Price"), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase and related
Certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set
forth above, are the number and Purchase Price as of , based on the Pre-
ferred Stock as constituted at such date. The Company reserves the right
to require prior to the occurrence of a Triggering Event (as such term is
defined in the Rights Agreement) that a number of Rights be exercised so
that only whole shares of Preferred Stock will be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or Adverse
Person or an Affiliate or Associate of any such Acquiring Person or Adverse
Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person or Adverse Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person or Adverse Person, or an Affiliate or Associate of an
Acquiring Person or Adverse Person, such Rights shall become null and
void and no holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) Event.
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<PAGE> 58
As provided in the Rights Agreement, the Purchase Price and the
number and kind of shares of Preferred Stock or other securities which
may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening
of certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of
the Rights Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent and
are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent
designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of one
one-thousandths (1/1000ths) of a share of Preferred Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate
shall be exercised in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option
at a redemption price of $0.01 per Right at any time prior to the earlier
of the close of business on (i) the tenth day following the Stock
Acquisition Date (as such time period may be extended pursuant to the
Rights Agreement), and (ii) the Final Expiration Date. In addition, the
Rights may be exchanged, in whole or in part, for shares of the Common
Stock, or shares of preferred stock of the Company having essentially the
same value or economic rights as such shares. Immediately upon the action
of the Board of Directors of the Company authorizing any such exchange, and
without any further action or any notice, the Rights (other than Rights
which are not subject to such exchange) will terminate and the Rights
will only enable holders to receive the shares issuable upon such ex-
change.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions
which are integral multiples of one one-thousandth (1/1000th) of a share of
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right
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<PAGE> 59
or Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ----------- ---, -----
ATTEST: OUTBOARD MARINE CORPORATION
_____________________ By ________________________
Secretary Title:
Countersigned:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By______________________
Authorized Signature
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<PAGE> 60
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ______________________________________ hereby sells,
assigns and transfer unto ____________________________________________
______________________________________________________________________
(Please print name and address of transferee) this Rights Certificate,
together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint _________________ Attorney, to
transfer the within Rights Certificate on the books of the within named
Company, with full power of substitution.
Dated:_______________ , ______
___________________________
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person
or Adverse Person or an Affiliate or Associate of any such Acquiring Person
or Adverse Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or
Adverse Person or an Affiliate or Associate of an Acquiring Person or
Adverse Person.
Dated:_______________ , ______ ______________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
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<PAGE> 61
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise Rights represented by the
Rights Certificate.)
To: OUTBOARD MARINE CORPORATION
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of
the Company or of any other person which may be issuable upon the exercise
of the Rights) and requests that certificates for such shares be issued in
the name of and delivered to:
Please insert social security or other identifying number
______________________________________________________________________
(Please print name and address)
______________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
______________________________________________________________________
(Please print name and address)
______________________________________________________________________
Dated:_______________ , ______
______________________
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring
Person or Adverse Person or an Affiliate or Associate of any such Acquiring
Person or Adverse Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or became an Acquiring Person or Adverse Person
or an Affiliate or Associate of an Acquiring Person or Adverse Person.
Dated:_______________ , ______ ______________________
Signature
Signature Guaranteed:
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<PAGE> 62
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
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<PAGE> 63
EXHIBIT 10(H)
SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
Among
OUTBOARD MARINE CORPORATION
THE BANKS,
and
THE FIRST NATIONAL BANK OF CHICAGO ("Agent")
and
BANK OF AMERICA ILLINOIS ("Co-Agent")
Dated as of March 29,1996
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<PAGE> 64
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Definitions . . . . . . . . . . . . . . . . . . . .
1.02. Financial Standards . . . . . . . . . . . . . . . . . . . .
ARTICLE II. THE CREDIT . . . . . . . . . . . . . . . . . . . . . . . . .
2.01. Credit . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.02. Requests for Advances. . . . . . . . . . . . . . . . . . . .
2.03. Evidence of Credit Extensions . . . . . . . . . . . . . . .
2.04. Computation of and Payment of Interest . . . . . . . . . . .
2.05. Payment of Principal . . . . . . . . . . . . . . . . . . . .
2.06. Notification of LIBOR for Eurodollar Advances. . . . . . . .
2.07. Facility Fee . . . . . . . . . . . . . . . . . . . . . . . .
2.08. Agent's and Co-Agent's Fees . . . . . . . . . . . . . . . .
2.09. Computations of Interest and Fees; Banking Day . . . . . . .
2.10. Late Payment; Date of Receipt of Notices . . . . . . . . . .
2.11. Method of Payment; Mistakes. . . . . . . . . . . . . . . . .
2.12. Optional Prepayment; Funding Losses on Any Prepayment. . . .
2.13. Reduction or Termination of Commitments. . . . . . . . . . .
2.14. Taxes' . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.15. Reserves, Etc. . . . . . . . . . . . . . . . . . . . . . . .
2.16. Illegality . . . . . . . . . . . . . . . . . . . . . . . . .
2.17. Unavailability . . . . . . . . . . . . . . . . . . . . . .
2.18. The Bid Facility . . . . . . . . . . . . . . . . . . . . . .
2.19. Telephone Notice, Indemnity . . . . . . . . . . . . . . . .
2.20. Facility Letters of Credit . . . . . . . . . . .. . . . . .
2.21. Extension of Termination Date . . . . . . . . . . . . . . .
ARTICLE III. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . .
3.01. Conditions Precedent to Closing Date . . . . . . . . . . . .
3.02. Conditions Precedent to Each Borrowing . . . . . . . . . . .
3.03. Termination of Existing Agreement. . . . . . . . . . . . . .
3.04. Advances under Existing Agreement. . . . . . . . . . . . . .
ARTICLE IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . .
4.01. The Company's Existence. . . . . . . . . . . . . . . . . . .
4.02. Subsidiaries' Existence. . . . . . . . . . . . . . . . . . .
4.03. Company's Powers . . . . . . . . . . . . . . . . . . . . . .
4.04. Power of Company Officers. . . . . . . . . . . . . . . . . .
4.05. Government and Other Approvals . . . . . . . . . . . . . . .
4.06. Compliance With Laws . . . . . . . . . . . . . . . . . . . .
4.07. Enforceability of Agreement. . . . . . . . . . . . . . . . .
4.08. Title to Property. . . . . . . . . . . . . . . . . . . . . .
4.09. Litigation . . . . . . . . . . . . . . . . . . . . . . . . .
4.10. Events of Default. . . . . . . . . . . . . . . . . . . . . .
4.11. Investment Company Act of 1940 . . . . . . . . . . . . . . .
4.12. Regulation U . . . . . . . . . . . . . . . . . . . . . . . .
4.13. Financial Information. . . . . . . . . . . . . . . . . . . .
4.14. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . .
4.15. Acquisitions . . . . . . . . . . . . . . . . . . . . . . . .
4.16. Environmental Matters. . . . . . . . . . . . . . . . . . . .
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ARTICLE V. AFFIRMATIVE COVENANTS
5.01. Use of Proceed . . . . . . . . . . . . . . . . . . . . . . .
5.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .
5.03. Financial Statements, Reports, Etc. . . . . . . . . . . . .
5.04. Existence, Etc. . . . . . . . . . . . . . . . . . . . . . .
5.05. Payment of Obligations . . . . . . . . . . . . . . . . . . .
5.06. Compliance with Laws . . . . . . . . . . . . . . . . . . . .
5.07. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . .
5.08. Adequate Books . . . . . . . . . . . . . . . . . . . . . . .
5.09. Interest Coverage Ratio. . . . . . . . . . . . . . . . . . .
5.10. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VI. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . .
6.01. Capitalization Ratio . . . . . . . . . . . . . . . . . . . .
6.02. Change in Business . . . . . . . . . . . . . . . . . . . . .
6.03. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.04. Mergers, Sales of Assets, Etc. . . . . . . . . . . . . . . .
6.05. Acquisitions, Investments. . . . . . . . . . . . . . . . . .
6.06. Operating Leases . . . . . . . . . . . . . . . . . . . . . .
6.07. Existing Indebtedness. . . . . . . . . . . . . . . . . . . .
6.08. Repurchase Arrangements. . . . . . . . . . . . . . . . . . .
6.09. Dividends and other Restricted Payments. . . . . . . . . . .
ARTICLE VII. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . .
7.01. Nonpayment . . . . . . . . . . . . . . . . . . . . . . . . .
7.02. Representation or Warranty . . . . . . . . . . . . . . . . .
7.03. Specific Defaults. . . . . . . . . . . . . . . . . . . . . .
7.04. Other Defaults . . . . . . . . . . . . . . . . . . . . . . .
7.05. Judgments. . . . . . . . . . . . . . . . . . . . . . . . . .
7.06. Voluntary Bankruptcy . . . . . . . . . . . . . . . . . . . .
7.07. Involuntary Bankruptcy . . . . . . . . . . . . . . . . . . .
7.08. Cross Default. . . . . . . . . . . . . . . . . . . . . . . .
7.09. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.10. Change in Control. . . . . . . . . . . . . . . . . . . . . .
ARTICLE VIII. RELATION OF BANKS. . . . . . . . . . . . . . . . . . . . . .
8.01. Appointment and Authorization. . . . . . . . . . . . . . . .
8.02. Pro Rata Sharing . . . . . . . . . . . . . . . . . . . . . .
8.03. Sharing of Setoff. . . . . . . . . . . . . . . . . . . . . .
8.04. Communication; Confidentiality . . . . . . . . . . . . . . .
8.05. Approvals. . . . . . . . . . . . . . . . . . . . . . . . . .
8.06. Exculpation. . . . . . . . . . . . . . . . . . . . . . . . .
8.07. Indemnification. . . . . . . . . . . . . . . . . . . . . . .
8.08. The Agent, the Co-Agent and Bid Agent as Banks . . . . . . .
8.09. Notice of Transfer . . . . . . . . . . . . . . . . . . . . .
8.10. Credit Decision. . . . . . . . . . . . . . . . . . . . . . .
8.11. Resignation of the Agent . . . . . . . . . . . . . . . . . .
8.12. Reliance by Agent and Co-Agent . . . . . . . . . . . . . . .
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ARTICLE IX. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . .
9.01. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .
9.02. Successors and Assigns . . . . . . . . . . . . . . . . . . .
9.03. Banks' Obligations Several . . . . . . . . . . . . . . . . .
9.04. Assignments, Participations; Setoff. . . . . . . . . . . . .
9.05. Delays and Waivers . . . . . . . . . . . . . . . . . . . . .
9.06. Costs and Expenses . . . . . . . . . . . . . . . . . . . . .
9.07. Entire Agreement . . . . . . . . . . . . . . . . . . . . . .
9.08. Governing Law. . . . . . . . . . . . . . . . . . . . . . . .
9.09. Section Headings . . . . . . . . . . . . . . . . . . . . . .
9.10. Severability . . . . . . . . . . . . . . . . . . . . . . . .
9.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . .
9.12. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . .
9.13. Judgment Currency Indemnity. . . . . . . . . . . . . . . . .
9.14. Waiver of Jury Trail . . . . . . . . . . . . . . . . . . . .
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EXHIBIT A-1 COMMITTED NOTE
EXHIBIT A-2 COMPETITIVE BID NOTE
EXHIBIT B OPINION OF COUNSEL
SCHEDULE I AGENT'S PAYMENT OFFICES
SCHEDULE 2 SIGNIFICANT SUBSIDIARIES
SCHEDULE 3 MATERIAL LIENS
SCHEDULE 4 LITIGATION
SCHEDULE 5 MATERIAL FINANCIAL OBLIGATIONS
SCHEDULE 6 FORM OF BID LOAN REQUEST
SCHEDULE 7 FORM OF BID LOAN OFFER
SCHEDULE 8 FORM OF BID LOAN ACCEPTANCE
SCHEDULE 9 FORM OF CONFIDENTIALITY AGREEMENT
SCHEDULE 10 SCHEDULE OF LETTERS OF CREDIT
SCHEDULE 11 INVESTMENTS
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SECOND AMENDED AND RESTATED
OUTBOARD MARINE CORPORATION
REVOLVING CREDIT AGREEMENT
This Agreement is entered into as of March 29, 1996, by and among
Outboard Marine Corporation (the "Company"), the banks listed on the
signature pages hereof (collectively the "Banks" and individually a
"Bank"), The First National Bank of Chicago as agent for the Banks (in such
capacity the "Agent") and Bank of America Illinois as co-agent for the
Banks (in such capacity, the "Co-Agent").
Whereas, the Company, the Banks, the Agent, and the Co-Agent are
parties to an Amended and Restated Revolving Credit Agreement dated as of
December 30, 1994, as heretofore amended (as so amended the "Existing
Agreement"); and
Whereas, the Company desires to amend and restate the Existing
Agreement to, among other things, permit the withdrawal of NBD Bank as a
Bank and the addition of The Northern Trust Company as a Bank and modify
the Commitments (as hereinafter defined) of the Banks;
So therefore, the Company, the Banks, the Agent and the Co-Agent have
agreed to amend and restate the Existing Agreement on the terms and
conditions set forth herein:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms have the meanings indicated for
purposes of this Agreement:
"Absolute Rate" means the rate of interest quoted by a Bank for an
Absolute Rate Loan pursuant to Section 2.18.
"Absolute Rate Loan" means a Bid Loan for which interest is based on
the Absolute Rate.
"Acquisition" means any transaction or series of transactions by which
the Company and/or any Consolidated Subsidiary
(a) acquires any going business or all or substantially all of the
assets of any Person, whether through the purchase of assets, merger or
otherwise;
(b) directly or indirectly acquires control of at least a majority (in
number of votes) of the securities of a corporation which have ordinary
voting power for the election of directors; or
(c) directly or indirectly acquires a twenty percent (20%) or more
ownership interest in any partnership or joint venture.
"Advance" means a loan hereunder by a Bank under the Revolving Credit
Facility pursuant to Section 2.01(a) and may also be used to refer to a
Refunding Advance unless the context otherwise requires.
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"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to
control a corporation if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
such corporation, whether through the ownership of voting securities, by
contract or otherwise.
"Aggregate Available Commitment" means, at any date of determination,
(a) the Aggregate Commitment minus (b) the Facility Letter of Credit
Obligations then outstanding minus (c) the principal amount of all then
outstanding Advances and minus (d) the principal amount of all the
outstanding Bid Loans.
"Aggregate Commitment" means the aggregate of the Commitments of all
the Banks, as modified from time to time pursuant to the terms hereof,
which amount is $200,000,000 as of the Closing Date of this Agreement.
"Applicable Margin" means the percentage in excess of the Base Rate
payable by the Company as set forth in Section 2.04.
"Available Fund" shall mean, as of any Restricted Payment Date, an
amount equal to 50% of Consolidated Net Income of the Company and
Subsidiaries for the period (taken as one accounting period) commencing on
October 1, 1994 and terminating at the end of the Company's most recently
completed fiscal quarter preceding such Restricted Payment Date, reduced by
the sum of the (i) aggregate amount of all dividends and other
distributions paid by the Company or any Subsidiary on each class of its
capital stock on or after October 1, 1994 and (ii) the aggregate amount
paid by or on behalf of the Company or any Subsidiary on or after October
1, 1994 for the redemption, purchase, retirement or other acquisition of
any shares of its capital stock. For purposes of this definition, the
amount of dividends and other distributions paid by any Subsidiary shall
not include amounts payable to the Company or to another Subsidiary.
Capital stock shall include warrants and other rights and options to
acquire shares of capital stock.
"Banking Day" means (a) for all purposes other than transactions
referred to in clause (b) below, a day on which banks are open for business
in Illinois, California and New York, and (b) with respect to all notices
and determinations in connection with, and payments of principal of and
interest on, Eurodollar Advances or LIBOR Loans and Optional Currency
Advances, any day which is a Banking Day described in clause (a) and is
also a day on which banks are open for business and quoting interest rates
for Dollar deposits or the relevant Optional Currency deposits in London,
England.
"Base Rate" means the Reference Rate, CD Rate, or LIBOR, as the case
may be.
"Bid Agent" means the Agent acting in its capacity as the bid agent for
the Bid Facility or any successor thereto appointed hereunder.
"Bid Facility" means the credit facility provided in Section 2.18.
"Bid Loan" means a loan by a Bank to the Company under the Bid Facility.
"Borrowing" means any Advances hereunder made by the Banks on the same
day and having the same interest rate and Interest Period and any Bid Loans
hereunder made by any or all of the Banks on the same day and having the
same Interest Period and may also be used to refer to a Refunding Borrowing
unless the context otherwise requires.
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"CD Rate" means for each Interest Period in respect of CD Rate Advances
the rate of interest determined pursuant to the following formula:
CD Rate = Certificate of Deposit Rate
--------------------------- + Assessment Rate
1.00 - Reserve Percentage
Where,
"Assessment Rate" means the arithmetic average, as determined by the
Agent, of the net annual assessment rates (rounded upwards, if
necessary, to the nearest one-hundredth of one percent (1/100%)) in
effect on the first day of such Interest Period payable by First
Chicago to the Federal Deposit Insurance Corporation, or any successor,
for insuring time deposits made in Dollars at offices of First Chicago
in the United States of America during the most recent period for which
such rate has been determined prior to the commencement of such
Interest Period.
"Certificate of Deposit Rate" means for each Interest Period in respect
of CD Rate Advances the rate of interest determined by the Agent to be
the arithmetic average (rounded up to the nearest one-hundredth of one
percent (1/100%)) of the rates of interest bid by two (2) New York or
Chicago certificate of deposit dealers of recognized standing selected
by First Chicago for the purchase at face value from First Chicago of
its certificates of deposit in the secondary market, for such period
and in the amount of First Chicago's CD Rate Advance to be made, at
approximately 10:00 a.m., Chicago time, on the first day of such
Interest Period.
"Reserve Percentage" means for each Interest Period for CD Rate
Advances the maximum reserve percentage (expressed as a decimal) in
effect at the beginning of such Interest Period (including, but not
limited to, marginal, emergency, supplemental, special and other
reserve percentages) prescribed by the Board of Governors of the
Federal Reserve System, or any successor, for determining the reserves
to be maintained by member banks of the Federal Reserve System with
deposits exceeding One Billion Dollars ($1,000,000,000) for new
non-personal time deposits for a period approximating such Interest
Period and in an amount of One Hundred Thousand Dollars ($100,000) or
more.
"CD Rate Advance" means an Advance for which interest is calculated
with reference to the CD Rate.
"Capitalization" means the sum of the Tangible Net Worth and
Indebtedness for Borrowed Money of the Company and its Consolidated
Subsidiaries, calculated on a consolidated basis.
"Closing Date" means March 29, 1996.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means for each Bank the obligation of such Bank to make
Advances and to issue or purchase participations in Facility Letters of
Credit in an aggregate amount not exceeding the amount set opposite its
name on the signature pages hereof as such amount may be modified from time
to time in accordance with the terms hereof.
"Committed Note" means a promissory note in substantially the form of
Exhibit "A-1" hereto, with appropriate insertions, duly executed and
delivered to the Agent by the Company for the account of a Bank in the
amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
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"Competitive Bid Note" means a promissory note in substantially the
form of Exhibit "A-2" hereto, with appropriate insertions, duly executed
and delivered to the Agent by the Company for the account of a Bank and
payable to the order of such Bank, including any amendment, modification,
renewal or replacement of such promissory note.
"Consolidated" or "consolidated" means: (a) when used herein with
reference to financial statements, ratios, assets or liabilities, that any
calculations have been made by consolidating the assets and liabilities of
the Company and certain of its Subsidiaries indicated in the footnotes to
the Company's financial statements after eliminating all intercompany items
and making such adjustments as required by GAAP; and (b) when used herein
with reference to a Subsidiary, a Subsidiary the financial statements of
which have been presented together with those of the Company or a
newly-acquired Subsidiary, which has been designated by the Company as a
Consolidated Subsidiary pursuant to Section 5.03(f).
"Credit" means the Revolving Credit Facility described in Section 2.01,
the Bid Facility described in Section 2.18 and the Letter of Credit
Facility described in Section 2.20.
"Default" means an event which, with notice or lapse of time or both,
would become an Event of Default.
"Dividends" means any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account of or in
exchange for any shares of any class of capital stock of the Company,
provided that dividend payments or other distributions payable solely in
its common stock shall not be included in this definition.
"Dollars" and "$" mean United States dollars.
"EBIT" means for any period of determination in respect of the Company
and its Consolidated Subsidiaries the sum of (a) their Net Income before
deduction of taxes, (b) their Interest Expense, (c) any extraordinary
losses, and (d) amortization of goodwill and intangibles associated with
any Acquisition minus any extraordinary gains, all calculated on a
consolidated basis.
"Environmental Claim" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability for
violation of any Environmental Law or for release or injury to the
environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability for damages, punitive damages, cleanup costs,
removal costs, remedial costs, response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting
from or based upon (a) the presence, placement, discharge, emission or
release (including intentional and unintentional, negligent and
non-negligent, sudden or non-sudden, accidental or non-accidental
placement, spill, leaks, discharges, emissions or releases) of any
Hazardous Material at, in or from property, whether or not owned by the
Company or any of its Subsidiaries, or (b) any other circumstances forming
the basis of any violation, or alleged violation, of any Environmental Law.
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"Environmental Law" means the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.)
("CERCLA"), the Hazardous Material Transportation Act (49 U.S.C. Section
1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.),
the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.) and the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.)
("OSHA"), as such laws have been or hereafter may be amended or
supplemented, and any and all analogous future federal, or present or
future state or local, statutes and the regulations promulgated pursuant
thereto.
"Equivalent Amount" means in relation to any Optional Currency Advance,
at any date any determination thereof is made, the amount in Dollars of
such Advance calculated at the spot rate of exchange for the purchase of
Dollars with the relevant Optional Currency quoted by First Chicago at
approximately 11:00 am. (London time) two (2) Banking Days prior to the
relevant date.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
all the rules and regulations promulgated pursuant thereto, as amended from
time to time.
"Eurodollars" means Dollars disbursed by a Bank from a location outside
of the United States.
"Eurodollar Advance" means an Advance denominated in Dollars for which
interest is calculated with reference to LIBOR.
"Event of Default" means any event set forth in Sections 7.01 through
7.10.
"Existing Agreement" means the Credit Agreement dated as of December
30, 1994 as amended, among the Company, the Bank parties thereto, The First
National Bank of Chicago, as Agent and Bank of America Illinois, as
Co-Agent.
"Existing Letters of Credit" means those Letters of Credit currently
outstanding and issued by a Bank party hereto, a list of which is attached
hereto as Schedule 10 including any extensions thereof.
"Facility Letter of Credit Obligations" means, at any date of
determination thereof, all liabilities, whether actual or contingent, of
the Company in respect of the Facility Letters of Credit, including without
limitation, the sum of (a) Reimbursement Obligations and (b) the aggregate
undrawn face amount of the outstanding Facility Letters of Credit.
"Facility Letters of Credit" means, collectively, the letters of credit
issued under the Letter of Credit Facility and including, without
limitation, the Existing Letters of Credit.
"Federal Funds Rate" means for any day the weighted average of rates on
overnight Federal funds transactions with members of the Federal Reserve
System only, arranged by Federal funds brokers as published for such day
(or, if such day is not a business day, for the next preceding business
day) by the Federal Reserve Bank of New York in statistical release H.15
(519) or any successor publication or, if such rate is not so published for
any business day, the average of the quotations at approximately 10:00 a.m.
(Chicago time) on such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by the Agent in
its sole discretion.
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"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"First Chicago" means The First National Bank of Chicago, in its
individual capacity, and its successors.
"fiscal year" means with respect to the Company a year commencing
October 1 and ending September 30.
"Fixed Assets" of any Person means land, buildings, fixtures and
personal property used in the operation of the business carried out thereon
(other than inventory held for sale in the ordinary course of business).
"Fixed Rate" means either or both of the CD Rate or LIBOR, for a Fixed
Rate Advance.
"Fixed Rate Advance" means a Eurodollar Advance or a CD Rate Advance.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any central bank thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hazardous Materials" means all those substances which are regulated
by, or which may form the basis of liability under, any Environmental Law,
including all substances identified under any Environmental Law as a
pollutant, contaminant, waste, solid waste, hazardous waste, hazardous
constituent, special waste, hazardous substance, hazardous material, or
toxic substance, or petroleum or petroleum derived substance or waste.
"Indebtedness for Borrowed Money" means for any Person, without
duplication, (i) all obligations of such Person (including without
limitation all fees, costs or unpaid accrued interest) for or with respect
to borrowed money or for the deferred purchase price of property or
services (other than accounts payable in the ordinary course of business),
(ii) all obligations of such Person created or arising under any
conditional sale or other title retention agreement with respect to any
property acquired by such Person and all obligations created or arising
under such agreement even though the rights and remedies of the seller or
lender thereunder are limited to repossession or sale of such property in
the event of default, (iii) all obligations of such Person under leases
which shall have been or should be recorded as capitalized leases, (iv) all
guaranties and other obligations (contingent or otherwise) of such Person
to assure a creditor against loss (including, without limitation, letters
of responsibility or comfort letters, arrangements to purchase or
repurchase property or obligations (other than repurchase arrangements with
respect to boats, motors or boat/motor/trailer (or any combination thereof)
packages permitted in accordance with Section 6.08), pay for property,
goods or services whether or not delivered or rendered, maintain working
capital, equity capital or other financial statement condition of, or lend
or contribute to or invest in, any such Person) in respect of obligations
of any other Person, which guaranties and other obligations exceed in the
aggregate at any one time Twenty Million Dollars ($20,000,000), (v) all
endorsements of such Person (other than, in the case of instruments, for
deposit or collection in the ordinary course of business), and (vi) all
indebtedness secured by any Lien on any property owned by such Person,
whether or not such Person has assumed or become liable for the payment
thereof. In calculating the amount of Indebtedness for Borrowed Money,
there shall be no double counting of obligations of Subsidiaries which are
guaranteed by the Company.
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"Indemnified Party" has the meaning specified in Section 9.12.
"Interest Expense" means all accrued interest paid or payable by the
Company and its Consolidated Subsidiaries.
"Interest Payment Date" means the last day of each Interest Period or
the day specified in accordance with Section 2.04(c).
"Interest Period" means
(a) for Reference Rate Advances, the period requested by the Company,
commencing on the date of the relevant Borrowing and ending up to
ninety (90) days thereafter;
(b) for Absolute Rate Loans, the period requested by the Company,
commencing on the date of the relevant Borrowing and ending not less
than fourteen (14) days and up to two hundred seventy (270) days
thereafter;
(c) (i) for Eurodollar Advances, a period selected by the Company,
commencing on the date of the relevant Borrowing and ending not
less than seven (7) days or more than 180 days thereafter, and
(ii) for Optional Currency Advances or LIBOR Loans, the period
requested by the Company, commencing on the date of the relevant
Borrowing and ending thirty (30), sixty (60), ninety (90) or one
hundred eighty (180) days thereafter; provided, however, that:
(d) for CD Rate Advances, the period requested by the Company,
commencing on the date of the relevant Borrowing and ending thirty
(30), sixty (60), ninety (90) or one hundred eighty (180) days
thereafter; provided, however, that:
(i) If any Interest Period would end on a day not a Banking Day,
it shall end on the next succeeding Banking Day, except that with
respect to Eurodollar Advances, Optional Currency Advances and
LIBOR Loans, if the next succeeding Banking Day would fall in the
next calendar month, the Interest Period shall end on the Banking
Day immediately preceding the last day of such Interest Period but
for such change; and
(ii) Any Interest Period which would otherwise extend beyond the
Termination Date shall end on the Termination Date.
"Investment" means (a) any loan, advance, extension of credit (other
than in the ordinary course of business to trade customers) or contribution
of capital by the Company or any Subsidiary to any Person or the purchase
by the Company or any Subsidiary of any Person's notes, stock, bonds or
other securities, (b) advances by the Company or any Subsidiary to
employees of a Person other than in the ordinary course of business for the
purpose of defraying travel, relocation or business expenses, and (c) any
contribution of capital or property or services contributed or committed to
be contributed by a Person in connection with the purchase of debt or
equity interests or other ownership interests.
"Issuance Date" means, with respect to any Facility Letter of Credit,
the date on which such Facility Letter of Credit is issued hereunder.
"Issuer" means, with respect to any Facility Letter of Credit, (i) any
Bank which has issued a Facility Letter of Credit pursuant to the Letter of
Credit Facility, and its successors and assigns, and (ii) solely with
respect to the Existing Letter of Credit issued by it, NBD Bank and its
successors and assigns.
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"Issuer's Fee" is defined in Section 2.20(g).
"Lending Branch" means, with respect to a Bank or the Agent, any
office, branch, subsidiary or affiliate of such Bank or the Agent.
"Letter of Credit Facility" means the Letter of Credit Facility
provided in Section 2.20.
"Letter of Credit Fee" means, with respect to any Facility Letter of
Credit on the Issuance Date thereof, a fee equal to the product of (a) the
applicable percentage set forth in Section 2.20(g) times (b) the maximum
face amount of such Facility Letter of Credit.
"Letter of Credit Request" is defined in Section 2.20(c).
"LIBOR" means,
(a) for each Interest Period in respect of Eurodollar Advances, the
rate of interest determined by the Agent to be the arithmetic average
of the rates reported to the Agent by each Reference Bank as the rate
at which deposits in Dollars are offered by such Reference Bank to
first-class banks in the London interbank market at approximately 11:00
a.m. (London time) two Banking Days prior to the first day of such
Interest Period, in the approximate amount of such Reference Bank's
relevant Eurodollar Advance and having a maturity approximately equal
to such Interest Period. If any Reference Bank fails to provide such
quotation to the Agent, the Agent shall determine LIBOR for
purposes of this clause (a) on the basis of the quotations by the
remaining Reference Bank(s); and
(b) for each Interest Period in respect of LIBOR Loans or Optical
Currency Advances, the rate of interest determined by the Agent to be
the applicable London interbank offered rate for deposits in Dollars or
the applicable Optional Currency appearing on the Bloomberg System
Money Market Function (Page LR) as of 11:00 a.m. (London time) two
Banking Days prior to the first day of such Interest Period and having
a maturity equal to such Interest Period. If no London interbank
offered rate of such maturity then appears on Bloomberg Page LR, the
LIBOR for purposes of this clause (b) shall be equal to the London
interbank offered rate for deposits in Dollars or the applicable
Optional Currency having a maturity immediately before or immediately
after the maturity of such Interest Period, whichever is higher, as
determined by the Agent from Bloomberg Page LR.
"LIBOR Loan" means a Bid Loan for which interest is calculated with
reference to LIBOR.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any agreement to provide any of the
foregoing), any conditional sale or other title retention agreement or any
lease in the nature thereof, any filing or agreement to file a financing
statement as debtor under the Uniform Commercial Code on any property
leased to any Person under a lease which is not in the nature of a
conditional sale or title retention agreement, or any subordination
arrangement in favor of another Person.
"Majority Banks" means Banks whose Commitments equal at least sixty-six
and two-thirds percent (66-2/3%) of the Aggregate Commitments, provided
that at any time after the Advances have been accelerated and the
Commitments terminated pursuant to Article VII, "Majority Banks" shall mean
Banks whose aggregate proportionate interest in the outstanding Advances,
Bid Loans and Facility Letters of Credit constitute at least sixty-six and
two-thirds percent (66-2/3%) of the outstanding Advances, Bid Loans and
Facility Letters of Credit.
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"Margin" means the percentage points above or below LIBOR quoted by a
Bank for a LIBOR Loan pursuant to Section 2.18.
"Margin Stock" has the meaning ascribed to it in Regulation U of the
Board of Governors of the Federal Reserve System.
"Minimum Amount" initially means $10,000,000, such amount to be
increased by an amount equal to the aggregate amount of dividends payable
during a fiscal year on all new shares of capital stock issued by the
Company after October 1, 1994 (at the dividend rate in effect on October 1,
1994), net of any shares retired after that date.
"Moody's" means Moody's Investors Service, Inc.
"Net Income" means the amount shown on the income statement of a Person
as its "net earnings (loss)."
"Net Proceeds" means the cash proceeds realized from the sale or from
any sale and leaseback transaction (after deducting all applicable taxes
and the reasonable costs of such sale) of any property (excluding
receivables) owned by the Company or any Consolidated Subsidiary (other
than sales of inventory in the ordinary course of business and the sale of
worn-out or obsolete equipment no longer useful or needed in the operation
of its business) or the sale of any common or preferred stock of the
Company.
"Notes" means, collectively, the Competitive Bid Notes and the
Committed Notes; and "Note" means any one of the Notes.
"Optional Currency" means Deutsche marks, Canadian dollars, Belgian
francs or Australian dollars, which are freely transferable and convertible
into Dollars and the deposits of which are traded in the London interbank
market and which are disbursed by a Bank outside the Federal Republic of
Germany, Canada, the Kingdom of Belgium or the Commonwealth of Australia,
respectively.
"Optional Currency Advance" means any Advance denominated in an
Optional Currency for which interest is calculated with reference to LIBOR.
"Original Dollar Amount" means in relation to any Optional Currency
Advance, at any time any determination thereof is made, the amount in
Dollars which would have been outstanding if such Optional Currency Advance
had first been disbursed and remained denominated in Dollars (taking into
account any partial repayments thereof) calculated at the spot rate of
exchange for the purchase of Dollars with the relevant Optional Currency
quoted by First Chicago at approximately 11:00 a.m. (London time) two (2)
Banking Days prior to the disbursement date of such Optional Currency
Advance.
"PBGC" means the Pension Benefit Guaranty Corporation created under
Section 4002 (a) of ERISA or any successor thereto.
"Percentage Share" means, as to any Bank, at any time, the proportion
of such Bank's Commitment (as it may be modified from time to time in
connection with any assignment of the Commitment of such Bank in accordance
with the terms hereof) to the Aggregate Commitment of all the Banks,
expressed as such percentage.
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"Performance Guaranty" means that certain Performance Guaranty, dated
as of December 22, 1995, executed and delivered by the Company in favor of
its wholly-owned Subsidiary, Outboard Marine Receivables Corp., a Delaware
corporation ("OMRC"), pursuant to which the Company guarantees certain
performance obligations in connection with the sale of accounts receivable
permitted under Section 6.04(h) by certain of its Subsidiaries to OMRC
including, without limitation, customary indemnities, representations and
warranties but excluding, as a general matter, collectibility of such
accounts, as such Performance Guaranty may be amended, restated,
supplemented or otherwise modified from time to time.
"Permitted Liens" means
(a) Liens for taxes not yet due or which are being actively contested
in good faith by appropriate proceedings and for which adequate
reserves have been established if required by GAAP;
(b) other Liens incidental to the conduct of the business of the
Company and its Consolidated Subsidiaries or the ownership of their
respective property and assets which were not incurred in connection
with the borrowing of money or the obtaining of advances or credit, and
which do not in the aggregate materially detract from the value of such
property or assets or materially impair the use thereof in the
operation of the Company's and its Subsidiaries' business;
(c) Liens on property or assets of a Subsidiary to secure obligations
of such Subsidiary to the Company or another Subsidiary;
(d) For one hundred eighty (180) days after the closing date of any
Acquisition or any Investment, Liens existing at the time of such
Acquisition or such Investment (and not created in contemplation of
such Acquisition or such Investment) in favor of Persons other than the
Banks on the inventory and accounts receivable of the Person acquired;
(e) any Liens on the Fixed Assets of a Person existing at the time such
Person becomes a Subsidiary, or existing Liens on Fixed Assets acquired
by a Subsidiary, whether or not such Liens are assumed by the Company
or a Subsidiary, or Liens on any Fixed Assets acquired, constructed or
improved by the Company or any Subsidiary after the date hereof and
created contemporaneously with or no more than one hundred twenty (120)
days after the acquisition, construction or improvement to secure or
provide for all or a portion of the purchase price of such Fixed Assets
or for such construction or improvement if such Liens do not extend to
other property of the Company or any Subsidiary (except to unimproved
real property on which the construction or improvement is located) and
the aggregate amount of Indebtedness for Borrowed Money or other
obligations secured thereby does not exceed an aggregate amount of Ten
Million Dollars ($10,000,000) at any time;
(f) any Lien renewing or extending any Lien permitted by clause (e)
above, provided that the principal amount of the obligations secured is
not increased beyond the original principal amount of the obligations
secured by such Lien, such principal amount secured does not include
any capitalization of interest, and the Lien is not extended to other
property;
(g) Liens in favor of the United States of America, resulting from
acceptance of progress or partial payments in the ordinary course of
business under government contracts or subcontracts thereunder;
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(h) other Liens provided that the sum of (i) the aggregate principal
amount of Indebtedness for Borrowed Money of the Company and its
Subsidiaries secured by Liens permitted by this clause (h) plus (ii)
the present value of all rental payments (discounted at the rate of 9%
per annum compounded semi-annually) arising from a sale and leaseback
transaction permitted in Section 6.04(c) owed by the Company and its
Subsidiaries does not exceed at any time an amount equal to five
percent (5%) of the Tangible Net Worth of the Company and its
Subsidiaries on a consolidated basis; and
(i) Liens incurred in connection with sales of receivables permitted by
Section 6.04 (h).
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
governmental or political subdivision or an agent or instrumentality
thereof.
"Plan" means any defined benefit plan maintained or contributed to by
the Company or any Subsidiary or by any trade or business (whether or
not incorporated) under common control with the Company or any Subsidiary
as defined in Section 4001(b) of ERISA and insured by the PBGC under Title
IV of ERISA.
"Reference Banks" means, collectively, First Chicago, Bank of America
Illinois, and Royal Bank of Canada; and "Reference Bank" means any one of
the Reference Banks.
"Reference Rate" means the higher of:
(a) the rate of interest announced from time to time by First Chicago
in Chicago, Illinois, as its corporate base rate, which is a rate set
by First Chicago based upon various factors and
(b) the Federal Funds Rate plus one-half of one percent (1/2%).
"Reference Rate Advance" means an Advance for which interest is
calculated with reference to the Reference Rate.
"Refunding Advance" means an Advance which, after application of the
proceeds thereof, results in no net increase in the outstanding principal
amount of the Advances of any Bank, and "Refunding Borrowing" means a
Borrowing having the same result.
"Reimbursement Obligations" means, at any time, the aggregate of the
obligations of the Company to the Issuers and the Banks in respect of all
unreimbursed payments or disbursements made by an Issuer and the Banks
under or in respect of the Facility Letters of Credit.
"Reportable Event" shall be as defined in ERISA.
"Restricted Payments" shall mean: (i) every dividend or other
distribution paid by the Company or any Subsidiary on or in respect of any
class of the capital stock of the Company or any Subsidiary, and (ii) every
payment by or on behalf of the Company or any Subsidiary in connection with
the redemption, purchase, retirement or other acquisition of any shares of
the capital stock of the Company or any Subsidiary; but excluding, however,
from the foregoing every dividend, distribution or other payment to the
extent payable in shares of the capital stock of the Company or any
Subsidiary. For purposes of this definition, "capital stock" shall include
warrants and other rights and options to acquire shares of capital stock.
"Restricted Payment Date" means the date a Restricted Payment is paid.
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"Revolving Credit Facility" means the credit facility provided in
Section 2.01(a).
"Shareholder Rights Plan" means the Company's Amended and Restated
Rights Plan dated as of June 12, 1986 as amended and restated as of
September 6, 1990.
"Significant Subsidiary" means (a) the Subsidiaries of the Company
listed on Schedule 2 hereto and any additional schedules provided pursuant
to this paragraph and (b) any other Subsidiary of the Company, the assets,
revenues, or Tangible Net Worth of which during the two (2) fiscal quarters
immediately preceding any date of calculation thereof is equal to or
greater than five percent (5%) of the corresponding assets or revenues or
the Tangible Net Worth of the Company and its Consolidated Subsidiaries, on
a consolidated basis (which subsidiaries shall be listed on additional
schedules delivered by the Company to the Agent from time to time).
"Standard & Poor's" means Standard & Poor's Ratings Group, a division
of McGraw Hill, Inc.
"Subsidiary" means any corporation in which the Company owns, directly
or indirectly, more than fifty percent (50%) of the total voting securities
thereof, irrespective of whether or not the stock of any class shall or
might have voting power by reason of any contingency, or which the Company
otherwise controls.
"Tangible Net Worth" means, without duplication, total shareholders'
equity in the Company and its Consolidated Subsidiaries (excluding treasury
stock, sinking fund payments required to be made prior to the Termination
Date of this Agreement, and that portion of any redeemable preferred stock
which has a mandatory redemption date prior to the Termination Date of this
Agreement) less (a) all items that would be treated as intangibles under
GAAP, including, without limitation, the net book value of goodwill,
patents, trademarks, trade names, copyrights, licenses, deferred charges,
leasehold conversion costs, unamortized debt discount, franchise rights,
and non-compete agreements, but excluding foreign currency translation
adjustments required by the Statement of the Financial Accounting Standards
Board #52, (b) any Investments in the form of credit extensions to
stockholders, directors or employees of the Company or its Subsidiaries
and, plus (c) from and after the date such charge is reported in the
Company's financial statements, an amount, not to exceed $109,000,000 at
any time, equal to the amount of non-cash charges, net of any tax benefits
taken, related to retiree medical benefits.
"Termination Date" means the earliest to occur of
(a) December 31, 1998, or such later date to which the Termination Date
is extended pursuant to Section 2.21 hereof,
(b) the date on which, prior to the date set forth in (a) above, the
Credit terminates in accordance with a notice to that effect given to
the Agent by the Company pursuant to Section 2.13, and
(c) the date on which the Credit is terminated or accelerated pursuant
to Article VII.
"Value Date" means the date an Advance or Bid Loan is to be disbursed
to the Company.
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1.02. Financial Standards. All financial computations required under this
Agreement shall be made, and all financial information required under this
Agreement shall be prepared, in accordance with GAAP. If generally accepted
accounting principles are modified by the Financial Accounting Standards Board
subsequent to the Closing Date and prior to the Termination Date, then for
purposes of this Section 1.02, such modified generally accepted accounting
principles shall be the generally accepted accounting principles which are
required to be consistently applied.
ARTICLE II
THE CREDIT
2.01. Credit.
(a) The Revolving Credit Facility. From the Closing Date to but
excluding the Termination Date, each Bank, severally, will make
available to the Company Advances in Dollars and any available Optional
Currency in an amount equal to such Bank's Percentage Share of the
Aggregate Available Commitment (without regard to such Bank's
outstanding Bid Loans); provided that the Original Dollar Amount of the
aggregate outstanding Optional Currency Advances denominated in
Australian dollars and Belgian francs, respectively, may not exceed
Fifty Million Dollars ($50,000,000) on any date of disbursement of any
such Optional Currency Advance; provided that in no event may the total
amount of Advances for all Banks (after determining the Equivalent
Amount of all Optional Currency Advances) plus Bid Loans for all Banks
outstanding under this Agreement plus Facility Letter of Credit
Obligations for all Banks exceed at any time the then effective
Aggregate Commitment.
If at any time the total amount of Advances for all Banks (after
determining the Equivalent Amount of all Optional Currency Advances)
plus Bid Loans for all Banks outstanding under this Agreement plus
Facility Letter of Credit Obligations for all Banks exceeds the maximum
available amount set forth above, the Company shall promptly prepay the
excess thereof plus accrued interest thereon to the Agent for the
account of the Banks.
(b) Minimum Amounts. Each Borrowing under this Section 2.01 shall be
in a minimum amount of
(i) Five Million Dollars ($5,000,000) in respect of Reference
Rate Advances and in integral multiples of One Million Dollars
($1,000,000) in excess thereof, and
(ii) Five Million Dollars ($5,000,000) in respect of Fixed Rate
Advances or Optional Currency Advances, and in integral multiples
of One Million Dollars ($1,000,000) in excess thereof for all
Advances denominated in Dollars or the Equivalent Amount of the
foregoing in an Optional Currency or an integral multiple of One
Million Australian dollars, Canadian dollars, Belgian francs or
Deutsche marks, as the case may be.
(c) Reborrowing. The Credit is a revolving credit and, prior to the
Termination Date, the Company may borrow, repay and reborrow amounts
repaid up to the then Aggregate Available Commitment of the Banks.
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2.02. Requests for Advances.
(a) Advances shall be made available to the Company upon the
irrevocable request of the Company received by the Agent, specifying:
(i) the date of the Borrowing, which shall be a Banking Day; (ii) the
amount of the Borrowing; (iii) whether the Advances are to be Reference
Rate Advances, Eurodollar Advances, CD Rate Advances or Optional
Currency Advances; (iv) the Original Dollar Amount (when such quotation
is available, but in any event prior to disbursement) of any requested
Optional Currency Advance; (v) the Interest Period therefor; and (vi)
the bank and the account where the funds to be borrowed are to be made
available to the Company. Such request must be received by the Agent
at its address for notices by the time specified in Section 2.10(b) not
less than
(A) the day such Advance is to be made, with respect to
Reference Rate Advances,
(B) two (2) Banking Days, with respect to CD Rate Advances,
(C) three (3) Banking Days, with respect to Eurodollar
Advances and
(D) four (4) Banking Days, with respect to Optional Currency
Advances,
prior to the date of the Borrowing.
(b) Each Bank agrees that it will make the funds which it is to advance
hereunder available to the Agent at the Agent's Domestic Lending Branch
not later than 1:00 p.m., Chicago time, or at the locations specified
on Schedule 1 attached hereto with respect to Advances in an Optional
Currency not later than 11:00 a.m., local time, on the date of
disbursement of Advances, upon receipt of notice from the Agent as
follows:
(i) not later than 11:00 a.m. (Chicago time) on the date of a
Borrowing with respect to Reference Rate Advances;
(ii) two (2) Banking Days prior to the date of a Borrowing with
respect to CD Rate Advances;
(iii) three (3) Banking Days prior to the date of a Borrowing
with respect to Eurodollar Advances; and
(iv) four (4) Banking Days prior to the date of a Borrowing with
respect to Optional Currency Advances.
The Agent will thereupon advance to the Company the amount so received
from the Banks unless the Agent, after notice is given to the Company,
shall determine that any condition precedent applicable to the
Borrowing set forth in Section 3.01 or 3.02 shall not be fulfilled as
of the date of such Borrowing.
(c) Each request for a Borrowing may be made by telephone (immediately
confirmed by telecopy on the same Banking Day) or by telecopy or by
telex, confirmed by letter sent not later than one (1) Banking Day
thereafter.
(d) Each Borrowing under Section 2.01 shall be made on a pro rata
basis from the Banks. Subject to Section 2.16(b), all Advances that
are part of the same Borrowing shall bear the same Base Rate.
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(e) (i) With respect to any Fixed Rate Advance or an Optional
Currency Advance, a notice of Borrowing shall be irrevocable and
the Company shall be obliged to accept the Advance requested. If
notwithstanding the notice of Borrowing, the Advance is not
disbursed to the Company on the date specified in such notice by
reason of any of the conditions set forth in Article III not having
been satisfied, the Company shall indemnify and hold harmless each
Bank, by payment in Dollars or the currency specified in the
relevant notice of Borrowing as the Agent shall stipulate
immediately upon demand, from and against any losses, costs and
expenses (including reasonable legal expenses) which it has
sustained or incurred as a consequence of the Advance not being
advanced on such date, including (but not limited to) all losses,
premiums and penalties incurred in liquidating or reemploying
deposits made by third parties or funds acquired or arranged to
effect or maintain the Advance or any part thereof. The
certificate of a Bank, signed by an authorized officer, as to the
amount of any losses, costs or expenses payable to it under this
Section 2.02(e)(i) shall, in the absence of manifest error, be
conclusive and binding upon the Company.
(ii) Subject to Sections 2.16 and 2.17, the Agent shall promptly
confirm by telecopy or telex to the Company that Eurodollars or the
Optional Currency requested by the Company is available and notify
the Company of the sum in the relevant Optional Currency which will
represent the Optional Currency Advance to be made available to the
Company during the Interest Period to which the notice of Borrowing
relates.
(iii) If Eurodollars or the Optional Currency requested by the
Company is not available to any Bank, such Bank shall promptly so
notify the Company and the Agent and the Bank shall consult with
the Company and the Agent as to the currency in which the Advance
is to be disbursed, provided, however, that in the case of renewal
of an Advance, the provisions of Section 2.05 shall apply.
2.03. Evidence of Credit Extensions.
(a) The total of each Bank's Advances shall be evidenced by a Committed
Note, executed by the Company, payable to the order of such Bank in the
amount of its Commitment, dated the Closing Date and providing for the
payment of principal and interest in accordance with the terms of this
Agreement. Each Bank's Bid Loans shall be evidenced by a Competitive
Bid Note, executed by the Company, payable to the order of such Bank
and providing for the payment of principal and interest on Competitive
Bid Loans in accordance with the terms of this Agreement. Each Bank
shall record Advances and Bid Loans and principal payments thereof on
the grid attached thereto or, at the option of each Bank, in its
records, and the Bank's record thereof shall be conclusive absent
manifest error. Notwithstanding the foregoing, the failure to make, or
an error in making, a notation with respect to any Advance or Bid Loan
shall not limit or otherwise affect the obligation of the Company
hereunder or under any Note.
(b) Each Bank's proportionate interest in each Borrowing and each
payment by the Company to such Bank under this Agreement and the Notes
shall be made to the Agent for the account of such Bank. Each Bank may
designate any of its branches as its Eurodollar Lending Branch or
Optional Currency Lending Branch for purposes of this Agreement. By
written notice to the Agent and the Company, a Bank may change the
designation of any of its Lending Branches. All payments to the Agent
shall be made at the locations specified on Schedule 1 hereto with
respect to the relevant currency.
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2.04. Computation of and Payment of Interest.
(a) The outstanding principal balance of each Advance shall bear
interest to but excluding the last day of the Interest Period therefor
at a rate per annum equal to the Base Rate selected by the Company plus
the Applicable Margin set forth below for each Base Rate, which
corresponds to the lower of the most recently published final Standard
& Poor's or Moody's rating for the Company's senior long-term unsecured
public debt (without credit enhancement) in effect four (4) Banking
Days before the applicable date of Borrowing:
Reference LIBOR CD
Rate Rate Rate
--------- ----- -------
Equal to or Better
than BBB and Baa2 0% .25% .375%
Equal to or Better
than BBB- and Baa3 0% .35% .475%
Equal to or Better
than BB+ and Ba1 0% .50% .625%
Equal to or Better
than BB and Ba2 0% .625% .750%
Lower than BB
or Ba2 0% 1.000% 1.125%
(b) If no senior long-term unsecured public debt rating (without credit
enhancement) for the Company from Standard & Poor's or Moody's is in
effect at the relevant time, the outstanding principal amount of each
Advance shall bear interest as set forth in the bottom row in subclause
(a) above.
(c) The Company shall pay interest on the principal amount of each
Advance and Bid Loan on the Interest Payment Date relating to such
Advance and Bid Loan and, with respect to each Advance or Bid Loan
having an Interest Period in excess of three (3) months or ninety (90)
days, as the case may be, the Company shall also pay interest on the
Banking Day falling three (3) months or ninety (90) days, respectively,
after the Borrowing date. Interest on any Optional Currency Advance
shall be calculated and paid in the relevant Optional Currency.
2.05. Payment of Principal. The Company will repay Advances to the Agent
for the account of each Bank and in the currency of such Advances on the
last day of the Interest Period for such Advances; provided, however, that,
if a Borrowing is made on an Interest Payment Date for Advances being
repaid, the Company may pay to the Agent for the account of the Banks only
the amount by which the repayment of maturing Advances exceeds the amount
reborrowed, and the Agent and each Bank shall apply the amount reborrowed
to repay the maturing Advances, disbursing to the Company only any excess
proceeds.
2.06. Notification of LIBOR for Eurodollar Advances. In the case of
Eurodollar Advances, the Agent will notify each Bank of LIBOR promptly upon
determination of such interest rate. Each Reference Bank agrees to furnish
to the Agent timely information for the purpose of determining LIBOR with
respect to Eurodollar Advances.
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2.07. Facility Fee.
(a) For the period from December 22, 1995 to but excluding the
Termination Date, the Company shall pay to the Agent for the account of
the Banks a facility fee at a rate per annum equal to the percentage
set forth below of the Aggregate Commitment for the lower of the most
recently published final Standard & Poor's or Moody's rating of the
Company's senior long-term unsecured public debt (without credit
enhancement) in effect on the last day of the then ending fiscal
quarter of the Company. The facility fee shall be due quarterly in
arrears, and each payment shall be made within five (5) days following
the end of each calendar quarter, and the last payment shall be due and
paid on the Termination Date. The applicable rate shall be the rate
set forth below:
Equal to or Equal to or Equal to or Equal to or
Better than Better than Better than Better than Lower than
BBB and Baa2 BBB- and Baa3 BB+ and Ba1 BB and Ba2 BB or Ba2
------------ ------------- ----------- ----------- ----------
.15% .20% .25% .25% .375%
(b) If no senior long-term unsecured public debt rating (without credit
enhancement) for the Company from Standard & Poor's or Moody's is in
effect at the relevant time, the facility fee shall be the amount set
forth in the furthest right-hand column in sub-clause (a) above.
2.08. Agent's and Co-Agent's Fees. The Company shall pay to the Agent and
the Co-Agent agency fees, administration fees and such other fees in such
amounts and at such times as may be agreed upon by the Company and the
Agent and the Company and the Co-Agent in writing from time to time.
2.09. Computations of Interest and Fees; Banking Day.
(a) All computations of interest and commissions under this Agreement
shall be made on the basis of
(i) a year of three hundred sixty-five (365) or three hundred
sixty-six (366), as the case may be, days and actual days elapsed
with respect to Reference Rate Advances; and
(ii) a year of three hundred sixty (360) days and actual days
elapsed with respect to Fixed Rate Advances, Optional Currency
Advances, Absolute Rate Loans and LIBOR Loans. Interest shall
accrue on any principal balance outstanding from and including the
date of a Borrowing to but excluding the date on which such
principal balance is repaid.
(b) All computation of fees under this Agreement shall be made on the
basis of a year of three hundred sixty-five (365) or three hundred
sixty-six (366) days, as the case may be, and actual days elapsed.
2.10. Late Payment; Date of Receipt of Notices.
(a) If any sum of principal or, to the extent permitted by law,
interest in respect of any Borrowing is not paid when due, whether by
acceleration or otherwise, the Company will, on demand, pay interest
thereon from its due date until paid in full at a rate per annum equal
to two percent (2%) in excess of the sum of the Reference Rate and the
Applicable Margin.
(b) All notices given by the Company to the Agent and received by the
Agent after
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(i) 10:00 a.m., Chicago time, on a Banking Day in respect of
Reference Rate Advances,
(ii) 10:00 a.m., Chicago time, on a Banking Day, in respect of
Fixed Rate Advances or Optional Currency Advances, and
(iii) 10:00 a.m., Chicago time, on a Banking Day, in respect of
LIBOR Loans or Absolute Rate Loans,
shall be deemed received on the next Banking Day.
2.11. Method of Payment; Mistakes.
(a) Each payment of principal, interest and other sums due under this
Agreement shall be made without set-off or counterclaim in Dollars or
the relevant Optional Currency in immediately available funds (or such
other funds having similar availability as the Agent may reasonably
require) on a Banking Day not later than 12:00 noon, Chicago time. All
sums received after such time shall be deemed received on the next
Banking Day. Any payment due on a day that is not a Banking Day shall
be made on the next Banking Day, subject to the practices of the London
interbank market. All payments to the Agent shall be made at the
locations specified on Schedule 1 hereto with respect to the relevant
currency.
(b) Payment of all sums under this Agreement shall be made by the
Company to the Agent for the account of the Banks, and the Agent shall
promptly distribute to each Bank its share of such payments by wire
transfer of immediately available funds.
(c) Unless the Agent shall have been notified by telephone (confirmed
in writing, by telex or telecopy), by any Bank prior to a Borrowing
date, that such Bank will not make available to the Agent such Bank's
pro rata share of such Borrowing or drawing under a Facility Letter of
Credit, the Agent may (but shall not be required to) assume that such
Bank has made such amount available to the Agent and, in reliance
thereon, may make available to the Company or the Issuer a
corresponding amount. If such Bank makes its pro rata share of a
Borrowing or drawing under a Facility Letter of Credit available to the
Agent after a Borrowing date, such Bank shall pay to the Agent on
demand an amount equal to the product of (i) the daily average Federal
Funds Rate from and including the Borrowing date to but excluding the
date such Bank's pro rata share of the Borrowing or drawing under a
Facility Letter of Credit was made available to the Agent (the "Out of
Funds Period") multiplied by (ii) an amount equal to such Bank's pro
rata share of the Borrowing or drawing under a Facility Letter of
Credit multiplied by (iii) the number of days in the Out of Funds
Period. A certificate signed by an authorized officer of the Agent
submitted to any Bank with respect to any amounts owing under this
subsection (c) shall be conclusive in the absence of manifest error.
If such amount is not in fact made available to the Agent by such Bank
within one (1) Banking Day after a Borrowing date, the Agent shall be
entitled to recover such amount, with interest thereon at the rate per
annum then applicable to such Borrowing or drawing under a Facility
Letter of Credit, on demand from the Company, without prejudice to the
Agent's and the Company's rights against such defaulting Bank.
(d) Unless the Agent shall have been notified by telephone (confirmed
in writing or by telex or telecopy) by the Company, prior to any date
on which a payment is due hereunder, under the Notes or on a Facility
Letter of Credit, that the Company will not make the required payment
on such date, the Agent may (but shall not be required to) assume that
the Company will make such payment to the Agent and, in reliance upon
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such assumption, may make available to each Bank the amount due to it
on such date. If such amount is not in fact paid to the Agent by the
Company within one (1) Banking Day after such payment is due, the Agent
shall be entitled to recover from each Bank the amount paid to it by
the Agent, together with interest thereon in the amount equal to the
product of (i) the daily average Federal Funds Rate from and including
the payment date to but excluding the date the payment was made
available to the Agent (the "Out of Funds Period") multiplied by (ii)
an amount equal to such Bank's pro rata share of the total amount paid
by the Agent multiplied by (iii) the number of days in the Out of Funds
Period. A certificate signed by an authorized officer of the Agent
submitted to any Bank with respect to any amounts owing under this
subsection (d) shall be conclusive in the absence of manifest error.
2.12. Optional Prepayment; Funding Losses on Any Prepayment.
(a) The Company shall not prepay all or any part of the Bid Facility.
The Company may, without premium or penalty, at any time prepay all or
any part of the Revolving Credit Facility as follows, together with
accrued and unpaid interest on the amount prepaid to but excluding the
date of payment:
(i) in a minimum amount of Five Million Dollars ($5,000,000) and
upon written notice received by the Agent at least one (1) Banking
Day prior to the date of payment with respect to Reference Rate
Advances;
(ii) in a minimum amount of Ten Million Dollars ($10,000,000)
and upon written notice received by the Agent at least two (2)
Banking Days prior to the date of payment with respect to CD Rate
Advances; and
(iii) in a minimum amount of Ten Million Dollars ($10,000,000)
(or the Equivalent Amount thereof in an Optional Currency) and upon
written notice received by the Agent at least three (3) Banking
Days prior to the date of payment with respect to Eurodollar
Advances and Optional Currency Advances.
(b) Notwithstanding Section 2.12(a), if the Company repays or prepays
Bid Loans, Optional Currency Advances or Fixed Rate Advances on a date
other than the last day of an Interest Period, the Company shall pay,
on demand by each Bank, such amount (as determined by such Bank) as is
required to compensate such Bank for any additional losses, costs or
expenses which such Bank may reasonably incur as a result of such
payment, including, without limitation, any loss, costs or expense
(including a loss of profit) incurred by reason of the liquidation or
re-employment of deposits or other funds acquired by such Bank to fund
or maintain such Bid Loan, Optional Currency Advance or Fixed Rate
Advance. A Bank's written statement to the Company, signed by an
authorized officer, of the amount owed in respect of this subsection
shall be conclusive evidence, absent manifest error, of the amount to
be paid.
2.13. Reduction or Termination of Commitments. Upon at least three (3)
Banking Days' notice to the Agent and on the last day of an Interest
Period, the Company may reduce the Commitments from time to time in whole
or in part in an aggregate amount not less than Ten Million Dollars
($10,000,000) and integral multiples of One Million Dollars ($1,000,000) in
excess thereof or may terminate the Commitments, and thereafter, if the
Commitments are reduced, the computation of any facility fees shall be
based upon such reduced Commitments; provided, however, that the
Commitments may not at any time be reduced by the Company if the reduced
Commitments would be less than the amount outstanding hereunder, under the
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Notes and the aggregate Facility Letter of Credit Obligations for all Banks
on the date of reduction. Any optional reduction of a portion of the
Commitments or termination shall not be reinstated.
2.14. Taxes.
(a) All payments or reimbursements under this Agreement and any
instrument or agreement required hereunder shall be made free and clear
of and without deduction for any taxes, fees or other charges of any
nature whatsoever imposed by any taxing authorities.
(b) The Company agrees to pay on behalf of each Bank directly to the
appropriate Governmental Authority, or to reimburse each Bank for the
cost of, any or all taxes or other duties which may be imposed by any
Governmental Authority with respect to the Credit, except such taxes
(including income taxes or franchise taxes of any taxing jurisdiction)
as are imposed on or measured by each Bank's net income or receipts.
Each Bank which is organized outside the United States shall deliver to
the Company such certificates, documents, or other evidence as the
Company may reasonably require from time to time as are necessary to
establish that such Bank is not subject to withholding under Section
1441 or 1442 of the Code, or comparable successor provisions, because
payments of interest to such Bank are effectively connected with the
conduct of such Bank of a trade or business in the United States or
exempt from United States tax under provision of an applicable tax
treaty.
(c) If the Company is legally prohibited from complying with
subparagraph (a) or (b), payments due to any such Bank under this
Agreement and any instrument or agreement required hereunder shall be
increased so that, after provisions for taxes and all taxes on such
increase, the amounts received by such Bank will be equal to the
amounts required under this Agreement and any instrument or agreement
required hereunder if no taxes were due on such payments.
(d) The Company shall confirm that all such taxes or duties have been
paid by sending official tax receipts, or notarized copies thereof, to
the Agent within thirty (30) days after the due date for each payment
of any such tax or duty.
(e) Each Bank will use its best efforts to notify the Company of any
taxes subject to this provision of which it has knowledge.
2.15. Reserves, Etc.
(a) The Company shall reimburse or compensate each Bank for all costs
incurred, losses suffered (including lost profit) or payments made by
such Bank which are applied or allocated by such Bank to its Eurodollar
Advances, Optional Currency Advances, LIBOR Loans, its Commitment
hereunder or the Facility Letters of Credit (all as determined by such
Bank in good faith and in its sole and absolute discretion) by reason
of:
(i) any and all present or future reserve, deposit or similar
requirements against (or against any class of or change in or in
the amount of) assets or liabilities of such Bank; or
(ii) compliance by such Bank with any directive, requirement or
request from any regulatory authority, whether or not having the
force of law.
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(b) Capital Adequacy. If, after the date hereof, any Bank shall have
determined that the adoption of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Bank
(or its Lending Branch) with any direction, requirement, or request
regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, affects or would
affect the amount of capital required or expected to be maintained by
such Bank or any corporation controlling such Bank and such Bank
(taking into consideration such Bank's policies with respect to capital
adequacy and such Bank's desired return on capital) determines that the
amount of such capital is increased as a consequence of such Bank's
obligations under this Agreement, then, upon demand by such Bank, the
Company shall immediately pay to such Bank, from time to time as
specified by such Bank, additional amounts sufficient to compensate
such Bank for such increase.
(c) Payment of such sum pursuant to Section 2.15(a) or (b) shall be
made by the Company to any Bank making demand hereunder not later than
ten (10) days after any such demand is made. A certificate of any
Bank, signed by an authorized officer claiming compensation under this
Section and setting forth the additional amount or amounts to be paid
to it and explaining the manner in which such amount was determined
shall be conclusive evidence of the amount to be paid, absent manifest
error. Demand for payment of any amount pursuant to Section 2.15(a)
shall be made within thirty (30) days after the end of the Interest
Period for the Advance or Bid Loan against which such cost, loss or
payment is incurred. Payment shall not be demanded by any Bank
pursuant to Section 2.15(b) for any portion of any period prior to
forty-five (45) days before the date of such demand for which such
Bank's capital is required to be increased.
(d) At any time and from time to time if the Company shall receive a
demand or request for payment from a Bank under Section 2.15(b), the
Company may elect to terminate or replace any such Bank and thereby
terminate the rights and obligations of such Bank, under this Agreement
by doing any one of the following within forty-five (45) days of
receipt of the demand or request:
(i) the Company may, provided no Default or Event of Default
then exists and upon three Banking Days prior notice to such Bank
(with a copy to the Agent), and if such notice is given the Company
shall, prepay in full all Advances (if any) and Bid Loans then
owing to such Bank together with accrued interest thereon and all
fees and other amounts payable to such Bank by the Company
hereunder (including but not limited to any increased costs or
additional amounts and any taxes, incurred by such Bank prior to
the effective date of such prepayment) and terminate the Commitment
of such Bank in full. If the Commitment of any Bank shall be so
terminated, the Company may (without the consent of, but upon
notice to, the Agent and the other Banks), request another Bank or
Banks or designate another bank to replace such Bank and to assume
all or part of the terminated Commitment pursuant to documentation
which shall be reasonably satisfactory to the Agent and under which
the assuming bank shall undertake, to the extent of the portion of
the terminated Commitment assumed by it, to assume the rights and
undertake the obligations of a Bank hereunder as though the
assuming bank had initially been a party hereto.
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(ii) The Company may request such Bank (with a copy to the
Agent) to, and such Bank will, if requested by the Company, unless
a Default or an Event of Default shall have occurred and shall be
continuing, assign to one or more financial institutions in
accordance with Section 9.04 (excluding, however, the 20% retention
requirement in Section 9.04(a)) all Advances and Bid Loans then
owing to such Bank and all rights and obligations hereunder,
provided that (A) each such assignment shall be either an
assignment of all of the rights and obligations of the assigning
Bank under this Agreement or an assignment of a portion of such
rights and obligations made concurrently with another such
assignment or assignments which together cover all of the rights
and obligations of the assigning Bank under this Agreement, and (B)
no Bank shall be obligated to make any such assignment as a result
of a demand by the Company pursuant to this Section 2.15(d) unless
and until such Bank shall have received one or more payments from
either the Company or one or more assignees in an aggregate amount
at least equal to the aggregate outstanding principal amount of the
Advances and Bid Loans owing to such Bank, together with accrued
interest thereon to the date of payment of such principal amount
and all fees and other amounts payable to such Bank under this
Agreement (including but not limited to any increased costs or
additional amounts and any taxes, incurred by such Bank prior to
the effective date of such assignment and any reasonable costs,
expenses and attorneys' fees (including without limitation the
reasonable allocated cost of staff counsel) incurred in connection
with making such assignment). Without prejudice to the survival of
any other agreement of the Company hereunder, the agreements of the
Company contained in Sections 2.10, 2.12, 2.14, 2.15 and 2.18 shall
survive for the benefit of any Bank being replaced under this
Section 2.15(d) with respect to the time prior to such replacement.
2.16. Illegality.
(a) If at any time any Bank, in its sole and absolute discretion,
determines that any change in applicable law or regulation or in the
interpretation thereof makes it unlawful for such Bank to make or
continue its portion of the Advances or any Bid Loan bearing interest
calculated with reference to LIBOR, then such Bank shall promptly give
notice (signed by an authorized officer) thereof to the Company and the
Agent and, upon the giving of such notice, such Bank's obligation to
make such Advances or Bid Loans, as the case may be, shall terminate
and thereafter only Reference Rate Advances or CD Rate Advances shall
be available from such Bank. If designating a different Lending Branch
with respect to such Advances or Bid Loans, as the case may be, would
obviate the need to give such notice, any affected Bank shall so
designate, so long as such designation shall not be illegal or
otherwise disadvantageous to such Bank.
(b) Upon receipt of such notice, the Company shall repay in full the
then outstanding principal amount of each affected Advance or Bid Loan
bearing interest with reference to LIBOR, together with interest
thereon and any amounts payable under Section 2.12(b) either (i) on the
last day of the then current Interest Period applicable to such Advance
or Bid Loan if such Bank may lawfully continue to maintain and fund
such Advance or Bid Loan to such day or (ii) immediately if such Bank
may not lawfully continue to maintain and fund such Advance or Bid Loan
to such day. On the date of any prepayment pursuant to clause (ii),
the Company shall borrow a Reference Rate Advance, or at the Company's
option, subject to the requirements of Section 2.02, a CD Rate Advance
from such Bank in an equal principal amount for an Interest Period
having the same number of days remaining in the then current Eurodollar
Advance Interest Period, Optional Currency Advance Interest Period or
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LIBOR Loan Interest Period, as the case may be.
(c) If the condition or circumstance causing the giving of notice
ceases to exist, the Agent or such Bank shall give notice thereof to
the Company, and the Company may then borrow Advances or Bid Loans
bearing interest calculated with reference to LIBOR, as the case may
be, in accordance with the terms hereof.
2.17. Unavailability. If the Agent is advised
(a) by the Majority Banks that deposits in Dollars or the relevant
Optional Currency in the amount of the Advances to be made by the Banks
are not being offered to the Majority Banks in the relevant market for
the Interest Period requested by the Company, or
(b) by Banks having Commitments equal to at least 50.1% of the
Aggregate Commitments that the CD Rate or LIBOR, as the case may be,
will not adequately and fairly reflect the cost to such Banks of
maintaining or funding their Fixed Rate Advances or Optional Currency
Advances for the requested Interest Period, the Agent shall promptly
give notice thereof to the Company and the Banks, and the obligations
of the Banks to make Fixed Rate Advances, or Optional Currency
Advances, as the case may be, shall be suspended until the Agent
notifies the Company that the circumstances giving rise to such
suspension no longer exist. If the circumstances causing such
suspension shall cease, the Agent shall give prompt notice thereof to
the Company, and the Company may then borrow Fixed Rate Advances or
Optional Currency Advances, as the case may be, in accordance with the
terms of this Agreement.
2.18. The Bid Facility.
(a) Bid Loans. From time to time, from the Closing Date to but
excluding the Termination Date, and provided that both Standard &
Poor's and Moody's ratings for the Company's senior long-term unsecured
public debt (without credit enhancement) is at least equal to BB and
Ba2, respectively, each Bank severally agrees to lend to the Company
Absolute Rate Loans and LIBOR Loans pursuant to bids which have been
made by such Bank pursuant to Section 2.18(c) and accepted by the
Company pursuant to Section 2.18(d); provided, however, that the total
amount of Advances for all Banks (after determining the Equivalent
Amount of all Optional Currency Advances), outstanding Facility Letter
of Credit Obligations and Bid Loans for all Banks outstanding under
this Agreement may not exceed at any time the Aggregate Commitment.
Neither the Agent, the Co-Agent nor any Bank (other than the Bank who
has agreed to fund such Bid Loan) will be liable for the failure of a
Bank to fund a Bid Loan such Bank agrees to make to the Company.
Each Bank may, but shall have no obligation to, make a bid in response
to a request for bids by the Company pursuant to Section 2.18(b), which
may exceed such Bank's Commitment but not the maximum amount available
under the Credit as set forth above. Subject to the requirements of
Section 2.18(d), the Company shall have no obligation to accept any of
the bids made pursuant to a request for bids.
(b) Requests for Bids. The Company may request the Bid Agent to
solicit bids from the Banks for one or more Bid Loans by a telephone
notice received not later than 10:00 a.m., Chicago time, one (1)
Banking Day prior to the Value Date for Absolute Rate Loans and not
later than 12:00 noon, Chicago time, three (3) Banking Days prior to
the Value Date for LIBOR Loans in Dollars and not later than 12:00
noon, Chicago time, six (6) Banking Days prior to the Value Date for
LIBOR Loans in Optional Currencies. Each such telephone request shall
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be followed promptly by a request in writing, by telecopy or by telex
in the form of Schedule 6 hereto and shall become irrevocable upon the
first notice of such request given by the Bid Agent to a Bank. The
Company may not request the Bid Agent to solicit bids within five (5)
Banking Days of any other request. Each request shall specify:
(i) the Value Date for the Bid Loans, which shall be a Banking
Day and the same day for all Bid Loans requested in such notice;
(ii) the principal amount of each Borrowing of Bid Loans under
this Section 2.18(b)(ii), which shall not be less than Ten Million
Dollars ($10,000,000) and shall be in an integral multiple of One
Million Dollars ($1,000,000) in excess thereof;
(iii) whether the Bid Loans are to be Absolute Rate Loans or
LIBOR Loans (but only one interest rate option may be specified in
each request); and
(iv) if the Bid Loans are to be Absolute Rate Loans, the
Interest Period for each such Loan, or if the Loans are to be LIBOR
Loans, the Interest Period for each such Bid Loan.
The Bid Agent shall promptly notify the Banks by telephone of each
request for bids received from the Company pursuant to this Section
2.18. Each such telephone notice from the Bid Agent shall be followed
promptly by notice in writing, by telecopy or by telex in the form of
Schedule 6 received from the Company.
(c) Bids. Each Bank shall notify the Bid Agent of the Bid Loans for
which such Bank is bidding by an irrevocable notice in writing, by
telecopy or by telex in the form of Schedule 7 hereto received by the
Bid Agent not later than 9:00 a.m., Chicago time, on the Value Date for
Absolute Rate Loans, not later than 1:00 p.m., Chicago time, three (3)
Banking Days prior to the Value Date for LIBOR Loans in Dollars and not
later than 1:00 p.m., Chicago time, three (3) Banking Days prior to the
Value Date for LIBOR Loans in Optional Currencies; provided that the
Bid Agent and any Bank may bid on not more than three (3) Bid Loans in
response to any one request by the Company for bids; provided further
that bids by the Bid Agent must be submitted to the Company not later
than 8:45 a.m., Chicago time, on the Value Date for Absolute Rate Loans
and not later than 12:45 p.m., Chicago time, three (3) Banking Days
prior to the Value Date for LIBOR Loans in Dollars and Optional
Currencies. Each notice shall specify:
(i) the principal amount such Bank is bidding for each Bid Loan,
which shall not be less than Five Million Dollars ($5,000,000) and
shall be an integral multiple of One Million Dollars ($1,000,000)
in excess thereof;
(ii) for Absolute Rate Loans, the Absolute Rate for each such
Bid Loan, and for LIBOR Loans, the Margin for each such Bid Loan
(but the interest rate option for all Bid Loans covered by such bid
must be the same as specified in the Company's request for bids);
and
(iii) for Absolute Rate Loans, the Interest Period for each such
Bid Loan, and for LIBOR Loans, the Interest Period for each such
Bid Loan.
The Bid Agent shall notify the Company by telephone of the bid received
from each Bank pursuant to this Section 2.18(c) not later than 9:30
a.m., Chicago time, on the date such bid is received by the Bid Agent
for Absolute Rate Loans and not later than 1:30 p.m., Chicago time, on
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the date such bid is received by the Bid Agent for LIBOR Loans in
Dollars and Optional Currencies.
(d) Acceptance of Bids. If the Company wishes to accept a bid or bids,
the Company shall by irrevocable telephone notice received by the Bid
Agent not later than 10:00 a.m., Chicago time, on the Value Date for
Absolute Rate Loans and not later than 2:00 p.m, Chicago time, three
(3) Banking Days prior to the Value Date for LIBOR Loans, notify the
Agent and the Bid Agent of the bid or bids it accepts, which telephone
notice shall be followed promptly by a notice in writing, by telecopy
or by telex in the form of Schedule 8 hereto. The Bid Agent shall
promptly notify the Banks by telephone of the amount of the bids
accepted and of the rates at which bids have been accepted. The
acceptance of bids is subject to the following requirements:
(i) the Company may accept one or more of the Bid Loans
specified in a bid (but not more than the aggregate amount
requested by the Company), and may accept a Bid Loan in an amount
less than the amount specified in the bid for such Bid Loan,
provided that, subject to the provisions of Section 2.18(d)(iii)
and (iv), each Bid Loan accepted shall be in an amount not less
than Five Million Dollars ($5,000,000) and an integral multiple of
One Million Dollars ($1,000,000) in excess thereof;
(ii) the acceptance of bids may only be made on the basis of
ascending interest rates for Bid Loans with the same Interest
Period;
(iii) if bids are made by two or more Banks for Bid Loans with
the same interest rates for the same Interest Period and for a
greater aggregate amount than the Company wishes to borrow, the
Company shall allocate its acceptance among such bids as nearly as
possible (in amounts of One Million Dollars ($1,000,000) or
integral multiples thereof) in proportion to the bids made by each
Bank; and
(iv) the acceptance of bids is subject to the maximum limits for
borrowing under Sections 2.01(a) and 2.18(a) (as reduced pursuant
to Section 2.13), and if bids are made by two or more Banks for a
greater aggregate amount than permitted by such limits, the Company
shall allocate its acceptance among such bids in proportion to the
bid made by each such Bank so that the total amounts of Advances
and Bid Loans do not exceed such limits.
(e) Bid Agent's Fee. The Company shall pay to the Bid Agent for the
account and sole use and benefit of the Bid Agent a fee of $200 per
Bank (excluding the Agent) per auction.
(f) Resignation of the Bid Agent. The Bid Agent may resign at any time
by giving written notice to the Agent, the Banks and the Company. Upon
any such resignation by the Bid Agent, the Majority Banks with the
prior written consent of the Company, which shall not be unreasonably
withheld, shall have the right to appoint a successor from among the
Banks party hereto. If no successor shall have accepted such
appointment within forty-five (45) days after the retiring Bid Agent's
giving of notice of resignation, the retiring Bid Agent may, on behalf
of the Banks, appoint a successor thereto with the prior written
consent of the Company, which shall not be unreasonably withheld and
such successor Bid Agent shall be a bank or trust company organized
under the laws of the United States or any state thereof having a
combined capital and surplus of at least $1,000,000,000. Upon the
acceptance by such successor of its appointment hereunder, such
successor shall succeed to and become vested with all the rights and
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obligations of the retiring Bid Agent, and the retiring Bid Agent shall
be discharged from its obligations under this Agreement except with
respect to any liability with respect to a breach of any obligation
hereunder prior to such resignation. The provisions of this Agreement
shall inure to the benefit of the retiring Bid Agent as to any actions
taken or omitted to be taken by it while it held such position under
this Agreement.
2.19. Telephone Notice, Indemnity. The Company shall protect the Banks,
the Bid Agent, the Agent and the Co-Agent and hold them harmless from and
not liable for any and all loss, damage, claim, or expense (including,
without limitation, reasonable attorneys' fees and the reasonable allocated
cost of staff counsel) incurred by the Banks, the Bid Agent, the Co-Agent
and the Agent in connection with or in relation to any act or any failure
to act upon telephone instructions received by any Bank, the Bid Agent, the
Co-Agent or the Agent from the Company or any persons who has identified
himself as an authorized officer of the Company, whether or not the
instructions are actually given by an authorized officer of the Company;
provided, however, that such indemnity shall not, as to the Bid Agent, the
Agent, the Co-Agent or any Bank, apply to any such losses, claims, damages,
liabilities or related expenses arising from the gross negligence or
willful misconduct of the party to be indemnified. If such written notice
conflicts with the telephonic notice, the Agent, the Co-Agent, the Banks
and the Bid Agent shall be entitled to rely on the telephonic notice.
2.20. Facility Letters of Credit. Subject to the terms and conditions of
this Agreement, the Company may obtain Facility Letters of Credit, from
time to time during the period commencing on the date hereof and ending on
the Banking Day prior to the Termination Date. The Company may request any
Bank to issue a Facility Letter of Credit and such Bank may, but is not
required to, issue a Facility Letter of Credit. If no other Bank is
willing to issue a Facility Letter of Credit, First Chicago shall issue
such Facility Letter of Credit. Any Bank issuing a Facility Letter of
Credit shall be an Issuer. No Bank shall be responsible for issuing a
Facility Letter of Credit that First Chicago or another Bank has agreed to
issue if First Chicago or such other Bank fails to issue such Facility
Letter of Credit. Nothing herein contained shall prohibit the Company from
obtaining letters of credit outside of this Agreement.
(a) Types and Amounts. No Issuer (including First Chicago) shall:
(i) issue any Facility Letter of Credit if the aggregate maximum
amount then available for drawing under Facility Letters of Credit,
after giving effect to the Facility Letter of Credit requested
hereunder, shall exceed any limit imposed by law or regulation upon
the Issuer;
(ii) issue any Facility Letter of Credit if, after giving effect
thereto, the sum of (a) the Facility Letter of Credit Obligations
and (b) the aggregate unpaid principal balance of the Advances plus
the Bid Loans would exceed the Aggregate Commitment;
(iii) issue any Facility Letter of Credit which has an
expiration date (a) later than twelve months after the Issuance
Date thereof or (b) after the Termination Date, provided that in no
case shall any Facility Letter of Credit expire after the
Termination Date; or
(iv) issue any Facility Letter of Credit if the Facility Letter
of Credit Obligations, after giving effect to the Facility Letter
of Credit requested hereunder, shall exceed $40,000,000.
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(b) Conditions. In addition to being subject to the satisfaction of
the conditions contained in Article III, the obligation of the Issuer
to issue any Facility Letter of Credit is subject to the satisfaction
in full of the following conditions:
(i) the Company shall have delivered to the Issuer, with a copy
to the Agent, at such times and in such manner as the Issuer may
reasonably prescribe such documents and materials as may be
required pursuant to the terms of the proposed Facility Letter of
Credit and the proposed Facility Letter of Credit shall be
reasonably satisfactory to the Issuer as to form and content; and
(ii) as of the Issuance Date, no order, judgment or decree of
any court, arbitrator or Governmental Authority shall purport by
its terms to enjoin or restrain the Issuer from issuing the
proposed Facility Letter of Credit and no law, rule or regulation
applicable to the Issuer and no request or directive (whether or
not having the force of law) from any Governmental Authority with
jurisdiction over the Issuer shall prohibit or request that the
Issuer refrain from the issuance of Facility Letters of Credit
generally or the issuance of such proposed Facility Letter of
Credit in particular.
(c) Procedure for Issuance of Facility Letters of Credit.
(i) The Company shall give the Issuer and the Agent three (3)
Banking Days' prior written notice of any requested issuance of a
Facility Letter of Credit (except that, in lieu of such written
notice, the Company may give the Issuer (x) notice of such request
by tested telex or other tested arrangement satisfactory to the
Issuer or (y) telephonic notice of such request if confirmed in
writing by delivery to the Issuer (i) immediately (A) of a telecopy
of the written notice required hereunder which has been signed by
an authorized signatory of the Company or (B) of a telex containing
all information required to be contained in such written notice and
(ii) promptly (but in no event later than the requested time of
issuance) of a copy of the written notice required hereunder
containing the original signature of an authorized signatory of the
Company). Each such notice (each a "Letter of Credit Request")
shall be irrevocable once the relevant Facility Letter of Credit is
issued and shall specify the stated amount of the Facility Letter
of Credit requested, the Issuance Date (which day shall be a
Banking Day) of such requested Facility Letter of Credit, the date
on which such requested Facility Letter of Credit is to expire
(which date shall be a Banking Day and shall in no event be later
than the Termination Date), the purpose for which such Facility
Letter of Credit is to be issued, and the Person for whose benefit
the requested Facility Letter of Credit is to be issued. Promptly
after receipt thereof, the Agent shall notify each Bank of the
contents of each Letter of Credit Request. At the time such Letter
of Credit Request is made, the Company shall also provide the
Issuer and the Agent with a copy of the form of the Facility Letter
of Credit it is requesting be issued. Such Letter of Credit
Request, to be effective, must be received by the Issuer and the
Agent not later than 2:00 p.m. (Chicago time) on the last Banking
Day on which notice can be given under this Section 2.20(c).
(ii) Subject to the terms and conditions of this Section 2.20(c)
and provided that the applicable conditions set forth in Article
III and Section 2.20(b) have been satisfied, the Issuer shall, on
the requested Issuance Date, issue the requested Facility Letter of
Credit for the account of the Company in accordance with the
Issuer's usual and customary business practices.
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(iii) An Issuer shall not amend, renew, extend, or permit an
extension of any Facility Letter of Credit unless the requirements
of this Section 2.20(c) are met as if a new Facility Letter of
Credit were being requested and issued.
(iv) On and after the Closing Date, all Existing Letters of
Credit shall be deemed to be Facility Letters of Credit and subject
to the terms of this Agreement as fully and completely as if such
Letters of Credit had been issued hereunder as Facility Letters of
Credit.
(d) Reimbursement Obligations.
(i) The Issuer shall promptly notify the Company and the Agent
and each Bank of any draw under a Facility Letter of Credit. The
Company shall reimburse the Agent for the account of the Issuer, in
immediately available funds, for draws under a Facility Letter of
Credit no later than the Banking Day next succeeding the date of
the payment by the Issuer.
(ii) Any Reimbursement Obligation with respect to any Facility
Letter of Credit shall bear interest from the date of the relevant
draws under the relevant Facility Letter of Credit at the interest
rate for Borrowings not paid at maturity as calculated in
accordance with Section 2.10.
(iii) Any action taken or omitted to be taken by the Issuer
under or in connection with any Facility Letter of Credit, if taken
or omitted in the absence of willful misconduct or gross
negligence, shall not put the Issuer under any resulting liability
to any Bank or, assuming that the Issuer has complied with the
procedures specified in Section 2.20(c) and such Bank has not given
a notice contemplated by Section 2.20(e) that continues in full
force and effect, relieve such Bank of its obligations hereunder to
the Issuer. In determining whether to pay under any Facility
Letter of Credit, the Issuer shall have no obligation relative to
the Banks, the Agent or the Company other than to confirm that any
documents required to be delivered under such Facility Letter of
Credit appear to comply on their face with the requirements of such
Facility Letter of Credit.
(e) Participation; Receipt of Payments.
(i) Immediately upon issuance or extension or renewal by an
Issuer of any Facility Letter of Credit in accordance with the
procedures set forth in Section 2.20(c), and for all Existing
Letters of Credit, each Bank shall be deemed to have irrevocably
and unconditionally purchased and received from the Issuer, without
recourse or warranty, an undivided interest and participation equal
to its Percentage Share in such Facility Letter of Credit
(including, without limitation, all obligations of the Company with
respect thereto) and any security therefor or guaranty pertaining
thereto, if any; provided, that a Facility Letter of Credit issued
by the Issuer shall not be deemed to be a Facility Letter of Credit
for purposes of this Section 2.20(e) if the Issuer and the Agent
shall have received written notice from any Bank on or before one
Banking Day prior to the date of its issuance of such Facility
Letter of Credit that one or more of the conditions contained in
Article III is not then satisfied, and, in the event the Issuer and
the Agent receive such a notice, there shall be no further
obligation on the part of First Chicago or any Issuer to issue any
Facility Letter of Credit until such notice is withdrawn by that
Bank or such condition has been effectively waived in accordance
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with the provisions of this Agreement.
(ii) In the event that an Issuer makes any payment under any
Facility Letter of Credit and the Company shall not have repaid
such amount to the Issuer pursuant to Section 2.20(d), the Issuer
shall promptly notify the Agent and each Bank of such failure, and
each Bank shall promptly and unconditionally pay to the Agent for
the account of the Issuer the amount of such Bank's Percentage
Share of the unreimbursed amount of any such payment. The failure
of any Bank to make available to the Agent, in immediately
available funds, its Percentage Share of the unreimbursed amount of
any such payment shall not relieve any other Bank of its obligation
hereunder to make available to the Agent, in immediately available
funds, its Percentage Share of the unreimbursed amount of any
payment on the date such payment is to be made, but no Bank shall
be responsible for the failure of any other Bank to make available
to the Agent its Percentage Share of the unreimbursed amount of any
payment on the date such payment is to be made.
(iii) Whenever the Agent or an Issuer receives a payment on
account of a Reimbursement Obligation, including any interest
thereon, it shall promptly pay to each Bank which has funded its
participating interest therein, in immediately available funds, an
amount equal to such Bank's Percentage Share thereof.
(iv) The obligations of a Bank to make payments to the Agent for
the account of an Issuer with respect to a Facility Letter of
Credit shall be absolute, unconditional and irrevocable, not
subject to any counterclaim, set-off, qualification or exception
whatsoever and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances.
(f) Payment of Reimbursement Obligations.
(i) The Company agrees to pay to the Agent for the account of
the Issuer the amount of all Reimbursement Obligations, interest
and other amounts payable to the Issuer under or in connection with
any Facility Letter of Credit immediately when due, irrespective of
any claim, set-off, defense or other right which the Company or any
Subsidiary may have at any time against the Issuer or any other
Person, under all circumstances, including without limitation, any
of the following circumstances:
(A) any lack of validity or enforceability of this Agreement
or any of the other documents, instruments or agreements
executed by the Company in connection therewith;
(B) the existence of any claim, setoff, defense or other
right which the Company or any Subsidiary may have at any time
against a beneficiary named in a Facility Letter of Credit or
any transferee of any Facility Letter of Credit (or any Person
for whom any such transferee may be acting), any Issuer, any
Bank, or any other Person, whether in connection with this
Agreement, any Facility Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including
any underlying transactions between the Company or any
Subsidiary and the beneficiary named in any Facility Letter of
Credit);
(C) any draft, certificate or any other document presented
under the Facility Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
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(provided any such draft, certificate or other document
appeared valid on its face when presented to the Issuer);
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of this Agreement
or any of the documents, instruments or agreements executed by
the Company in connection therewith; or
(E) the occurrence of any Default or Event of Default.
(ii) In the event any payment by the Company received by the
Agent or an Issuer with respect to a Facility Letter of Credit and
distributed to the Banks on account of their participations is
thereafter set aside, avoided or recovered from the Agent or an
Issuer in connection with any receivership, liquidation,
reorganization or bankruptcy proceeding, each Bank which received
such distribution shall, upon demand by the Agent, contribute to
the Agent or such Issuer such Bank's Percentage Share of the amount
set aside, avoided or recovered together with interest at the rate
required to be paid by the Agent or such Issuer upon the amount
required to be repaid by it.
(g) Compensation for Facility Letters of Credit. The Company shall pay
to the Agent, for the ratable account of each Bank, a Letter of Credit
Fee in respect of the facility Letter of Credit then being issued in
accordance with the following schedule, based on the lower of the most
recently published final Standard & Poor's or Moody's rating of the
Company's senior long-term unsecured public debt (without credit
enhancement) in effect on the day such Facility Letter of Credit is
issued. For Existing Letters of Credit, the Letter of Credit Fee will
commence on the Closing Date. Promptly upon its receipt of such Letter
of Credit Fee, the Agent shall promptly pay to each Bank, in
immediately available funds, an amount equal to such Bank's Percentage
Share thereof.
Letter of
Credit Fee
----------
Equal to or Better
than BBB and Baa2 .25%
Equal to or Better
than BBB- and Baa3 .35%
Equal to or Better
than BB+ and Ba1 .50%
Equal to or Better
than BB and Ba2 .625%
Lower than BB or Ba2 1.000%
Any Issuer shall have the right to receive, for its own account, (i) in
respect of each Facility Letter of Credit issued by it, a fee in the
amount of 1/4 of 1% per annum of the maximum face amount of such
Facility Letter of Credit ("Issuer's Fee"), and (ii) all of its
reasonable and customary costs of issuing and servicing the Facility
Letters of Credit. The Letter of Credit Fee and the Issuer's Fee shall
begin to accrue on the Issuance Date or, for Existing Letters of
Credit, commencing on the Closing Date, and shall be payable quarterly
in arrears.
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2.21. Extension of Termination Date. The Company may, from time to time,
by notice to the Agent (each such notice being an "Extension Notice") given
no later than 60 days but not sooner than 90 days prior to the first and
second anniversary of the Closing Date, extend the Termination Date to a
date one year after the then applicable Termination Date; provided,
however, that such extension shall not be effective unless all of the Banks
consent to such extension by written notice to the Agent within 30 days of
the Agent's receipt of the Extension Notice. Failure to respond shall be
deemed a rejection of the extension request. The Agent shall notify each
Bank of its receipt of an Extension Notice within two (2) Business Days
after the Agent's receipt thereof. The Company may deliver only one (1)
Extension Notice per year and not more than two (2) Extension Notices
during the term of this Agreement. In no event may the Termination Date be
extended beyond December 31, 1999. If less than 100% of the Banks consent
to the proposed extension, the Commitments of the Banks shall terminate on
the then effective Termination Date without giving effect to such proposed
extension.
ARTICLE III
CONDITIONS PRECEDENT
3.01. Conditions Precedent to Closing Date. In addition to the
requirements set forth in Section 3.02, the obligation of each Bank to make
its first Advance or Bid Loan or the Issuer to issue any Facility Letter of
Credit, as the case may be, under the Credit is subject to the condition
precedent that on the Closing Date, the following shall have been delivered
to the Agent, in form and substance satisfactory to the Agent and its
counsel and copies in sufficient numbers for each Bank:
(a) Confirmation Certificate. A certificate, certified by the
Secretary or an Assistant Secretary of the Company, stating that each
of the following items delivered in connection with the closing of the
Existing Agreement has not been amended and is still in force and
effect on the Closing Date:
(i) The articles of incorporation of the Company.
(ii) The by-laws of the Company.
(iii) The resolution passed by the Board of Directors of the
Company on July 16, 1992 authorizing the Borrowings provided for
herein and the execution, delivery and performance of this
Agreement, the Notes and any other instrument or agreement required
hereunder.
(b) Company's Incumbency Certificate. A certificate, signed by the
Secretary or an Assistant Secretary of the Company and dated the
Closing Date, as to the incumbency, and containing the specimen
signature or signatures, of the Persons authorized to execute and
deliver this Agreement, the Notes, and any other instrument or
agreement required hereunder.
(c) Agreement. A copy of this Agreement, duly executed by an
authorized officer of the Company.
(d) Notes. Committed Notes payable to the order of each Bank in the
amount of such Bank's Commitment, dated the Closing Date and duly
executed by an authorized officer of the Company.
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(e) No Default Certificate. A certificate, signed by the controller or
chief financial officer of the Company, stating that on the Closing
Date the representations and warranties contained in the Agreement are
true and correct and that no Default or Event of Default has occurred
and is continuing.
3.02. Conditions Precedent to Each Borrowing. The obligation of each Bank
to make any Advance or Bid Loan hereunder and the obligation of an Issuer
to issue any Facility Letter of Credit, including the first Advance or Bid
Loan or Facility Letter of Credit, is subject to the following conditions
precedent:
(a) On the date of any Borrowing or issuance of any Facility Letter of
Credit (other than a Refunding Borrowing), the representations and
warranties contained in Article IV (other than Section 4.09 and
4.13(a)) shall be true and correct as if made in writing on that date
and by making a request for such Borrowing or Facility Letter of
Credit, the Company shall be deemed to have made such representations
and warranties as of that date (except to the extent that any of the
Schedules hereto shall have been modified by more current information
furnished to the Banks in accordance with Section 5.02 or 5.03, in
which event such representations and warranties shall be deemed to be
made on the basis of the information contained in the modified
schedules).
(b) On the date of each Refunding Borrowing or renewal or extensions of
any Facility Letter of Credit (including, without limitation, any
automatic extensions pursuant to the terms of any such Facility Letters
of Credit), the representations and warranties contained in Sections
4.01 through 4.08, 4.10 through 4.12, 4.14 and 4.16 (except as any of
the Schedules hereto shall have been modified by more current
information furnished to the Banks in accordance with Section 5.02 or
5.03, in which event such representations and warranties deemed to be
made on the basis of the information contained in the modified
schedules) herein shall also be true and correct and the Company shall
be deemed to have remade such representations and warranties on each
such date as if made in writing by the Company on that date.
(c) The Agent or the Bid Agent shall have received from the Company the
notice of Borrowing described in Section 2.02 or the bid request
described in Section 2.18 or the Facility Letter of Credit Request
described in Section 2.20(c), as the case may be.
(d) With respect to the first Bid Loan by a Bank, an executed
Competitive Bid Note payable to the order of such Bank.
3.03. Termination of Existing Agreement. The parties hereto agree that
the commitments under the Existing Agreement shall terminate in their
entirety and the Existing Agreement shall be amended and restated by this
Agreement simultaneously with and subject to the effectiveness of this
Agreement and that, the Company shall simultaneously pay all other amounts
due and outstanding thereunder to but excluding the Closing Date.
3.04. Status of NBD. Upon and as of the effectiveness of this Agreement,
NBD Bank, N.A.) shall cease to be a "Bank" under this
Agreement. Notwithstanding the foregoing, NBD shall continue to be an
Issuer entitled to the benefit of this Agreement with respect
to the Existing Letter of Credit issued by NBD Bank.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that:
4.01. The Company's Existence. The Company is a corporation duly
organized and existing under the laws of the State of Delaware, with its
principal place of business in Waukegan, Illinois, and is duly qualified as
a foreign corporation and is properly licensed and in good standing in each
jurisdiction where the failure to qualify or be licensed would have a
material adverse effect on the business, properties or financial condition
of the Company and its Consolidated Subsidiaries taken as a whole.
4.02. Subsidiaries' Existence. Schedule 2(b) attached hereto contains a
list of all of the Company's Subsidiaries showing, as to each, the
jurisdiction of incorporation and as to each class of stock of such
Subsidiary, the amount issued and outstanding owned by any Person other
than the Company or a Subsidiary. All of the outstanding shares of stock
of each of the Subsidiaries shown on Schedule 2 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and, except for directors' qualifying shares, are owned by
the Company or another Subsidiary free and clear of all Liens. Each
Consolidated Subsidiary is duly organized and existing under the laws of
the jurisdiction of its incorporation, and is properly licensed and in good
standing in each jurisdiction in which the failure to qualify or be
licensed would have a material adverse effect on the business, properties
or financial condition of the Company and its Consolidated Subsidiaries
taken as a whole.
4.03. Company's Powers. The execution, delivery and performance of this
Agreement and any instrument or agreement required to be delivered by the
Company hereunder are within the Company's corporate powers, have been duly
authorized by all requisite corporate action, and are not in conflict with
the terms of any charter, by-law or other organizational papers of the
Company, or any instrument or agreement to which the Company is a party or
by which the Company is bound or affected.
4.04. Power of Company Officers. The officers of the Company executing
this Agreement, the Notes and any other certificate, instrument or
agreement required to be delivered by the Company hereunder have been duly
elected or appointed and were fully authorized to execute the same at the
time such agreement, certificate or instrument was executed.
4.05. Government and Other Approvals. No approval, consent, exemption or
other action by, or notice to or filing with, any Governmental Authority is
necessary in connection with the execution, delivery or performance by the
Company of this Agreement, the Notes or any other instrument or agreement
required hereunder.
4.06. Compliance With Laws. There is, to the best of the Company's
knowledge, no law, rule or regulation, nor is there any judgment, decree or
order of any court or Governmental Authority binding on the Company which
would be contravened by the execution, delivery or performance of this
Agreement, the Notes or any other instrument or agreement required
hereunder.
4.07. Enforceability of Agreement. This Agreement is the legal, valid and
binding agreement of the Company, and the Notes when executed and delivered
will be the legal, valid and binding agreements of the Company, enforceable
against the Company in accordance with their respective terms, and any
other instrument or agreement required hereunder, when executed and
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delivered, will be similarly legal, valid, binding and enforceable against
the Company.
4.08. Title to Property. The Company and its Subsidiaries have good and
marketable title to their respective properties and assets free and clear
of Liens except for Permitted Liens. The execution, delivery and
performance of this Agreement, the Notes or any other instrument or
agreement required to be delivered by the Company hereunder will not result
in the creation of any Lien. Schedule 3 attached hereto is a true and
correct listing of all existing material Liens on property owned by the
Company and its Subsidiaries.
4.09. Litigation. There are no suits, proceedings, claims or disputes
pending or, to the actual knowledge of the Company after due inquiry,
threatened against or affecting the Company or any Significant Subsidiary
and their respective properties, the adverse determination of which
individually or in the aggregate would in the reasonable judgment of the
Company materially adversely affect the Company's and its Consolidated
Subsidiaries' financial condition or operations taken as a whole or impair
the Company's ability to perform its obligations hereunder or under any
instrument or agreement required hereunder, except as disclosed in writing
on Schedule 4 hereto or otherwise disclosed to the Banks in accordance with
the terms hereof.
4.10. Events of Default. No Default or Event of Default has occurred and
is continuing or will result from the incurring of the obligations by the
Company under this Agreement.
4.11. Investment Company Act of 1940. The Company is not, and no
Affiliate of the Company is, and will by such acts as may be necessary
continue not to be, an investment company within the meaning of the
Investment Company Act of 1940.
4.12. Regulation U. The proceeds of the Advances, Bid Loans or Facility
Letters of Credit will not be used, directly or indirectly, to purchase or
carry any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock in violation of any applicable
regulation of the Board of Governors of the Federal Reserve System.
4.13. Financial Information.
(a) The financial statements dated September 30, 1994 and all other
information and data furnished by the Company to the Banks are
materially complete and correct, and such financial statements have
been prepared in accordance with GAAP and fairly present the
consolidated financial condition and results of operations of the
Company and its Consolidated Subsidiaries as of such date and for the
period ended on such date. Neither the Company nor any Consolidated
Subsidiary has any contingent obligations, liabilities for taxes or
other outstanding financial obligations which are material in the
aggregate, except as disclosed in such statements, information and data
or on Schedule 4 or Schedule 5 hereto.
(b) Since the date of the financial statements of the Company and its
Consolidated Subsidiaries most recently furnished to the Banks, there
has been no material adverse change in the financial condition of the
Company and its Consolidated Subsidiaries sufficient to impair the
Company's ability to repay the Credit in accordance with the terms
hereof.
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4.14. ERISA. No fact or circumstance, including but not limited to any
Reportable Event, exists in connection with any Plan of the Company or any
of its Consolidated Subsidiaries which would constitute grounds for the
termination of any such Plan by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer any
such Plan and which would result in the termination of a Plan and the
incurrence of material liability by the Company or its Affiliates to the
Plan, the PBGC, participants, beneficiaries or a trustee under Section 4049
of ERISA. For the purposes of this representation and warranty, the
Company or such Consolidated Subsidiary, if not the Plan administrator,
shall be deemed to have knowledge of all facts attributable to the Plan
administrator designated pursuant to ERISA.
4.15. Acquisitions. The consummation of each Acquisition financed with
Borrowings hereunder is in accordance with the description thereof in any
information furnished by the Company to the Banks and (a) is within the
Company's or Subsidiary's corporate powers, whichever is applicable, (b)
has been duly authorized by all necessary corporate action, (c) requires no
action by or in respect of, or filing with, any governmental body, agency
or official (other than filings already made related to each such
Acquisition with the Securities and Exchange Commission and filings made
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended) that has not been made or taken and which is material,
individually or in the aggregate, other than filings on Form 8-K, which the
Company is permitted to make at a later date, and (d) will not contravene,
or constitute a default under, any provision of applicable law or
regulation or of any agreement, judgment, injunction, order, decree or
other instrument binding upon the Company or any Subsidiary, except to the
extent that such failure to comply or such default would not have a
material adverse effect on the business, condition, property or prospects
of the Person acquired or of the Company, and will not result in the
creation or imposition of any Lien on any asset of the Company or any
Subsidiary, other than Permitted Liens.
4.16. Environmental Matters.
(a) Except as identified in Schedule 4, to the actual knowledge of the
Company after due inquiry, the operations of the Company and each of
its Subsidiaries comply in all respects with all Environmental Laws and
all other applicable requirements concerning the protection of the
environment and the health and safety of the public except where the
failure to comply, when aggregated with all other conditions, failures
and potential liabilities and costs under this Section 4.16, would not
have a material adverse effect on the financial condition of the
Company and its Consolidated Subsidiaries, taken as a whole.
(b) Except as identified in Schedule 4, to the actual knowledge of the
Company after due inquiry, the Company and each of its Subsidiaries has
obtained or has applied for all environmental, health and safety
permits which they each believe are necessary or required for its
operations, and all such granted permits are in good standing, and the
Company and each of its Subsidiaries are in compliance with all terms
and conditions of such permits except where the failure to comply, when
aggregated with all other conditions, failures and potential
liabilities and costs under this Section 4.16, would not have a
material adverse effect on the financial condition of the Company and
its Consolidated Subsidiaries, taken as a whole.
(c) Except as identified in Schedule 4, to the actual knowledge of the
Company after due inquiry, the Company and each of its Subsidiaries and
all of their present property or operations (as well as their past
property or operations) are not subject to any material outstanding
written order from or agreement with any Governmental Authority or
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other Person nor subject to any material judicial or docketed
administrative proceeding, respecting (i) any environmental, health or
safety law, rule or regulation; (ii) any action required to clean up,
remove, treat or in any other way address Hazardous Materials in the
indoor or outdoor environment; or (iii) any material Environmental
Claim arising from the release or threatened release of a Hazardous
Material into the environment.
(d) Except as identified in Schedule 4, to the actual knowledge of the
Company, there are no conditions or circumstances associated with any
property of the Company or any of its Subsidiaries formerly owned and
operated by the Company or any of its Subsidiaries or any of their
predecessors or with the former operations, including off-site disposal
practices, of the Company or its Subsidiaries or their predecessors
which may give rise to an Environmental Claim which Environmental Claim
would, when aggregated with all other conditions, failures and
potential liabilities and costs under this Section 4.16, have a
material adverse effect on the financial condition of the Company and
its Consolidated Subsidiaries taken as a whole.
(e) Except as identified in Schedule 4, to the actual knowledge of the
Company after due inquiry (i) neither the Company nor any of its
Subsidiaries has any underground storage tanks (x) that are not
properly permitted or for which a permit has not been applied for under
applicable Environmental Laws or (y) that are leaking or dispose of
Hazardous Materials off-site and (ii) the Company and each of its
Subsidiaries have substantially met all notification requirements under
Title III of CERCLA and OSHA.
ARTICLE V
AFFIRMATIVE COVENANTS
The Company covenants and agrees that so long as the Commitments shall
remain available and until the full and final payment of all obligations
incurred hereunder and under the Notes and expiration of all Facility
Letters of Credit, it will and, with respect to Sections 5.04 through 5.08,
will cause each Consolidated Subsidiary to, unless the Majority Banks waive
compliance in writing:
5.01. Use of Proceeds. Use the proceeds of the Credit solely (a) for
working capital and trade financing, (b) to relend to its Consolidated
Subsidiaries from time to time, (c) to make non-hostile Acquisitions which
have been approved by the boards of directors or other governing bodies or,
if a vote of such governing bodies is not required, by the stockholders of
the Persons to be acquired with the proceeds of Borrowings hereunder, (d)
to purchase shares of the Company's outstanding common stock to the extent
permitted pursuant to Section 6.09 hereof, (e) for Facility Letters of
Credit used in the ordinary course of business of the Company and its
Subsidiaries, and (f) to repay Borrowings and Reimbursement Obligations;
but the Company will not, and will not permit any Subsidiary to, use such
proceeds to make any Acquisitions or any Investments other than those
permitted under subsections (a) through (h) of Section 6.05.
5.02. Notices. Promptly give written notice to the Agent of:
(a) all litigation or material Environmental Claims affecting the
Company or any Subsidiary where the amount claimed is One Million
Dollars (or the Equivalent Amount thereof in another currency or
currencies) or more in excess of insurance coverage (including any
self-retention) or where the insurance carrier has denied its
responsibility as to an amount claimed of One Million Dollars (or the
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Equivalent Amount thereof in another currency or currencies) or more in
excess of insurance coverage (including any self-retention);
(b) any other litigation or proceeding affecting the Company or any of
its Subsidiaries which the Company reports to the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934,
within four days after reporting the same to the Securities and
Exchange Commission;
(c) any Reportable Event under Section 4043(b) (5), (6) or (9) of ERISA
with respect to any Plan, any decision to terminate or withdraw from a
Plan, any finding made with respect to a Plan under Section 4041(c) or
(e) of ERISA, the commencement of any proceeding with respect to a Plan
under Section 4042 of ERISA, or any material increase in the actuarial
present value of unfunded vested benefits under all Plans over the
preceding year; and
(d) any Default or Event of Default, specifying the nature and the
period of existence thereof and what action the Company has taken and
proposes to take with respect thereto.
5.03. Financial Statements, Reports, Etc. Deliver to each Bank:
(a) as soon as available but not later than sixty (60) days after the
close of each of the first three quarters of its fiscal year, the
Company's and its Consolidated Subsidiaries' unaudited condensed
statement of consolidated financial position, statement of consolidated
earnings as of the close of such quarter, and statement of consolidated
cash flow for such quarter and that portion of the fiscal year ending
with such quarter, certified by the chief financial officer or the
controller of the Company as being complete and correct and fairly
presenting the Company's and its Consolidated Subsidiaries' financial
condition and results of operations as of the end of such quarter and
for that portion of the fiscal year ending with such quarter, and
accompanied by a statement from the chief financial officer, controller
or treasurer of the Company stating: (i) that as of the end of such
quarter, no Default or Event of Default existed, or, if such did exist,
a description of such Default or Event of Default and what action the
Company has taken and proposes to take with respect thereto and (ii)
that as of the end of such quarter the Company and its Consolidated
Subsidiaries, taken on a consolidated basis, were in compliance with
the covenants contained in Sections 5.09, 6.01, 6.04, 6.05(e), 6.06 and
6.09 and with the requirements of clauses (d), (e), and (h) of the
definition of Permitted Liens, together with the calculations showing
how such compliance was determined or (iii) if the Company and its
Consolidated Subsidiaries, taken on a consolidated basis, were not in
compliance therewith, stating each incidence of non-compliance and the
amount thereof and explaining the reason therefor, together with the
calculations showing how such non-compliance was determined;
(b) as soon as available but not later than one hundred (100) days
after the close of each of its fiscal years, a complete copy of the
Company's audit report, which shall include at least the Company's and
its Consolidated Subsidiaries' statement of consolidated financial
position, statement of consolidated earnings, and its statement of
consolidated cash flow for such year, examined in accordance with
generally accepted auditing standards by an independent public
accountant of national reputation selected by the Company and
acceptable to the Majority Banks. Such auditor's report shall be free
from exceptions, reservations or qualifications as a result of which
the auditor is unable to conclude that the financial statements fairly
present or adequately disclose the financial condition of the Company
and its Consolidated Subsidiaries and shall not be limited because of
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restricted or limited access by such accountant to any material portion
of the Company's or any Subsidiary's records and shall include or be
accompanied by a statement from such accountant that during the fiscal
year no Default or Event of Default has occurred. Such report shall be
accompanied by a certificate from the chief financial officer,
controller or treasurer of the Company stating (i) that as of the end
of such fiscal year no Default or Event of Default existed, or, if any
exists, a description of such Default or Event of Default and what
action the Company has taken and proposes to take with respect thereto
and (ii) that the Company and its Consolidated Subsidiaries, taken on a
consolidated basis, are in compliance with the covenants contained in
Sections 5.09, 6.01, 6.04, 6.05(e), 6.06 and 6.09 and with the
requirements of clauses (d), (e), and (h) of the definition of
Permitted Liens, together with the calculations showing how such
compliance was determined or (iii) if the Company and its Consolidated
Subsidiaries, taken on a consolidated basis, are not in compliance
therewith, stating each incidence of non-compliance and the amount
thereof and explaining the reason therefor, together with the
calculations showing how such non-compliance was determined;
(c) as soon as available but not later than one hundred twenty (120)
days after the close of each of its fiscal years, its unaudited
consolidating balance sheet, statement of earnings, and statement of
accumulated earnings employed in the business and capital in excess of
par value of the common stock;
(d) promptly after being filed by the Company with the Securities and
Exchange Commission, a copy of each form 8-K current report, form 10-K
annual report, form 10-Q quarterly report, annual report to
shareholders, proxy statement and registration statement;
(e) not later than one hundred (100) days after the end of each fiscal
year of the Company, an amendment to Schedule 3 hereto, describing
Permitted Liens (of the type described in Schedule 3) arising by
operation of law or created or suffered by the Company or any
Subsidiary subsequent to the Closing Date;
(f) not later than sixty (60) days after the end of each fiscal quarter
of the Company, an amendment to Schedules 1 and 2 hereto, adding or
subtracting the Subsidiaries or Significant Subsidiaries, as the case
may be, acquired or sold or which became Significant Subsidiaries
during such period;
(g) as soon as available but no later than sixty (60) days after the
close of each fiscal quarter of the Company, a complete copy of the
statement of financial position, the statement of earnings, and the
statement of consolidated cash flow of any captive finance Subsidiary
of the Company, prepared by management and certified by the chief
financial officer or the controller of the Company as being true and
correct and fairly presenting the financial condition of such
Subsidiary and, to the extent any such reports are prepared by
independent auditors at fiscal year-end, a complete copy of the report
of such independent auditors, no later than one hundred (100) days
after the close of the Company's fiscal year; and
(h) such other statements or reports as the Majority Banks may
reasonably request in form and detail satisfactory to the Agent and the
Majority Banks.
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5.04. Existence, Etc. Except as permitted herein, maintain and preserve
its existence and all rights, privileges and franchises now enjoyed and
necessary for the operation of its business and keep all its properties in
good working order and condition, normal wear and tear excepted, except
properties the Company or a Consolidated Subsidiary reasonably determines
to be surplus, obsolete or otherwise not necessary or useful in the conduct
of its business.
5.05. Payment of Obligations. Pay all taxes, assessments, governmental
charges and other obligations when due, except such as may be contested in
good faith or as to which a bona fide dispute may exist, and for which
adequate reserves have been provided if required by GAAP.
5.06. Compliance with Laws. At all times comply in all material respects
with all applicable laws, rules, regulations, orders and directions of any
Governmental Authority having jurisdiction over it or its business.
5.07. Insurance. Maintain insurance with responsible insurance companies
against such risks, on such properties and in at least such amounts as is
customarily maintained by similar businesses; and deliver to the Agent at
the request of any Bank a list in reasonable detail of the insurance
policies then in effect, stating the names of the insurance companies, the
amounts and rates of insurance, the dates of the expiration thereof and the
properties and risks covered thereby.
5.08. Adequate Books. Maintain adequate books, accounts and records in
order to provide financial statements in accordance with GAAP and, if
requested by Banks holding twenty-five percent (25%) or more of the
Aggregate Commitment then available, permit employees or representatives of
the Agent and the Banks at any reasonable time and upon reasonable notice
to inspect and audit its properties, and to examine or audit its inventory,
books, accounts and records and make copies and memoranda thereof.
5.09. Interest Coverage Ratio. Maintain a ratio of (a) EBIT net of cash
interest income (excluding interest income earned on dealer financing) to
(b) Interest Expense, net of cash interest income (excluding interest
income earned on dealer financing), of not less than 2.00 to 1.00 as of the
last day of each calendar quarter, commencing with the quarter ending
March 31, 1996. For purposes of calculating such ratio, the items
required to be included in the calculation shall be measured on a
consolidated basis for the twelve-month period (or such shorter period
specified below) ending on the last day of such calendar quarter.
5.10. ERISA. Make prompt payment of contributions required to meet the
minimum funding standards set forth in ERISA except to the extent waived or
deferred by the PBGC.
ARTICLE VI
NEGATIVE COVENANTS
The Company covenants and agrees that, so long as the Commitments shall
remain available and until full and final payment of all obligations
incurred hereunder and under the Notes and the expiration of all Facility
Letters of Credit, it will not and, with respect to Sections 6.02, 6.03,
6.04, 6.05 6.06 and 6.09, will not permit any Consolidated Subsidiary of
the Company to, unless the Majority Banks waive compliance in writing:
6.01. Capitalization Ratio. Permit its ratio of (i) Indebtedness for
Borrowed Money for the Company and its Subsidiaries on a consolidated basis
to (ii) Capitalization to exceed the ratio set forth below at any time
during the calendar quarters as set forth below:
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Quarter Capitalization
Ending: Ratio
-------------------------- --------------
December 31 of each
year during this Agreement .50 to 1.0
March 31 of each year
during this Agreement .55 to 1.0
June 30 of each year
during this Agreement .50 to 1.0
September 30 of each year
during this Agreement .45 to 1.0
6.02. Change in Business. Engage in any business activities or operations
substantially different from and unrelated to present business activities
and operations conducted by the Company or any Affiliate other than
business activities or operations in which the aggregate Investment of the
Company or such Affiliate does not constitute a material amount in relation
to the Tangible Net Worth of the Company or such Affiliate.
6.03. Liens. Create, assume or suffer to exist any Lien (including the
Lien of an attachment, judgment or execution) on any of its or its
Consolidated Subsidiaries' properties, whether now owned or hereafter
acquired, except Permitted Liens.
6.04. Mergers, Sales of Assets, Etc. Liquidate, dissolve, or enter into
any consolidation, merger, partnership, joint venture or any other
combination or sell, lease, assign, transfer or otherwise dispose of any
assets, whether now owned or hereafter acquired, in a single transaction or
in a series of transactions or enter into any sale and leaseback
transactions, other than
(a) the sale of inventory in the ordinary course of business;
(b) the sale or other disposition of property no longer needed in the
conduct of its business;
(c) the sale of Fixed Assets or any sale and leaseback transaction
involving Fixed Assets if the Net Proceeds thereof and any other
non-cash property received therefor in the aggregate during the term of
this Agreement commencing on the Closing Date do not exceed at any time
an amount equal to five percent (5%) of the Tangible Net Worth of the
Company and its Subsidiaries on a consolidated basis;
(d) any merger in which the Company is the legal surviving corporation
and there will exist no Default or Event of Default after the
consummation thereof;
(e) the merger, consolidation or transfer of the business or assets of
any Subsidiary with or to the Company or with or to any Consolidated
Subsidiary;
(f) the merger or consolidation or transfer of the business or assets
of any non-consolidated Subsidiary with or to any other
non-consolidated Subsidiary;
(g) as permitted in Section 6.05; and
(h) (1) sales of receivables by the Company or any Consolidated
Subsidiary; and (2) sales of receivables by the Company or any
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Consolidated Subsidiary to any Person other than a Consolidated
Subsidiary (i) in such amounts that at any one time the aggregate
unpaid amount of accounts receivable so sold shall not exceed One
Hundred Twenty-Five Million Dollars ($125,000,000); (ii) the
consideration received by the applicable transferor for such sales of
accounts receivable includes cash, cash equivalents and marketable
securities in an amount not less than fifty percent (50%) of the
consideration received by the applicable transferor for such sales of
accounts receivable consists of promissory notes (whether subordinated
or otherwise restricted in payment) against which the purchaser of such
accounts receivable may offset the principal amount of uncollected
accounts receivable and (iv) the amount of any recourse (other than
customary representations and warranties made by the applicable
transferor with respect to such receivables) to the applicable
transferor established in connection with such sale of receivables does
not exceed 10% of the face amount of the receivables sold.
6.05. Acquisitions, Investments. Make any Acquisitions or any Investments
or commitments therefor, or create any non-consolidated Subsidiary, or
create any sinking fund in relation thereto, other than
(a) Investments in accordance with the Company's Short-Term Investment
Policy and Guidelines, issued on July 26, 1994, a copy of which has
been provided to the Banks;
(b) Investments (other than in Subsidiaries) in existence on the date
hereof and described in Schedule 11 hereto;
(c) loans by the Company to its Consolidated Subsidiaries in the
ordinary course of their respective businesses;
(d) the making of tax-sharing payments to any Consolidated Subsidiary
or by any Consolidated Subsidiary to the Company pursuant to an
agreement with a Consolidated Subsidiary requiring such payment;
(e) Investments, Acquisitions and capital contributions (not otherwise
specified in this Section 6.05) of up to $20,000,000 during the term of
this Agreement, provided that such amount shall be increased by
$10,000,000 for each fiscal year for which the Company meets or exceeds
its Base Case for Earnings Before Taxes, as presented to the Banks
party to the Existing Agreement on November 30, 1994.
(f) Investments in the form of credit extensions to stockholders,
directors or employees of the Company or its Subsidiaries in the
ordinary course of business, provided such Investments are subtracted
in calculating "Tangible Net Worth";
(g) as permitted by Section 6.04; and
(h) Investments in Consolidated Subsidiaries.
6.06. Operating Leases. Enter into any operating leases the terms of
which prohibit cancellation of such leases if the aggregate amount of the
minimum required payments under all such leases (whether entered into prior
to or subsequent to the Closing Date and after giving effect to any such
new lease) during the remaining life of such leases exceeds Forty Million
Dollars ($40,000,000) for the Company and its Consolidated Subsidiaries.
6.07. Existing Indebtedness. Prepay, defease, refinance or repurchase or
enter into any arrangement having substantially such effect with respect
to, any Indebtedness for Borrowed Money (other than the Advances and Bid
Loans) prior to the maturity or scheduled repayment date in effect as of
the Closing Date, except that during any fiscal year, the Company may
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prepay, defease, refinance or repurchase up to an amount of $5,000,000 of
such Indebtedness for Borrowed Money. If the entire $5,000,000 is not
expended in any fiscal year, the unexpended amount may be carried over to
later fiscal years, provided that the total amount expended to prepay,
defease, refinance or repurchase Indebtedness for Borrowed Money over the
term of this Agreement may not exceed $15,000,000.
6.08. Repurchase Arrangements. Repurchase boats, motors or
boat/motor/trailer (or any combination thereof) packages sold pursuant to
repurchase arrangements with the financing institutions owning such boats,
motors or boat/motor/trailer (or any combination thereof) packages in an
aggregate amount in excess of Ten Million Dollars ($10,000,000) during any
fiscal year.
6.09. Dividends and other Restricted Payments. Pay any Restricted
Payments (other than dividends payable in its own capital stock) except
that (1) any Consolidated Subsidiary may pay dividends to the Company, (2)
the Company may pay Restricted Payments during any fiscal year, commencing
with the fiscal year ending September 30, 1995, if, after giving effect to
such Restricted Payment, the aggregate amount of Restricted Payments during
such fiscal year would not exceed the greater of (a) the Minimum Amount or
(b) the Available Fund on the date the Restricted Payment is paid,
provided, however, that no Restricted Payment may be paid if an Event of
Default exists on the date such Restricted Payment is declared, authorized,
or paid and further provided (subject to the immediately preceding
proviso), that all Restricted Payments must be made within 90 days after
such Restricted Payment is declared or authorized.
ARTICLE VII
EVENTS OF DEFAULT
Regardless of the terms of any Notes issued hereunder or Facility Letters
of Credit, the occurrence and continuation of any of the following events,
at the option of Majority Banks, shall terminate any obligation on the part
of the Banks to make or continue the Credit and, at the option of the
Majority Banks, shall make all outstanding principal and accrued and unpaid
interest on the Credit and all fees and other sums outstanding under or in
respect of this Agreement, the Notes and the Facility Letters of Credit
immediately due and payable, without notice of default, presentment or
demand for payment, protest or notice of nonpayment or dishonor, or other
notices or demands of any kind or character, except as hereinafter
specified; provided, however, that the occurrence of any of the events set
forth in Section 7.06, 7.07 or 7.10 shall automatically terminate the
Banks' Commitments, automatically accelerate the amounts due hereunder and
under the Notes and the Facility Letters of Credit, without notice of
default, presentment or demand for payment, protest or notice of nonpayment
or dishonor, or other notices or demands of any kind or character.
With respect to all Facility Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an
acceleration pursuant to the preceding paragraph, the Company shall at such
time deposit in a cash collateral account opened by the Agent for the
ratable benefit of the Banks and the Issuers an amount equal to the
aggregate then undrawn and unexpired amount of such Facility Letters of
Credit. Amounts held in such cash collateral account shall be applied by
the Agent to the payment of drafts drawn under such Facility Letters of
Credit, and the unused portion thereof after all such Facility Letters of
Credit shall have expired or been fully drawn upon, if any, shall be
applied to repay other obligations of the Company to the Banks under this
Agreement. After all such Facility Letters of Credit shall have expired or
been fully drawn upon, all Reimbursement Obligations shall have been
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satisfied and all other obligations of the Company to the Banks under this
Agreement shall have been paid in full, the balance, if any, in such cash
collateral account shall be returned to the Company.
7.01. Nonpayment. The Company shall fail to pay when due any installment
of principal or any Reimbursement Obligation when due or, within three (3)
Banking Days of its due date, any installment of interest or any fee or
other sum due under this Agreement in accordance with the terms hereof or
of any Note or Facility Letter of Credit issued under this Agreement.
7.02. Representation or Warranty. Any written representation or warranty
herein or in any agreement, instrument or certificate executed pursuant
hereto shall prove to have been false or misleading in any material respect
when made or when deemed to have been made.
7.03. Specific Defaults. The Company shall fail to duly or promptly
perform or observe the provisions of any of Sections 5.09, 6.01, 6.03 or
6.09.
7.04. Other Defaults. The Company shall fail duly or promptly to perform
or observe any of the other covenants, agreements or conditions contained
in this Agreement and such default shall continue unremedied for a period
of thirty (30) days after written notice thereof is delivered to the
Company by the Agent.
7.05. Judgments. One or more final judgments shall be entered against the
Company or any Subsidiary for the payment of money in the aggregate amount
of Five Million Dollars ($5,000,000) (or the Equivalent Amount thereof in
another currency or currencies) or more on claims not covered by insurance
or as to which the insurance carrier has denied its responsibility, and
such judgments shall continue unsatisfied and in effect for thirty (30)
consecutive days without a stay of execution.
7.06. Voluntary Bankruptcy. The Company or any Subsidiary shall generally
fail to pay or admit in writing its inability to pay its debts as they come
due, or shall file any petition or action for relief as to itself under any
bankruptcy, reorganization, insolvency or moratorium law, or any other
similar law or laws for the relief of, or relating to, debtors, or shall
apply for or consent to a receiver, trustee or custodian for it or a
substantial portion of its property, or shall make a general assignment for
the benefit of creditors.
7.07. Involuntary Bankruptcy. An involuntary petition shall be filed
under any bankruptcy or similar statute against the Company or any
Subsidiary, or a custodian, receiver, trustee, assignee for the benefit of
creditors (or other similar official) shall be appointed to take
possession, custody or control of the properties of the Company or any
Subsidiary, unless such petition or appointment is set aside or withdrawn
or ceases to be in effect within sixty (60) days from the date of said
filing or appointment.
7.08. Cross Default. Any breach or default shall occur (after giving
effect to any applicable cure period) under any other agreement relating to
Indebtedness for Borrowed Money in excess of $5,000,000 under which the
Company or any Significant Subsidiary may be obligated as borrower or
guarantor, if such default consists of the failure to pay any such
Indebtedness for Borrowed Money when due or if such default permits or
causes the acceleration of any such Indebtedness for Borrowed Money or the
termination of any commitment to lend.
7.09. ERISA. Any Plan of the Company or any of its Subsidiaries shall be
terminated within the meaning of Title IV of ERISA except as permitted by
Section 4044(d) of ERISA, or a trustee shall be appointed by the
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appropriate United States District Court to administer any Plan of the
Company or any of its Subsidiaries, or the PBGC shall institute proceedings
to terminate any Plan of the Company or any of its Subsidiaries or to
appoint a trustee to administer any such Plan and, upon the occurrence of
any of the foregoing, the then current value of guaranteed benefits and
other benefit commitments (as such terms are defined under Title IV of
ERISA and determined in accordance with the principles of Title IV of
ERISA) for which the Company or any Subsidiary might be liable to any
Person exceed the then current value of the assets allocable to such
benefits by more than Five Million Dollars ($5,000,000).
7.10. Change in Control. (a) Any Person or Persons acting in concert
shall acquire beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of
1934) of fifteen percent (15%) or more of the outstanding shares of voting
stock of the Company and the board of directors of the Company fails to
redeem the rights issued under the Shareholder Rights Plan within the time
period prescribed therein; or (b) during any period of twelve (12)
consecutive months, commencing before or after the Closing Date,
individuals who at the beginning of such twelve-month period were directors
of the Company cease for any reason to constitute a majority of the board
of directors of the Company; or (c) any change of control shall occur as
defined under the provisions of the Company's certificate of incorporation
or by-laws, as at any time amended.
ARTICLE VIII
RELATION OF BANKS
8.01. Appointment and Authorization. Each Bank hereby appoints each of
the Agent, the Bid Agent and the Co-Agent to act as its agent in connection
with the administration of this Agreement and for such purpose irrevocably
authorizes the Agent, the Bid Agent and the Co-Agent to take such action
and to exercise such rights, powers and discretions as are specifically
delegated to the Agent, the Bid Agent and the Co-Agent in this Agreement,
together with all rights, powers and discretions as are reasonably
incidental thereto. The Agent, the Bid Agent and the Co-Agent may perform
any of their respective functions and duties under this Agreement by or
through agents or their respective directors, officers or employees. In
performing their respective functions and duties under this Agreement, the
Agent, the Bid Agent and the Co-Agent shall not be deemed to have a
fiduciary relationship in respect of, or (except as provided herein) other
responsibility to, any Bank or to have assumed any relationship of agency
or trust with or for the Company or any Consolidated Subsidiary.
8.02. Pro Rata Sharing. All payments of principal and interest on the
Credit (including Reimbursement Obligations) are to be divided pro rata
among the Banks according to the principal amount outstanding (including
outstanding participations in Facility Letters of Credit) from each Bank,
provided that prior to the occurrence of an Event of Default, payments of
principal and interest on Bid Loans will not be divided pro rata. All
payments of fees (other than Issuer's Fees) to be shared among the Banks
are to be divided among the Banks pro rata according to each Bank's
Commitment.
8.03. Sharing of Setoff. Any Bank which shall receive payment of or on
account of all or part of its share of the Credit through the exercise of
any right of setoff, counterclaim, banker's lien, secured claim under any
bankruptcy statute or otherwise in a greater proportion than the
proportionate amount of principal, interest and fees due it under this
Agreement shall purchase immediately prior to such payment participations
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in the portions of the Credit held by the other Banks so that all
recoveries of principal, interest and fees (except payments made pursuant
to Section 2.08, 2.11(d), 2.14 or 2.15) shall be shared by Banks in
accordance with their pro rata interests in the Credit as set forth in
Section 8.02. If all or any portion of such excess payment is thereafter
recovered from such Bank, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest. All
sums received by a Bank through the exercise of any right of setoff,
counterclaim, banker's lien, secured claim under any bankruptcy statute or
otherwise shall be deemed to be first applied to such Bank's portion of the
Indebtedness for Borrowed Money under this Agreement until payment thereof
in full and any balance remaining thereafter shall be deemed applied to any
other Indebtedness for Borrowed Money of the Company to such Bank.
8.04. Communication; Confidentiality.
(a) Upon receipt by the Agent from the Company of any information
relating to the Company or its Consolidated Subsidiaries calling for an
action on the part of the Banks, or upon notice to the Agent of any
Default or Event of Default, the Agent will in turn immediately inform
the other Banks by telephone, telecopy or by telex of the nature of
such communication or of the Default or Event of Default, as the case
may be, and will promptly deliver to the Banks the information received
by the Agent relating to the Company or its Consolidated Subsidiaries.
(b) Each Bank agrees to use its best efforts not to disclose without
the prior written consent of the Company (other than to such Bank's
employees, auditors or counsel) any confidential information with
respect to the Company or any Subsidiary or any Acquisition which is
furnished pursuant to this Agreement; provided, however, that each Bank
may disclose any such information (i) as has become generally available
to the public (other than in violation of this Agreement), (ii) as
required by law or regulation or by any regulatory authority having
jurisdiction over the Bank, (iii) pursuant to a subpoena or other legal
process or, in connection with any litigation, (iv) to any prospective
purchaser or participant as described in Section 9.04, provided such
prospective purchaser or participant agrees in writing to be bound as
described in Section 9.04, and (v) as may be necessary to enforce its
rights hereunder or under its Notes and the Facility Letters of Credit.
8.05. Approvals. Except as provided below in this Section 8.05, upon any
occasion requiring or permitting an approval, consent, waiver, election or
other action on the part of the Banks, action shall be taken by the Agent
for and on behalf or for the benefit of all Banks upon the direction of
Majority Banks, and any such action shall be binding on all Banks. Without
the prior written consent of all the Banks, no amendment, modification,
consent or waiver shall be effective which:
(a) increases the amount of the Credit or changes the Commitment of any
Bank,
(b) reduces the rate or amount of interest, principal or fees owing
hereunder or under the Notes,
(c) extends the date on which any sum is due hereunder or under the
Notes,
(d) waives an Event of Default arising from a failure to pay principal
of or interest on an Advance or Bid Loan,
(e) reduces the rate or amount of interest on or the principal amounts
of or extends the time of payment of any Reimbursement Obligation,
Letter of Credit Fee or Issuer's Fee,
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(f) changes the provisions of this Section 8.05,
(g) waives any condition specified in Article III,
(h) amends the definition of Majority Banks,
(i) affects the rights, duties or obligations of the Agent, unless all
Banks agree in writing thereto, or
(j) changes the percentage of Banks required to consent to or to take
any action hereunder.
8.06. Exculpation. Neither the Agent, the Bid Agent nor the Co-Agent
shall be liable or answerable for anything whatsoever in connection with
this Agreement or any instrument or agreement required hereunder, including
responsibility in respect to the execution, construction or enforcement of
this Agreement or any such instrument or agreement, except for its willful
misconduct or gross negligence, and the Agent, the Bid Agent and the
Co-Agent shall have no duties or obligations other than as expressly
provided herein and therein. The Agent, the Bid Agent and the Co-Agent
shall be entitled to rely on any opinion of counsel (including counsel for
the Company) in relation to this Agreement and any instrument or agreement
required hereunder, and upon statements and communications received from
the Company, or from any other Person, reasonably believed by it to be
authentic, and shall not be liable for any action taken or omitted in good
faith on such reliance.
8.07. Indemnification. Each Bank agrees to indemnify the Agent, the Bid
Agent and the Co-Agent to the extent not reimbursed by the Company, ratably
according to its proportionate interest in the outstanding Advances and
Reimbursement Obligations (or, if there are no outstandings hereunder, in
the Commitments), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent, the Bid Agent or the Co-Agent in
any way relating to or arising out of this Agreement or any instrument or
agreement required hereunder or any action taken or omitted by the Agent,
the Bid Agent or the Co-Agent in such role under this Agreement or any such
instrument or agreement; provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever resulting from the Agent's, the Bid Agent's or the
Co-Agent's willful misconduct or gross negligence.
8.08. The Agent, the Co-Agent and Bid Agent as Banks. The Agent, the Bid
Agent and the Co-Agent shall have the same rights and powers hereunder as
any other Bank and may exercise the same as though it were not the Agent,
the Bid Agent or the Co-Agent; and the term "Banks" shall include the
Agent, the Bid Agent and the Co-Agent in its individual capacity. The
Agent, the Bid Agent and the Co-Agent and their subsidiaries and Affiliates
may accept deposits from, lend money to, act as agent or trustee for other
lenders to, and generally engage in any kind of banking, trust or other
business with, the Company or any of its Subsidiaries or Affiliates as if
it were not the Agent, the Bid Agent or the Co-Agent.
8.09. Notice of Transfer. The Agent and the Company may deem and treat a
Bank party to this Agreement as the owner of such Bank's Notes for all
purposes hereof unless and until a written notice of the assignment or
transfer thereof executed by such Bank shall have been received by the
Agent and the Company.
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8.10. Credit Decision. Each Bank represents that it has made and agrees
that it shall continue to make its own independent investigation of the
financial condition and affairs of the Company and its own appraisal of the
creditworthiness of the Company in connection with its Commitment and the
making and the continuance of the Advances, the Bid Loans and the Facility
Letters of Credit. Neither the Agent, the Bid Agent nor the Co-Agent has
any duty or responsibility, either initially or on a continuing basis, to
provide any Bank with any credit or other information (other than obtained
pursuant to this Agreement) with respect thereto, whether coming into its
possession before the date hereof or at any time thereafter, unless
furnished to the Agent, the Bid Agent or the Co-Agent by the Company for
delivery to the Banks.
8.11. Resignation of the Agent. The Agent, the Bid Agent and the Co-Agent
may each resign at any time by giving written notice to the Banks and the
Company. Upon any such resignation, the Majority Banks with the prior
written consent of the Company, which shall not be unreasonably withheld,
shall have the right to appoint a successor from among the Banks party
hereto. If no successor shall have accepted such appointment within
forty-five (45) days after the retiring Agent's, Bid Agent's or Co-Agent's
giving of notice of resignation, the retiring Agent, Bid Agent or Co-Agent
may, on behalf of the Banks, appoint a successor thereto with the prior
written consent of the Company, which shall not be unreasonably withheld,
and such successor Agent, Bid Agent or Co-Agent shall be a bank or trust
company organized under the laws of the United States or any state thereof
having a combined capital and surplus of at least $1,000,000,000. Upon the
acceptance by such successor of its appointment hereunder, such successor
shall succeed to and become vested with all the rights and obligations of
the retiring Agent, Bid Agent or Co-Agent, and the retiring Agent, Bid
Agent or Co-Agent shall be discharged from its obligations under this
Agreement except with respect to any liability with respect to a breach of
any obligation hereunder prior to such resignation. The provisions of this
Article shall inure to the benefit of the retiring Agent, Bid Agent or
Co-Agent as to any actions taken or omitted to be taken by it while it held
such positions under this Agreement.
8.12. Reliance by Agent and Co-Agent. Agent and Co-Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter,
telegram, telecopy, telex or telephone message, statement or other document
or conversation reasonably believed by them to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including counsel to the Company),
independent accountants and other experts selected by Agent and Co-Agent.
Agent and Co-Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other instrument or agreement
contemplated hereunder unless they shall first receive such advice or
concurrence of the Majority Banks as they deem appropriate and, if they so
request, they shall first be indemnified to their satisfaction by the Banks
against any and all liability and expense which may be incurred by them by
reason of taking or continuing to take any such action. Agent and Co-Agent
shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other instrument or agreement
contemplated hereunder in accordance with a request or consent of the
Majority Banks (or, when expressly required hereby, all the Banks) and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all Banks.
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ARTICLE IX
MISCELLANEOUS
9.01. Notices. Except as otherwise specifically set forth in Article 2,
any communications between the parties hereto or notices or requests
provided herein to be given may be given by mailing the same, postage
prepaid (which notice shall be deemed received two Banking Days after
mailing), by personal delivery, or by telex, telecopy or cable to each
party at its address set forth on the signature pages hereto (with a copy
to each address indicated for notices), or to such other address as any
party may in writing hereafter indicate.
9.02. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns; provided, however, that the Company shall not assign this
Agreement or any of the rights or obligations of the Company hereunder
without the prior written consent of each Bank.
9.03. Banks' Obligations Several. The obligations of each Bank under this
Agreement are several. Neither the Agent, the Bid Agent, the Co-Agent nor
any Bank shall be liable for the failure of any other Bank to perform its
obligations under this Agreement. The failure of any Bank to make all or
any part of the proceeds of any Advance or Bid Loan or participation in a
Facility Letter of Credit to be made by it available to the Agent, the Bid
Agent or the Co-Agent, as the case may be, for the benefit of the Company
or Issuer, as the case may be, pursuant to this Agreement, shall not
relieve any other Bank from the performance of its obligations under this
Agreement.
9.04. Assignments, Participations; Setoff.
(a) With the prior written consent of the Company and the Agent, which
shall not be unreasonably withheld, any Bank may at any time sell,
assign or otherwise transfer to any other Person all or any part of the
obligations of the Company to such Bank, so long as such Bank at all
times retains at least twenty percent (20%) of its original Commitment,
and thereupon such Person shall become a "Bank" for all purposes
hereunder, provided however, that no Bank shall be deemed to be in
violation of this Section because of a subsequent reduction of the
Commitments by the Company. Notwithstanding the foregoing, any Bank
assigning its obligations under Section 2.15(d) may sell 100% of its
obligations and any Bank may at any time, without the consent of the
Company or the Agent, assign all or any portion of its rights under
this Agreement and its Notes to a Federal Reserve Bank; provided that
no such assignment shall release the transferor Bank from its
obligations hereunder.
(b) Any Bank may at any time grant participations to any other Person
(a "participant") in all or part of the obligations of the Company to
such Bank under this Agreement or any Note evidencing such obligations
or with respect to any Reimbursement Obligation, so long as such Bank
at all times retains at least twenty percent (20%) of its original
Commitment hereunder and any Advances hereunder, provided however, that
no Bank shall be deemed to be in violation of this Section because of a
subsequent reduction in the Commitments by the Company.
(c) Each such transfer by a Bank shall be in accordance with federal
and state securities laws applicable to such Bank. In connection with
such transfer, each Bank, including the Agent, may furnish or disclose
to a proposed purchaser or participant any financial or other
information furnished or disclosed to the Banks by the Company provided
that the proposed purchaser or participant first executes a written
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agreement in the form of Schedule 9 stating that it will not disclose
any information furnished to it with respect to the Company and its
Subsidiaries except (i) as has become generally available to the public
(other than in violation of this Agreement), (ii) as required by law or
regulation or by any regulatory authority, (iii) pursuant to a subpoena
or other legal process or in connection with any litigation, and (iv)
as may be necessary to enforce the rights of the Banks or such
participant hereunder or under the Notes.
(d) In any participation described in subsection (b) above, each Bank
shall retain the right to vote in connection with all waivers, consents
and amendments and shall retain the right to take or fail to take any
action hereunder except as to waivers, consents, and amendments or
action directly affecting the extension of the maturity of any portion
of the principal amount of or the dates on which the interest is
payable on such portion of an Advance or any other amount payable under
Sections 2.06 and 2.07 allocated to such participation or a reduction
of any portion of the principal amount of or the rate of interest
payable on such portion of an Advance or any other amount payable under
Sections 2.06 and 2.07 allocated to such participation.
(e) Upon any such transfer or assignment (other than a participation
for a period not in excess of one hundred eighty (180) consecutive
days) by a Bank pursuant to this Section 9.04, such Bank will, promptly
after making such transfer, advise the Agent and the Company in writing
of the transfer and the name and address of the transferee. The
Company hereby acknowledges and agrees that any such disposition will
give rise to a direct obligation of the Company to the participant.
The Company hereby authorizes each Bank and each such participant, in
case of the occurrence of an Event of Default by the Company hereunder,
to proceed directly, subject to Section 8.03, by right of setoff,
banker's lien, or otherwise, against any assets of the Company which
may at the time of such Event of Default be in the hands of such Bank
or any such participant.
9.05. Delays and Waivers. No delay or omission by the Agent or the Banks
to exercise any right under this Agreement shall impair any such right,
nor shall it be construed to be a waiver thereof. No waiver of any single
breach or default under this Agreement shall be deemed a waiver of any
other breach or default. Any waiver, modification, amendment, consent or
approval relating to this Agreement, the Notes or the Facility Letters of
Credit, must be in writing to be effective and must be signed by or on
behalf of the Majority Banks or all the Banks, as the case may be, as
provided in Section 8.05.
9.06. Costs and Expenses. The Company agrees to pay on demand to the
Agent, the Bid Agent, the Co-Agent, each Bank and each Issuer all
reasonable costs and expenses incurred by the Agent, the Co-Agent, the Bid
Agent and each such Bank and Issuer including, without limitation,
reasonable attorneys' fees and the reasonable allocated costs of staff
counsel (a) in connection with the enforcement (after the occurrence of an
Event of Default) of this Agreement or any instrument or agreement required
hereunder or in connection with any proposed refinancing or restructuring
of the credit provided in this Agreement in the nature of a "work-out" and
(b) for all stamp, registration and other duties and imposts to which this
Agreement and any instrument or agreement required hereunder may be
subject. The Company shall indemnify the Agent, the Co-Agent, the Bid
Agent, each Issuer and each Bank against any and all liabilities and
penalties resulting from any delay in paying, or failure to pay, any such
duties and imposts upon written notice from the Agent, the Co-Agent or the
Bid Agent or an Issuer or a Bank that such amounts have been assessed. The
Company shall reimburse each of the Agent, the Bid Agent and the Co-Agent
for its reasonable attorneys' fees (including the reasonable allocated
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costs of staff counsel) and other expenses incurred in connection with the
negotiation, preparation and execution of this Agreement and any
amendments, consents, or waivers of, or relating to, this Agreement.
9.07. Entire Agreement. This Agreement and any agreement, document or
instrument attached hereto or referred to herein integrate all the terms
and conditions mentioned herein or incidental hereto, and supersede all
oral negotiations and prior writings in respect to the subject matter
hereof (except a letter agreement dated November 21, 1994 between the Agent
and the Company, a letter agreement between the Co-Agent and the Company
and any subsequent agreements relating to fees to be paid to the Agent, the
Co-Agent or the Bid Agent). In the event of any conflict between the
terms, conditions and provisions of this Agreement and any such prior
agreement, document or instrument, the terms, conditions and provisions of
this Agreement shall prevail.
9.08. Governing Law. This Agreement, the Notes, the Facility Letters of
Credit and all other documents executed in connection herewith shall be
governed by and construed in accordance with the laws of the State of
Illinois.
9.09. Section Headings. Section headings and the table of contents are
for reference only, and shall not affect the interpretation or meaning of
any provision of this Agreement.
9.10. Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall
not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement
required hereunder.
9.11. Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts (provided that the Company shall
execute each counterpart), each of which, when so executed, shall be deemed
an original, but all such counterparts shall constitute but one and the
same agreement.
9.12. Indemnity. The Company hereby agrees to indemnify, protect and hold
harmless the Agent, the Bid Agent, the Co-Agent, any Issuer, the Banks and
their officers, directors, agents, employees, attorneys and shareholders or
their successors (each an "Indemnified Party") from and against all
reasonable costs and expenses (including, without limitation, the cost of
counsel, whether staff or otherwise and whether allocated or out-of-pocket)
and all actions, claims (whether made or threatened), suits, liabilities,
damages and losses incurred by or imposed on the Agent, the Bid Agent, the
Co-Agent, any Issuer, the Banks or any such officer, director, agent,
employee, attorney or shareholder or their successors in connection with or
as a result of the execution, delivery and performance of this Agreement,
and the transactions contemplated hereunder, or any Acquisition financed
with Borrowings hereunder, or with any other act, omission or event
relating in any manner to any of the foregoing. Notwithstanding anything
to the contrary in this Section 9.12, the Company shall not be obligated to
indemnify any such Person for any losses, claims, damages, liabilities and
expenses incurred by such Person which have resulted from gross negligence
or willful misconduct on the part of such Person. Without limiting the
generality of the foregoing, such indemnity shall extend to any and all
reasonable costs and expenses whatsoever incurred by the Banks, the Agent,
the Bid Agent, the Co-Agent or any Issuer their officers, directors,
agents, employees, attorneys and shareholders or their successors
(including, without limitation, the reasonable cost of counsel, whether
staff or otherwise and whether allocated or out-of-pocket) in connection
with investigating, preparing for or defending against or providing
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evidence, producing documents or taking any action with respect to any such
action, claim (whether made or threatened and whether or not such Bank or
other Indemnified Party is a party to such action or claim), suit,
liability, damage or loss, whether or not resulting in any liability. The
obligation of the Company to indemnify each Bank, each Issuer, the Bid
Agent, the Co-Agent and the Agent under this Section for fees and
disbursements of counsel shall be limited to the fees and expenses of one
counsel in each jurisdiction representing all such Persons, except (i) to
the extent that, in the reasonable judgment of any such Person, the
existence of actual or potential conflicts of interest make representation
by the same counsel inappropriate and (ii) that any such Person that is a
party to, or compelled to participate in, any such action, suit or
proceeding shall be indemnified for the reasonable fees and disbursements
of its counsel to the extent otherwise provided in this Section 9.12. This
indemnity shall survive the execution, delivery and consummation of the
transactions contemplated by this Agreement and the documents related to
any Acquisition financed with Borrowings hereunder. The Company's
obligations under this indemnity are and shall remain absolute and
unconditional, enforceable against it whether or not any Borrowings are
ever made by the Company or any conditions of lending are ever met and
without regard to any act, omission, breach, knowledge or event by,
attributable to, or in any manner involving the Banks, the Agent, the Bid
Agent, the Co-Agent, or any Issuer. Payment by the Company in respect of a
claim made by the Agent, the Co-Agent, the Bid Agent, or any Issuer or Bank
pursuant to this Section shall be made within fifteen (15) days after
demand therefor. Nothing contained herein shall be construed to prevent or
restrict the Company from asserting, or be deemed to be a waiver of, any
rights which the Company may have against the Agent, the Bid Agent, the Co-
Agent or any Issuer or Bank, under any provision of law. If and to the
extent that the foregoing undertaking may be unenforceable for any reason,
the Company hereby agrees to make the maximum contribution to the payment
and satisfaction of each of the foregoing amounts which is permissible
under applicable law.
9.13. Judgment Currency Indemnity.
(a) In the event of a judgment or order being rendered by a court or
tribunal of any particular jurisdiction for the payment of any amount
owing to the Agent, the Co-Agent, the Bid Agent, any Issuer or any of
the Banks pursuant to or in respect of this Agreement or any instrument
or agreement required hereunder (the "Loan Documents") and any such
judgment or order being expressed in a currency (the "Judgment
Currency") other than that in which the amount then owing pursuant to
or in respect of this Agreement or the Loan Documents is expressed to
be payable (the "Contractual Currency"), the Company shall indemnify
and hold each of the Agent, the Co-Agent, the Bid Agent, any Issuer or
any of the Banks harmless against any deficiency arising or resulting
from any variation between (i) the rate of exchange applied in
converting any amount expressed in the Contractual Currency into the
Judgment Currency for the purposes of such judgment or order and (ii)
the rate of exchange of the Judgment Currency for the Contractual
Currency as at the date or dates of discharge of the said judgment or
order.
(b) The foregoing indemnity shall constitute an obligation of the
Company separate and independent from its other obligations under this
Agreement and the Loan Documents, shall give rise to separate and
independent causes of action against the Company, shall apply
irrespective of any indulgence granted to the Company by the Agent, the
Co-Agent, the Bid Agent, any Issuer or any of the Banks from time to
time and shall continue in full force and effect notwithstanding any
judgment or order. The certificate of the Agent, the Co-Agent, the Bid
Agent, an Issuer or a Bank as to the amount of any such deficiency as
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aforesaid (which shall be deemed to constitute a loss suffered by the
Agent, the Co-Agent, the Bid Agent, an Issuer or such Bank without any
proof or evidence of any actual loss being required) shall, save for
any manifest error, be conclusive and binding on the Company.
9.14. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.
OUTBOARD MARINE CORPORATION
By: JAMES R. MAURICE
----------------
Title: Vice President and Controller
Address for Notices:
--------------------
100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: Robert J. Moerchen
Telephone: (847) 689-5279
Telex: 253891
Answerback: OMCORP WAUK
Rapifax: (847) 689-6206
THE FIRST NATIONAL BANK OF CHICAGO Commitment: $ 44,000,000
By: DEBORAH STEVENS
---------------
Title: Authorized Agent
Address for Notices:
--------------------
One First National Plaza
Chicago, Illinois 60670
Attention: Carlene Hicks
Telephone: (312)732-6294
Answerback: FNBCUI
Telex: 4330253
Rapifax: (312) 732-4840
With a copy to:
---------------
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Attention: Deborah E. Stevens
Vice President
Telephone: (312) 732-2532
Telex: 4330253
Answerback: FNBCUI
Rapifax: (312) 732-4840
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BANK OF AMERICA ILLINOIS Commitment: $38,000,000
By: MIKE HEALY
----------
Title: Vice President
Address for Notices:
--------------------
231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Lewis B. Fisher
Vice President
Telephone: (312) 828-3137
Rapifax: (312) 987-7384
ROYAL BANK OF CANADA Commitment: $36,000,000
By: KAREN T. HULL
-------------
Title: Manager, Corporate Banking
Address for Notices:
--------------------
New York Branch
Royal Bank of Canada
Financial Square, 23rd Floor
New York, NY 10005-3531
Attention: Manager, Loans Administration
Telephone: (212) 428-6311
Telex: MCI62519
Answerback: RBCNY
Rapifax: (212) 428-2372
With a copy to:
---------------
Royal Bank of Canada
1 N. Franklin Street
Suite 700
Chicago, Illinois 60606
Attention: Karen Hull
Manager, Corporate Banking
Telephone: (312) 551-1617
Rapifax: (312) 551-0805
THE BANK OF NEW YORK Commitment: $21,000,000
By: SARAH POWELL-GOLDMAN
--------------------
Title: Manager, Corporate Banking
Address for notices:
--------------------
One Wall Street - 19th Floor
New York, NY 10286
Attention: Ms. Sarah Powell-Goldman
Assistant Vice President
Telephone: (212) 635-1119
Rapifax: (212) 635-1208
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ABN AMRO BANK N.V. Commitment: $17,000,000
By: DAVID SAGERS
------------
Title: David Sagers
Vice President
By: THOMAS M. TOERPE
----------------
Title: Thomas M. Toerpe
Vice President
Address for notices:
--------------------
135 S. Lasalle Street, Suite 425
Chicago, Illinois 60674-9135
Attention: John William Stanger
Group Vice President
Telephone: (312) 904-2671
Rapifax: (312) 606-8425
THE BANK OF NOVA SCOTIA Commitment: $17,000,000
By: F. C. H. ASHBY
----------------
Title: F. C. H. Ashby
Senior Manager, Loan Operations
Address for Notices:
--------------------
The Bank of Nova Scotia
600 Peachtree St., N.E. Suite 2700
Atlanta, GA 30308
Attention: Joe Legista
Loan Administrative Officer
Telephone: (404) 877-1500
Rapifax: (404) 888-8998
With a copy to:
---------------
The Bank of Nova Scotia
181 West Madison Avenue, Suite 3700
Chicago, IL 60602
Attention: John P. Malloy
Representative
Telephone: (312) 201-4100
Telex:
Answerback:
Rapifax: (312) 201-4108
The Bank of Nova Scotia
Scotia Plaza
44 King Street West
Toronto, Ontario, Canada M5H 1H1
Attention: Steve Lucken
Assistant General Manager
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<PAGE> 122
FIRSTAR BANK MILWAUKEE, N.A. Commitment: $17,000,000
By: F. R. DENGEL
------------
Title: Vice President
Address for Notices:
--------------------
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: U.S. Banking Division
F. R. Dengel, Vice President
Telephone: (414) 765-4144
Telex: TRT 191178
Answerback: FIRWIS MIL
Rapifax: (414) 765-5062
THE NORTHERN TRUST COMPANY Commitment: $10,000,000
By: MICHELLE M. TETEAK
------------------
Title: Vice President
Address for Notices:
--------------------
50 South Lasalle Street
Chicago, Illinois 60675
Attention: Chicago Division
Telephone:(312) 444-3555
Telex:
--------------------
Answerback:
Rapifax: (312) 444-3506
NBD BANK Commitment: $0
By: JENNY GILPIN
------------
Title: Vice President
Address for Notices:
611 Woodward Avenue
Detroit, MI 48226
Attention: Mr. Chris Chevannes
Detroit Capital Markets -- Revenue Bonds
Telephone: (313) 225-3104
Rapifax: (312) 225-4533
------------
$200,000,000
============
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EXHIBIT 11
OUTBOARD MARINE CORPORATION AND SUBSIDIARIES
Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Mar. 31 Mar. 31
(In millions except amounts per share) 1996 1995 1996 1995
- -------------------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary Earnings Per Share:
Net Earnings (Loss) $ 1.1 $ 18.0 $ (11.3) $ 14.9
====================== ======================
Weighted Average Number of Shares 20.1 20.0 20.1 20.0
Common Stock Equivalents (Stock Options) .1 .1 * .1
---------------------- ----------------------
Average Shares Outstanding 20.2 20.1 20.1 20.1
====================== ======================
Primary Earnings (Loss) Per Share $ .05 $ .90 $ (.56) $ .74
====================== ======================
Fully Diluted Earnings Per Share:
Net Earnings (Loss) $ 1.0 $ 18.0 $ (11.3) $ 14.9
Add: After-Tax Interest and Related
Expense Amortization on 7%
Convertible Subordinated Debentures .9 .9 1.6 1.7
---------------------- ----------------------
Net Earnings (Loss) Adjusted $ 1.9 $ 18.9 $ (9.7) $ 16.6
====================== ======================
Weighted Average Number of Shares 20.1 20.0 20.1 20.0
Common Stock Equivalents (Stock Options) .1 .1 .1 .1
Weighted Average Common Shares Assuming
Conversion of 7% Convertible
Subordinated Debentures 3.4 3.4 3.4 3.4
---------------------- ----------------------
Average Shares Outstanding 23.6 23.5 23.6 23.5
====================== ======================
Fully Diluted Earnings (Loss) Per Share $ ** $ .81 $ ** $ .71
====================== ======================
</TABLE>
* The computation of primary earnings per share of common stock is computed
without common stock equivalents because inclusion of common stock
equivalents is antidilutive.
** The computation of fully diluted earnings per share of common stock is
antidilutive; therefore, the amount reported for primary and fully diluted
earnings per share is the same.
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EXHIBIT 19
To Our Shareholders:
The second quarter of fiscal 1996 was one in which our performance fell
significantly below our expectations. We achieved net earnings of $1.1
million, or five cents per share (primary and fully diluted), on sales of
$285.5 million for the quarter, compared with net earnings of $18 million,
or 90 cents per share (81 cents, fully diluted), on sales of $318.8 million
for last year's second quarter. Our U.S. sales declined 14.4 percent,
while our sales outside the U.S. increased 1.3 percent.
Our U.S. sales declined in the second quarter because of a sharp drop in
market demand for marine products, exacerbated by our higher field
inventories of outboards. Additionally, the year-to-year sales comparison
was made more difficult by the fact that last year's second quarter
benefitted from as much as $15 million in sales from engine backorders
carried into the period.
Sales in all of our U.S. product lines were down, with the exception of
our Recreational Boat Group, which achieved a small sales gain. Our
reduced sales performance was similar to the overall U.S. marine
industry's performance in the quarter. Unusually cold weather early this
spring may have negatively impacted industry sales. Some short-term
softness in employment and consumer confidence in the quarter also may have
played a role.
Our second quarter earnings this year were depressed by our lower sales and
also by lower manufacturing efficiencies that resulted from reduced
production schedules in our engine plants. We reduced our manufacturing
schedules because of reduced market demand and our commitment to better
manage our factory inventories. By comparison, last year's second quarter
benefitted from higher manufacturing efficiencies due to increased
production levels that resulted from the engine order backlog carried into
the quarter. The lower manufacturing efficiencies in this year's second
quarter accounted for the reduction in our gross margin to 21.5 percent
from 26.9 percent in the second quarter last year.
Although we reduced our operating expense by 10.5 percent, or $6.4 million,
in the past quarter, our operating earnings still declined to $6.8 million
from $24.9 million, and our pre-tax earnings fell to $2.9 million from
$20.3 million in the second quarter of 1995.
For the first six months of fiscal 1996, we incurred a net loss of $11.3
million, or 56 cents per share (primary and fully-diluted), on sales of
$517.6 million compared with net earnings of $14.9 million, or 74 cents per
share (71 cents, fully diluted), on sales of $561.4 million for the first
half of 1995.
As you know, we also limited production in our first quarter to control
factory inventories. That further contributed to the reduction in our
gross margin to 19.5 percent in the first half of 1996, down from 24.4
percent in the first half of last year. Operating expense was reduced by
more than 10 percent in the first half, as well; however, operating
earnings fell to $500,000 from $26 million in the first half of 1995. On a
pre-tax basis, we incurred a loss of $8.5 million for this year's first
half compared with pre-tax earnings of $18 million for the first half last
year.
Clearly, this isn't a level of performance we're satisfied with, and we're
taking action to improve it. We've implemented immediate cost-cutting
measures to improve our earnings performance for the balance of fiscal
1996. Additionally, we're taking a longer view to improving our earnings
and returns.
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<PAGE> 125
Last fall, when we combined our U.S. Marine Power Products Group and our
former International Group, we began a study of how we could achieve
efficiencies and improve service to our customers through a strategic
consolidation of the two units. That work is nearly complete, and we are
beginning to implement our plans.
The first step is the re-engineering of our U.S. and Canadian sales and
marketing operations into one streamlined, North American unit. We will
gain the benefits of superior coordination and consistent brand positioning
by unifying our marketing efforts for both countries. We'll also gain
efficiencies by consolidating our back-room operations: functions like
warehousing, order processing and warranty administration.
Our North American and European re-engineering effort will result in costs
of $8 million to $12 million and annualized savings, beginning in fiscal
1997, of a like amount. We are studying similar initiatives in our markets
around the globe.
We also have begun a study of our boat operations to determine how we can
increase efficiencies by consolidating our boat groups and streamlining
both manufacturing and support functions. The plan that grows out of that
effort will be implemented in fiscal 1997. Additionally, we are conducting
a study of our corporate staff organization to determine the most effective
structure for the staff group and to reduce our corporate overhead cost.
And, we are evaluating critical issues in the areas of sales, manufacturing
and information systems with the aim of improving our sales margins,
reducing our product costs and increasing our competitiveness.
We will establish our base operational costs at levels that will support
the achievement of consistently higher returns on the assets invested in
our business.
Not all of our activities, though, are focused on consolidation and cost
cutting. In the third quarter, we'll begin to ship the first models of a
new generation of outboards -- the FICHT Fuel Injection engines. The first
model we'll introduce will be a 150-horsepower engine designed primarily
for the high-volume, high-profit bass boat market. These engines
incorporate a revolutionary computerized fuel injection technology that
will be unique to our outboards. Supported by high quality manufacturing
and effective marketing, we believe Ficht Fuel Injection can establish
important product differentiation for our engines and boat packages.
We're also making progress on our visioning effort, which we will be
reviewing with our employees and fine-tuning in the third quarter. This
effort is helping us clarify our direction and our areas of opportunity.
We've obviously got a lot of work ahead of us, but we're also taking
important steps to improve our operations and establish the foundation for
stronger long-term returns.
On April 24, our board of directors declared a cash dividend of 10 cents
per share, payable June 28, 1996, to shareholders of record June 14, 1996.
HARRY W. BOWMAN
- ---------------
Harry W. Bowman
Chairman, President and
Chief Executive Officer
April 25, 1996
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<PAGE> 126
OUTBOARD MARINE CORPORATION
Statements of Consolidated Earnings
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Mar. 31 Mar. 31
(In millions except amounts per share) 1996 1995 1996 1995
- -------------------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 285.5 $ 318.8 $ 517.6 $ 561.4
Cost of Goods Sold 224.2 233.0 416.9 424.4
--------------------- ---------------------
Gross Earnings 61.3 85.8 100.7 137.0
Selling, General & Administrative Expenses 54.5 60.9 100.2 111.0
--------------------- ---------------------
Earnings from Operations 6.8 24.9 .5 26.0
Non-Operating Expense (Income)
Interest 4.1 5.4 9.5 10.4
Other, Net (.2) (.8) (.5) (2.4)
--------------------- ---------------------
3.9 4.6 9.0 8.0
--------------------- ---------------------
Earnings (Loss) Before Provision for Income Taxes 2.9 20.3 (8.5) 18.0
Provision for Income Taxes 1.8 2.3 2.8 3.1
--------------------- ---------------------
Net Earnings (Loss) $ 1.1 $ 18.0 $ (11.3) $ 14.9
===================== =====================
Net Earnings (Loss) Per Share of Common Stock
Primary $ .05 $ .90 $ (.56) $ .74
===================== =====================
Fully Diluted $ .05 $ .81 $ (.56) $ .71
===================== =====================
Dividends Paid Per Share $ .10 $ .10 $ .20 $ .20
===================== =====================
Average Shares of Common Stock and Common
Stock Equivalents Outstanding 20.2 20.1 20.1 20.1
</TABLE>
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<PAGE> 127
OUTBOARD MARINE CORPORATION
Condensed Statements of Consolidated Financial Position
<TABLE>
<CAPTION>
(Unaudited)
-------------------
Mar. 31 Mar. 31 Sept. 30 Sept. 30
(In millions) 1996 1995 1995 1994
- ------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Assets
- ------
Current Assets
Cash & Cash Equivalents $ 35.1 $ 37.1 $ 58.3 $ 80.3
Receivables 168.1 211.0 200.9 150.5
Inventories
Finished Product 92.1 90.5 69.9 58.7
Raw Material, Work In
Process & Service Parts 125.5 143.9 124.2 105.0
--------------------- --------------------
Total Inventories 217.6 234.4 194.1 163.7
Other Current Assets 49.6 37.2 48.9 35.3
--------------------- ---------------------
Total Current Assets 470.4 519.7 502.2 429.8
Product Tooling, Net 53.0 52.4 52.0 48.3
Intangibles 39.4 31.5 40.6 32.1
Other Assets 90.7 95.4 87.9 89.8
Plant & Equipment 567.2 548.0 558.9 535.6
Accumulated Depreciation (343.4) (326.5) (334.6) (318.5)
--------------------- ---------------------
Plant & Equipment, Net 223.8 221.5 224.3 217.1
--------------------- ---------------------
Total Assets $ 877.3 $ 920.5 $ 907.0 $ 817.1
===================== =====================
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<PAGE> 128
Liabilities and Shareholders' Investment
- ----------------------------------------
Current Liabilities
Notes Payable $ - $ 90.0 $ - $ -
Accounts Payable 86.7 101.7 99.6 102.9
Accrued and Other 144.0 132.3 149.2 130.7
--------------------- ---------------------
Total Current Liabilities 230.7 324.0 248.8 233.6
Long-Term Debt 177.5 177.3 177.4 178.2
Postretirement Benefits Other
Than Pensions 101.0 100.8 102.6 102.3
Other Non-Current Liabilities 126.6 96.1 122.4 94.0
Shareholders' Investment
Common Stock & Capital Surplus 113.8 110.9 111.6 109.3
Retained Earnings 134.4 117.2 149.7 106.3
Cumulative Translation
Adjustments (6.7) (5.8) (5.5) (6.6)
--------------------- ---------------------
Total Shareholders' Investment 241.5 222.3 255.8 209.0
--------------------- ---------------------
Total Liabilities and
Shareholders' Investment $ 877.3 $ 920.5 $ 907.0 $ 817.1
===================== =====================
Shares of Common Stock
Outstanding 20.1 20.0 20.0 20.0
</TABLE>
-128-
<PAGE> 129
EXHIBIT 99
"SAFE HARBOR" STATEMENT UNDER PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
Information provided by the company from time to time may contain
certain "forward-looking" information, as that term is defined by: (i) the
Private Securities Litigation Reform Act of 1995 (the "Act") and in (ii)
releases made by the Securities Exchange Commission ("SEC"). These
cautionary statements are being made pursuant to the provisions of the Act
and with the intent of obtaining the benefits of the "Safe Harbor"
provisions of the Act. The company cautions investors that any
forward-looking statements made by the company are not guarantees of future
performance and that actual results may differ materially from those in the
forward-looking statements as a result of various factors, including but
not limited to the following:
- The company's performance should be expected to be affected by the
strength of the retail economy, primarily in the United States, but also in
other international markets. Weakness in consumer confidence and rising
interest rates should be expected to adversely impact the company's future
financial results.
- Sales of a significant portion of the company's products can be
negatively impacted by abnormal weather conditions during different seasons
and quarters of the year.
- The Company competes with numerous well established manufacturers and
distributors in its product lines. The Company's financial results may be
negatively impacted by failure of new or existing products to be favorably
received by retailers and consumers due to price, availability, features,
other product choices or the necessity of promotions to increase sales of
the company's products.
- Underutilization of the company's facilities may occur as a result of
failure to meet anticipated sales volumes. Such underutilization, which
results in excess capacity costs, may significantly affect the company's
operating results. Any material inability of the company to utilize excess
factory capacity efficiently, either through increased production or
reduction in capacity, should be expected to adversely affect future
financial results.
- The company manufactures most of its products, although it sources
some products from third parties. The company's ability to realize
operating profits is dependent upon its ability to timely manufacture,
source and deliver products which may be sold for a profit. Labor
difficulties, delays in delivery or pricing of raw materials or sourced
products, scheduling and transportation difficulties, management
dislocations and delays in development and manufacture of new products can
negatively affect operating profits.
- The company is currently analyzing opportunities for reducing costs
and improving efficiencies and service on a worldwide basis. The timing,
cost and impact of any strategies which are implemented could affect future
financial results.
-129-
