<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 69,500
<SECURITIES> 0
<RECEIVABLES> 172,900
<ALLOWANCES> 11,200
<INVENTORY> 173,400
<CURRENT-ASSETS> 442,800
<PP&E> 552,200
<DEPRECIATION> 343,500
<TOTAL-ASSETS> 835,400
<CURRENT-LIABILITIES> 245,600
<BONDS> 172,600
<COMMON> 3,000
0
0
<OTHER-SE> 207,200
<TOTAL-LIABILITY-AND-EQUITY> 835,400
<SALES> 237,000
<TOTAL-REVENUES> 237,000
<CGS> 200,500
<TOTAL-COSTS> 200,500
<OTHER-EXPENSES> 38,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,000
<INCOME-PRETAX> (6,300)
<INCOME-TAX> 1,000
<INCOME-CONTINUING> (7,300)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,300)
<EPS-PRIMARY> (0.36)
<EPS-DILUTED> (0.36)
</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, 1997.
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,
1997 were 20,198,515 shares (not including 129,716 treasury shares).
Exhibit Index Page 13.
-1-
<PAGE> 2
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 1
FINANCIAL INFORMATION
FINANCIAL STATEMENTS
March 31, 1997
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
March 31 March 31
(In millions except amounts per share) 1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 237.0 $ 285.5 $ 434.1 $ 517.6
Cost of Goods Sold 200.5 224.2 374.9 416.9
--------------------- ---------------------
Gross earnings 36.5 61.3 59.2 100.7
Selling, General and Administrative Expenses 49.5 54.5 91.9 100.2
--------------------- ---------------------
Earnings (Loss) from operations (13.0) 6.8 (32.7) 0.5
Non-Operating Expense (Income)
Interest expense 4.0 4.1 8.4 9.5
Other, net (10.7) (0.2) (21.3) (0.5)
--------------------- ---------------------
(6.7) 3.9 (12.9) 9.0
--------------------- ---------------------
Earnings (Loss) before provision for income
taxes (6.3) 2.9 (19.8) (8.5)
Provision for Income Taxes 1.0 1.8 1.8 2.8
--------------------- ---------------------
Net earnings (loss) $ (7.3) $ 1.1 $ (21.6) $ (11.3)
===================== =====================
Net Earnings (Loss) Per Share of Common Stock
Primary $ (0.36) $ 0.05 $ (1.07) $ (0.56)
===================== =====================
Fully diluted $ (0.36) $ 0.05 $ (1.07) $ (0.56)
===================== =====================
Dividends Declared Per Share $ 0.10 $ 0.10 $ 0.20 $ 0.20
===================== =====================
Average Shares of Common Stock and Common
Stock Equivalents Outstanding (if applicable) 20.2 20.2 20.2 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)
-------------------
March 31 March 31 September 30
(In Millions) 1997 1996 1996
---- ---- ----
<S> <C> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 69.5 $ 35.1 $ 95.5
Receivables 161.7 168.1 167.6
Inventories
Finished products 64.5 92.1 62.6
Raw material, work in
process and service parts 108.9 125.5 102.5
------------------------------------
Total inventories 173.4 217.6 165.1
Other current assets 38.2 49.6 39.3
------------------------------------
Total current assets 442.8 470.4 467.5
Product Tooling, net 49.4 53.0 51.6
Intangibles 36.7 39.4 38.3
Other Assets 97.8 90.7 97.4
Plant & Equipment, at cost 552.2 567.2 565.1
Less-Accumulated depreciation (343.5) (343.4) (346.2)
------------------------------------
208.7 223.8 218.9
------------------------------------
Total assets $ 835.4 $ 877.3 $ 873.7
====================================
-4-
<PAGE> 5
Liabilities and Shareholders' Investment
Current Liabilities
Accounts payable $ 83.3 $ 86.7 $ 90.0
Accrued and other 162.3 144.0 163.3
------------------------------------
Total current liabilities 245.6 230.7 253.3
Long-Term Debt 172.6 177.5 177.6
Postretirement Benefits Other
Than Pensions 100.3 101.0 100.7
Other Non-Current Liabilities 106.7 126.6 104.5
Shareholders' Investment
Common stock & capital surplus 115.2 113.8 114.8
Retained earnings 105.7 134.4 131.3
Cumulative translation
adjustments (10.7) (6.7) (8.5)
------------------------------------
Total shareholders'
investment 210.2 241.5 237.6
------------------------------------
Total liabilities
and shareholders'
investment $ 835.4 $ 877.3 $ 873.7
====================================
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE> 6
OUTBOARD MARINE CORPORATION
Statements of Consolidated Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31
(In millions) 1997 1996
---- ----
<S> <C> <C>
Cash Flows from Operating Activities
Net loss $ (21.6) $ (11.3)
Adjustments to reconcile net earnings to net cash
provided by operations:
Depreciation and amortization 27.0 25.4
Changes in current accounts excluding the
effects of noncash transactions:
Decrease in receivables 3.9 32.1
(Increase) in inventories (9.3) (23.5)
Decrease (Increase) in other current assets 0.8 (0.9)
(Decrease) in accounts payable and accrued liabilities (3.8) (17.7)
Other, net 6.0 2.5
--------------------
Net cash provided by operating activities 3.0 6.6
Cash Flows from Investing Activities
Expenditures for plant and equipment, and tooling (22.7) (28.2)
Other, net (1.3) 0.4
--------------------
Net cash used for investing activities (24.0) (27.8)
Cash Flows from Financing Activities
Cash dividends paid (6.0) (4.0)
Other, net 1.5 2.2
--------------------
Net cash provided by (used for) financing activities (4.5) (1.8)
Exchange Rate Effect on Cash (0.5) (0.2)
--------------------
Net Decrease in Cash and Cash Equivalents (26.0) (23.2)
Cash and Cash Equivalents at Beginning of Period 95.5 58.3
--------------------
Cash and Cash Equivalents at End of Period $ 69.5 $ 35.1
====================
Supplemental Cash Flow Disclosures
Interest paid $ 8.0 $ 8.4
Income taxes paid 3.3 7.0
</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 of
Outboard Marine Corporation and its subsidiaries (the "Company") 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, 1996.
The 1997 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
Subsequent to March 31, 1997, the Company negotiated the Third Amended and
Restated Revolving Credit Agreement, dated as of April 30, 1997 and
terminating December 31, 1999, which provides for credit of up to $150 million
secured by accounts receivable, inventories, patents and trademarks.
Prior to the Third Amended and Restated Revolving Credit Agreement, the
Company had receivables sales agreements 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
are only reduced by the net outstanding proceeds from the sales. The Company
had net outstanding proceeds of $29 million and $51 million at March 31, 1997
and 1996, respectively. The Company had retained 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. These receivable sales agreements were
terminated as of April 30, 1997 upon execution of the Third Amended and
Restated Revolving Credit Agreement.
Under the Second and Amended and Restated Revolving Credit Agreement, the
Company was required to meet certain financial covenants. At March 31, 1997,
the Company was in compliance with those 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 products in
the event of repossession upon a retail dealer's default. These arrangements
contain provisions which limit the Company's repurchase obligation to $40
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,
including 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. 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.
Once the Company becomes aware of its potential liability at a particular
site, it uses its 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
other participants' 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, 1997, the
Company has an accrued liability of approximately $14 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.
In the first quarter of the current fiscal year, the Company recovered
insurance proceeds of $6.1 million for prior environmental charges. These
insurance proceeds are included in non-operating expense (income) in the
Statement of Consolidated Earnings for the six months ended March 31, 1997.
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 reflects the
Company's liability based upon the information available at the time.
-8-
<PAGE> 9
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, 1997
RESULTS OF OPERATIONS
For the second quarter of fiscal 1997, the Company ("OMC") reported a net
loss of $7.3 million, or 36 cents per share (primary and fully diluted), on
sales of $237.0 million. During the second quarter of 1996, the Company
reported net earnings of $1.1 million, or five cents per share (primary and
fully diluted), on sales of $285.5 million. The sales decline for the quarter
of $48.5 million represented a 17.0% decrease.
For the first six months of the current fiscal year, the Company reported
sales of $434.1 million compared to $517.6 million in the similar period in
its fiscal 1996 year, a decrease of $83.5 million or 16.1%. A net loss of
$21.6 million for the six months ended March 31, 1997, compares to a net loss
of $11.3 million in the comparable period in 1996, and resulted in a net loss
per share of $1.07 for the first six months of 1997 compared to a net loss per
share of $0.56 in the comparable period of 1996.
OMC's sales decrease was due primarily to reduced market demand for its
products, both domestically and internationally, coupled with a managed effort
to assist dealers in reducing field inventories. The Company's retail
consumer programs were very successful in helping the dealer inventory
reduction effort, although they resulted in higher sales discounts for the
quarter. The Company estimates that, on a year-to-year basis, U.S. dealer
inventories of OMC outboard engines have been reduced approximately 16% while
U.S. dealer inventories of boats are down about 1%.
The earnings decrease, both for the quarter and year-to date, was
principally a function of the sales decrease, but was also affected by
unabsorbed manufacturing expenses arising from reduced production schedules as
well as costs associated with the Company's earnings improvement programs.
Earnings were also impacted by increased marketing expenses related to the
introduction of the Company's new FICHT TM fuel injection engines. Other
operating expenses were down, both for the quarter and year-to-date.
Non-operating income of $10.7 million for the three months ended March 31,
1997 includes non-recurring income of $8.8 million which was due primarily to
a favorable lawsuit settlement and gain on sale of fixed assets. This,
coupled with similar gains of $7.7 million in the first quarter, resulted in
$16.5 million of non-recurring income in the first six months of 1997.
The provision for income taxes for the three and six months ended March
31, 1997 and 1996 resulted from the net of expected taxes payable and benefits
relating to certain international subsidiaries. No tax benefit is allowed for
domestic losses because they are not realizable under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."
Effective October 1, 1997, the Company will report earnings per share as
required by the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 128 (SFAS 128), "Earnings per Share." SFAS 128 will
require restatement of earnings per share for prior periods but such
restatement will not be material for the Company.
-9-
<PAGE> 10
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 OMC's business it is more appropriate to
compare the March 31, 1997 Condensed Statement of Financial Position with
March 31, 1996. The Company's ratio of current assets to current liabilities
was 1.8 at March 31, 1997 compared to 2.0 at March 31, 1996. Current assets
of $442.8 million at March 31, 1997 decreased $27.6 million as compared to
current assets of $470.4 million at March 31, 1996. Due primarily to lower
sales, receivables were $28.4 million lower on a proforma basis after
reflecting $29.0 million at March 31, 1997 and $51.0 million at March 31, 1996
sold through a receivables sales agreement (see Note 2 of Notes to
Consolidated Financial Statements). Inventories decreased $44.2 million to
$173.4 million at March 31, 1997 as compared to $217.6 million at March 31,
1996 due primarily to reduced production in engine plants to bring inventories
more in line with sales. Other current assets decreased and other assets
increased due primarily to deferred income tax benefits.
Current liabilities increased by $14.9 million to $245.6 million as of
March 31, 1997 compared to $230.7 million at March 31, 1996. Accrued
liabilities increased $18.3 million due primarily to reclassification of $5.0
million of debt to short-term, to higher accrued income taxes and a
reclassification of interest expense relating to tax settlements to a current
liability. Other non-current liabilities decreased $19.9 million due
primarily to a decrease in tax liabilities.
The Company's total debt to total capitalization at March 31, 1997 was 46
percent compared to 42 percent at March 31, 1996.
As a result of a review undertaken at their direction, the Board of
Directors elected not to declare a dividend payable in the third fiscal
quarter. The Board of Directors has also directed management to engage the
services of the investment banking firm of Salomon Brothers Inc. as financial
advisor to explore strategic alternatives as a means of maximizing shareholder
value
Due to the seasonal nature of OMC's business, receivables, inventory and
accompanying short-term borrowing to satisfy working capital requirements are
usually at their highest levels in the second and third quarters and decline
thereafter as the Company's products enter their peak selling season. The
Company has a $150 million revolving credit agreement (see Note 2 of Notes to
Consolidated Financial Statements) in place for seasonal working capital
requirements.
TRENDS AND FORWARD-LOOKING FACTORS
The Company continues to initiate programs to improve its operational
structure and to make OMC more competitive in the marine marketplace. OMC is
continuing to reduce operating expenses and is beginning to reap benefits from
its restructuring programs. Also, the Company recently launched a program
designed to accelerate the expansion of its FICHT TM fuel injection technology
across its full line of Johnson and Evinrude outboards. OMC also has
recently integrated its boat group operations to strengthen its boat brand
positioning in the market while reducing operating expenses.
-10-
<PAGE> 11
The Company's financial performance in recent years has been inconsistent
and inadequate. In fiscal year 1996, OMC experienced a profit decline, and
the first half of fiscal year 1997 reflects a continuation of that trend. As
a result, the Board of Directors has directed management to engage the
services of the investment banking firm of Salomon Brothers Inc. as financial
advisor to explore strategic alternatives as a means of maximizing shareholder
value. The Company's Board of Directors believes the capital base of the
company must be stabilized and strengthened in order to allow it to accelerate
the operational and strategic changes underway at OMC, and to permit a more
rapid development of the Company's FICHT TM fuel injection technology and other
product development initiatives.
Some of the foregoing statements are forward-looking in nature and made in
reliance upon the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. These statements involve risks and uncertainties,
including but not limited to the impact of competitive products and pricing,
product demand and market acceptance, new product development, availability of
raw materials, general economic conditions including interest rates and
consumer confidence. Investors are also directed to risks discussed in
documents filed by the Company with the Securities and Exchange Commission.
The Company assumes no obligation to update the information included in this
statement.
-11-
<PAGE> 12
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
For information on matters submitted to a vote of Security Holders
during the Company's second quarter, see the Company's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1996, which is
incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits reference is made to the Exhibit Index on Page 13.
(b) Reports on Form 8-K. The Registrant did not file any reports on
Form 8-K for the fiscal quarter ended March 31, 1997.
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/: George L. Schueppert Executive Vice President May 15, 1997
& Chief Financial Officer
_____________________________ _________________________ _________________
GEORGE L. SCHUEPPERT
-12-
<PAGE> 13
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 April 24, 1997, a
copy is attached hereto as Exhibit 3(B).
Exhibit 4: Instruments defining the rights of security holders
including indentures:
(A) With respect to the Agreement of Outboard Marine Corporation to
furnish copies upon request of the Securities and Exchange Commission
covering unregistered long-term debt, reference is made to Exhibit
4(A) to the Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1996, which is incorporated herein by
reference.
(B) 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.
(C) 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.
(D) With respect to the Rights Agreement dated April 24, 1996, to be
effective June 23, 1996, reference is made to Exhibit 4(E) of the
Registrant's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996, which is incorporated by reference.
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.
(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.
-13-
<PAGE> 14
(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 Harry W. 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, reference is made to Exhibit
10(H) of the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996, which is incorporated herein by
reference. With respect to the Amendment No. One to the Second
Amended and Restated Revolving Credit Agreement, reference is made to
Exhibit 10(H) of the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996, which is incorporated herein by
reference. With respect to the Extension Letter to the Second Amended
and Restated Revolving Credit Agreement , reference is made to Exhibit
10(H) of the Registrant's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1996, which is incorporated herein by
reference. With respect to the Third Amended and Restated Revolving
Credit Agreement dated as April 30, 1997, 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. With
respect to the Amendment No. 1 and Waiver and the Amendment No. 2
and Waiver 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 June
30, 1996, 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 Letter to Our Shareholders for the fiscal
quarter ended March 31, 1997 is attached hereto as Exhibit 19.
Exhibit 27: Financial data schedules:
This information is filed only in the electronic filing.
-14-
<PAGE> 15
Exhibit 3 (B)
BYLAWS
of
Outboard Marine Corporation
(As amended to and including April 24, 1997)
TABLE OF CONTENTS
ARTICLE I Location
- -------------------------------------------------------------
Section 1. Principal Office
Section 2. Other Offices
ARTICLE II Stockholders
- -------------------------------------------------------------
Section 1. Place of Annual Meeting
Section 2. Changing Place of Annual Meeting
Section 3. Date of Annual Meeting
Section 4. Special Meetings
Section 5. Quorum
Section 6. Voting
Section 7. Notice
Section 8. Chairman and Secretary of the Meeting
Section 9. Proper Business
ARTICLE III Directors
- -------------------------------------------------------------
Section 1. Power of Directors
Section 2. Compensation
Section 3. Number of Directors
Section 4. Quorum
Section 5. Actions Without a Meeting
Section 6. Vacancy
Section 7. Meetings
Section 8. Committees
Section 9. Nominees
ARTICLE IV Officers
- -------------------------------------------------------------
Section 1. Required Officers
Section 2. Term of Office
Section 3. Chief Executive Officer
Section 4. President
Section 5. Vice President
Section 6. Secretary
Section 7. Treasurer
Section 8. Other Assistant Officers
Section 9. Officers Holding Multiple Positions
ARTICLE V Stock
- -------------------------------------------------------------
Section 1. Form of Stock Certificate
Section 2. Transfer of Shares
Section 3. Lost or Destroyed
Section 4. Holder of Record
ARTICLE VI Execution of Instruments
- -------------------------------------------------------------
Section 1. Authorized Signatures
Section 2. Certificates of the Company
-15-
<PAGE> 16
ARTICLE VII Indemnification
- -------------------------------------------------------------
Section 1. Proper Parties
Section 2. Expenses
Section 3. Right of Claimant to Bring Suit
Section 4. Non-Exclusivity of Rights
Section 5. Insurance
Section 6. Contractual Nature
Section 7. Severability
ARTICLE VIII Amendments
- -------------------------------------------------------------
Section 1. Power to Amend Bylaws
Section 2. Exceptions to the Power to Amend Bylaws
ARTICLE IX Miscellaneous
- -------------------------------------------------------------
Section 1. Corporate Seal
Section 2. Fiscal year
-16-
<PAGE> 17
ARTICLE I
---------
Location
Section 1. Principal Office
----------------------------
The principal office of the Company shall be located in the City of
Wilmington, New Castle County, Delaware.
Section 2. Other Offices
-------------------------
The Company shall have such other offices, either in or outside the
State of Delaware, as the Board of Directors or the Chief Executive
Officer shall from time to time direct.
ARTICLE II
----------
Stockholders
Section 1. Place of Annual Meeting
-----------------------------------
The Board of Directors shall determine the place, which may be in or
outside the State of Delaware, for holding any meeting of the
stockholders of the Company.
Section 2. Changing Place of Annual Meeting
--------------------------------------------
No change of the time or place for the annual meeting for the election
of Directors shall be made within 60 days of the day on which such
election is to be held unless required by law; provided, however, the
Board of Directors may change the time or place of the meeting at any
time, without notice. If any change is required by law, notice of such
change shall be given by the Secretary of the Company to each
stockholder entitled to notice thereof no less than 20 days before such
election is to be held.
Section 3. Date of Annual Meeting
----------------------------------
The annual meeting of stockholders shall be held on the third Thursday
in January in each year, if not a holiday. If such day is a holiday,
the meeting shall be held on the first day thereafter that is not a
holiday, Saturday or Sunday or at such time, which shall not be more
than 30 days from the date of the original meeting or the immediately
preceding adjournment, as may be set by the Board of Directors. At the
annual meeting, the stockholders shall elect Directors and transact
such other business as may properly come before the meeting.
Section 4. Special Meetings
----------------------------
Special meetings of stockholders, for any purpose other than the
election of Directors, may be held at such time, on such date and at
such place as shall be specified in the notice of such meeting. Special
meetings of stockholders may be called by the Chairman of the Board,
the Chief Executive Officer or three-quarters of the entire Board of
Directors.
-17-
<PAGE> 18
Section 5. Quorum
------------------
The holders of a majority of the shares of common stock entitled to
vote who shall be present in person or by proxy, shall constitute a
quorum at all meetings of stockholders. A majority of the quorum shall
decide any matter properly brought before the meeting, except as may
otherwise be required by these Bylaws, by the Certificate of
Incorporation or by law. Whether or not there is a quorum present at
any such meeting, the chairman of the meeting or a majority of the
shares so present or represented shall have the power to adjourn the
meeting from time to time without notice. At any adjourned meeting,
any business may be transacted which might have been transacted at the
original or immediately preceding adjourned meeting. If the adjournment
is for more than 30 days or if after the adjournment a new record date
is fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to notice of and
to vote at the meeting.
Section 6. Voting
------------------
All votes by stockholders on proposed amendments to the Company's
Certificate of Incorporation and all elections of Directors shall be by
written ballot. All elections for Directors shall be decided by a
plurality of the votes of the shares present at the meeting, in person
or by proxy, and entitled to vote on the election of Directors; all
other questions shall be decided by a majority vote of the shares
entitled to vote on the subject matter and present, in person or by proxy,
at the meeting, except as otherwise provided in these Bylaws, by the
Company's Certificate of Incorporation or by law.
-18-
<PAGE> 19
Section 7. Notice
------------------
Written notice of each annual or special meeting of stockholders shall
be prepared and mailed by or shall be caused to be prepared and mailed
by the Secretary of the Company. These notices shall be mailed to the
address of each stockholder as it appears on the books and records of
the Company as of the record date for such meeting. The notice for any
annual or special meeting shall be mailed no less than 10 days and no
more than 60 days before the meeting. Any notice shall state the place,
date and hour of the meeting and, in the case of a special meeting,
shall state the purpose or purposes of such meeting. In no event shall
any irregularity in such notice affect the validity of any annual
meeting of stockholders or any proceeding at any such meeting duly
constituted.
Section 8. Chairman and Secretary of the Meeting
-------------------------------------------------
The Chairman of the Board shall act as chairman and shall preside and
the Secretary shall act as secretary and record the proceedings at all
meetings of stockholders.
Section 9. Proper Business
---------------------------
Any action required or permitted to be taken by the stockholders of the
Company must be effected at a duly called annual or special meeting of
the stockholders of the Company and may not be effected by any consent
in writing by such stockholders. At any annual or special meeting of
stockholders, only that business which is properly brought before the
meeting shall be conducted. To be properly brought before the meeting,
such business must be specified in the notice of the meeting (or any
supplement thereto) given by or at the direction of the Board of
Directors or the Chief Executive Officer or otherwise properly brought
before the meeting by the Board of Directors or by a stockholder. For a
stockholder to properly bring business before the meeting, the
stockholder must have given written notice thereof; such notice to be
received by the Secretary, at the Company's principal executive
offices, no less than 60 nor more than 90 days prior to the date one
year from the date of the immediatedly preceding annual meeting of
stockholders. The notice must contain a brief description of the
business intended to be brought before the meeting, the stockholder's
name and address, the class and number of share of stock the
beneficially owns and a description of any material interest the
stockholder has in the Company. If the Company provides less than 30
days notice or prior public disclosure of the date of the meeting is
given or made to stockholders, to be timely received the stockholders'
notice must be received by the Secretary no later than the close of
business on the tenth day after that notice was mailed to stockholders
or public disclosure of the notice was made.
-19-
<PAGE> 20
ARTICLE III
-----------
Directors
Section 1. Power of Directors
------------------------------
The business and affairs of the Company shall be vested in the Board
of Directors, subject to any restrictions imposed upon them by these
Bylaws, by the Certificate of Incorporation or by law.
Section 2. Compensation
------------------------
The Board of Directors shall have the power to fix the compensation
of its members and may provide for the payment of the expenses of the
members attending meetings of the Board of Directors and any committee
of the Board.
Section 3. Number of Directors
-------------------------------
There shall be no less than nine and no more than 12 members on the
Board of Directors, the actual number to be set by a resolution of the
Board of Directors from time to time. The election and term of office
of each Director shall be in accordance with the provisions of Article
FOURTEENTH of the Certificate of Incorporation.
Section 4. Quorum
------------------
A majority of the Board of Directors then in office shall constitute a
quorum for the transaction of business at any meeting of Directors. If
a quorum is not present, a majority of those present may adjourn the
meeting. The act of a majority of the Directors present at any meeting
at which a quorum is present shall be the act of the Board of
Directors, except as provided by these Bylaws, by the Certificate of
Incorporation or by law. At all meetings of the Board of Directors, each
Director present shall have one vote.
Section 5. Actions Without a Meeting
-------------------------------------
Any action required or permitted to be taken at any meeting of the
Board of Directors or committee of the Board may be taken without a
meeting, if all members of the Board of Directors or the committee, as
the case may be, shall consent in writing, and such writing is filed
with the minutes of the Board of Directors or the committee, as the
case may be.
-20-
<PAGE> 21
Section 6. Vacancy
-------------------
Any Director or the entire Board of Directors may be removed from
office at any time but only for cause and only by the affirmative vote
of the holders representing 80% or more of the combined voting power
of all the shares of stock of the Company entitled to vote for the
election of Directors. In the event of any vacancy in the Board of
Directors for any reason, a majority of the Directors then in office,
or if only one director remains, that director, may elect a person to
fill any such vacancy. The Director so elected shall serve for the
unexpired term of the vacant directorship or as otherwise may be
required in accordance with the provisions of Article FOURTEENTH of the
Company's Certificate of Incorporation.
Section 7. Meetings
--------------------
The Board of Directors shall elect one of its members to be Chairman of
the Board of Directors and to have such other powers, authority and
duties as the Board of Directors may assign to such office. The
Chairman of the Board of Directors shall preside at all meetings of the
Board of Directors. If the Chairman is not present or available, the
Directors present at the meeting shall appoint, from one of their
members, a Director to act as Chairman of the meeting. The Board of
Directors shall meet to elect the officers of the Company as promptly
as practical after the adjournment of the Annual Meeting of
Stockholders. Other meetings of the Directors may be held at such time,
on such date and in such place as the Board of Directors may from time
to time direct. Special meetings of the Directors may be called at any
time by the Chairman of the Board, the Chief Executive Officer, or the
written request of two-thirds of the entire Board of Directors then in
office. The Secretary shall give notice to the Directors of the time,
date and place of each such meeting no less than two days prior to any
such meeting. The notice shall be sent to the last known address of
each such director as shown on the Company's books and records. Any
Director may, before or after any meeting, waive, in writing, notice
of such meeting.
Section 8. Committees
----------------------
The Board of Directors may, by a resolution passed by a majority of the
entire Board of Directors, designate such committee or committees of
the Board as it deems necessary or appropriate. Each committee shall
consist of two or more Directors. In the absence or disqualification
of a member of any committee, the member or members present at any
meeting and not disqualified from voting may unanimously appoint
another director to act at the meeting in place of such absent or
disqualified member. Each committee shall have such power, authority
and duties as may, by a resolution of the Board of Directors, these
Bylaws, the Certificate of Incorporation or by law, be delegable to a
committee of the Board.
-21-
<PAGE> 22
Section 9. Nominees
--------------------
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as Directors. Nominations of
persons for election to the Board of Directors of the Company may be
made at a meeting of stockholders, by or at the direction of the Board
of Directors, by any nominating committee or person appointed by the
Board of Directors, or by any stockholder of the Company entitled to
vote for the election of Directors at the meeting, who complies with
the notice procedures set forth in this Section 9. Such nominations,
other than those made by or at the direction of the Board of Directors,
shall be made pursuant to timely notice in writing to the Secretary of
the Company. To be timely, a stockholders' notice shall be delivered to
or mailed and received by the Secretary of the Company at the principal
executive offices of the Company not less than 60 nor more than 90 days
prior to the date one year from the date of the immediately preceding
annual meeting of stockholders; provided, however, that in the event
that less than 30 days notice or prior public disclosure of the date of
the meeting is given or made to stockholders, notice by the stockholder
to be timely must be so received no later than the close of business on
the tenth day following the day on which such notice of the date of the
meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth: (a) as to each person who the stockholder
proposes to nominate for election or re-election as a Director, (1) the
name, age, business address and residence address of the person, (2)
the principal occupation or employment of the person, (3) the class and
number of shares of stock of the Company which are beneficially owned
by the person, (4) the nominee's written consent to being named in the
proxy statement as a nominee and to serving as a Director if elected
and (5) any other information relating to the person that is required
to be disclosed in solicitations for proxies for election of Directors
pursuant to Rule 14a under the Securities Exchange Act of 1934 or any
successor rule thereto; and (b) as to the stockholder giving the
notice, (1) the name and record address of the stockholder and (2) the
class and number of shares of stock of the Company which are
beneficially owned by the stockholder as of the record date for such
meeting. The Company may require any proposed nominee to furnish such
other information as may reasonably be required by the Company to
determine the eligibility of such proposed nominee to serve as a
Director of the Company.
ARTICLE IV
----------
Officers
Section 1. Required Officers
-----------------------------
The Board of Directors (i) shall elect a Chief Executive Officer, a
President, a Secretary and a Treasurer, and (ii) may elect or appoint
one or more Vice Presidents, such assistant officers or such other
officers of the Company as may be designated by the Board of Directors
from time to time. The Chief Executive Officer may appoint other
Vice President, assistant officers or such other officers provided
any such officer appointed by the Chief Executive Officer shall not
have more powers, authority or duties of any such similarly titled
officer elected by the Board of Directors. Each officer elected or
appointed by the Board of Directors shall have such power and authority
as may be prescribed by the Board Directors or the Chief Executive
Officer or as may be specified by these Bylaws, by the Certificate of
Incorporation or by law.
-22-
<PAGE> 23
Section 2. Term of Office
--------------------------
Except where otherwise expressly provided in a contract duly authorized
by a majority of the Board of Directors or these Bylaws, all officers
elected or appointed by the Board of Directors or the Chief Executive
Officer shall hold office until the annual meeting of stockholders
held next after such election or appointment and until such officer's
successor shall have been duly chosen and qualified or until such
officer shall have resigned or shall have been removed. All agents,
including any employee, representative or officer appointed by the
Board of Directors or the Chief Executive Officer of the Company shall
be subject to removal at any time by the Board of Directors or the
Chief Executive Officer with or without cause. All officers elected by
the Board shall be subject to removal with or without cause at any time
by two-thirds of the Directors then in office. Any vacancy occurring in
any office to which such officer was elected or appointed by the Board
of Directors shall be filled by the vote of a majority of the Directors
then in office. Any vacancy occurring in any office to which such
officer was appointed by the Chief Executive Officer may be filled by
the vote of a majority of the Directors then in office or the Chief
Executive Officer. Notwithstanding the foregoing, any such removal
shall be without prejudice to such officer's contractual rights.
Section 3. Chief Executive Officer
-----------------------------------
The Chief Executive Officer shall be primarily responsible for
formulating and implementing the Company's missions, goals, objectives
and strategies and for generally managing the Company's business and
affairs. The Chief Executive Officer shall have such other powers,
authority and duties as the Board of Directors may assign to such
office.
Section 4. President
---------------------
The President shall ensure that all orders and resolutions of the Board
of Directors are carried into effect, except with respect to any
specific authority as the Board of Directors may grant to any other
officer or agent of the Company. The President shall have such other
powers, authority and duties as the Board of Directors, the Chairman
of the Board or the Chief Executive Officer may assign to such office.
Section 5. Vice President
--------------------------
Any Vice President elected by the Board of Directors, shall, upon
designation by the Board of Directors, in the absence of the President,
have the power and perform the duties of the President, as long as such
absence continues. Any Vice President appointed by the Chief Executive
Officer shall not, in the absence of the President, have the powers and
duties of the President. The Vice President, or Vice Presidents, shall
have such other powers and duties as the Board of Directors or Chief
Executive Officer may assign to such office.
-23-
<PAGE> 24
Section 6. Secretary
---------------------
The Secretary shall attend and record the proceedings of all meetings
of the Board of Directors and, upon request, the committees of the
Board. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders, the Board of Directors and the committees,
if any, as required by the Chairman of the Board, the Chief Executive
Officer or these Bylaws. The Secretary shall have such other powers
and duties as the Board of Directors or the Chief Executive Officer may
assign to such office. The Secretary shall keep the seal of the Company
in safe custody and shall affix said seal to any instrument requiring
same.
Section 7. Treasurer
---------------------
The Treasurer shall be the custodian of all of the funds and
securities of the Company. The Treasurer shall have the power, in the
regular performance of the duties of the Treasurer, to endorse for
collection, on behalf of the Company, checks, notes and other
obligations, and shall deposit or shall cause to be deposited, all such
checks, notes or other obligations in such bank or banks or depository
or depositories as the Board of Directors or the Chief Executive
Officer, may designate. The Treasurer shall have such other powers and
duties as the Board of Directors or Chief Executive Officer may assign
to such office.
Section 8. Other Assistant Officers
------------------------------------
The Board of Directors or the Chief Executive Officer may appoint such
other assistant officers, with such powers and duties then specified,
as such appointing party may from time to time deem necessary or
appropriate.
Section 9. Officers Holding Multiple Positions
-----------------------------------------------
Any number of offices may be held by the same person unless otherwise
provided in the Certificate of Incorporation or by law, provided, however
that any one of such offices may remain vacant from time to time, except
as otherwise required by law.
ARTICLE V
---------
Stock
Section 1. Form of Stock Certificate
-------------------------------------
Certificates for shares or certificates representing rights with respect
to the capital stock of the Company shall be in such form as shall be
approved by the Board of Directors. The certificate shall be
countersigned by a Transfer Agent and registered by a Registrar, both
of which shall be designated by the Board of Directors and may be the
same person. The stock records shall be kept by a Transfer Agent or by
Transfer Agents or by the Secretary or by such other agent as may be
designated by the Board of Directors.
-24-
<PAGE> 25
Section 2. Transfer of Shares
------------------------------
The shares of the capital stock of the Company shall be transferable on
the records of the Company only by the person in whose name such shares
appear or by such person's duly authorized attorney, upon surrender of
the certificate representing such transferred shares, properly endorsed.
The Board of Directors may make such additional rules and regulations
with respect to the issue, transfer or registration of the shares of
the capital stock of the Company as it deems necessary or appropriate.
Section 3. Lost or Destroyed Certificate
-----------------------------------------
In case of loss or destruction of a certificate of the capital stock of
the Company, a new certificate replacing such lost or destroyed
certificate shall be issued provided the Secretary, or the Secretary's
agent, after receiving satisfactory proof of loss or destruction and of
the posting of satisfactory indemnity bond or otherwise, has approved
such replacement.
Section 4. Holder of Record
----------------------------
The Company shall be entitled to treat the holder of record of any
share of its capital stock as the holder in fact thereof and shall
not be bound to recognize any equitable or other claim to or interest
in such shares on the part of any other person, whether or not it
shall have express or other notice thereof.
ARTICLE VI
----------
Execution of Instruments
Section 1. Authorized Signatures
---------------------------------
All documents, instruments or other writings to be signed by, on behalf
of or in the name of the Company shall be signed, executed, verified,
acknowledged and delivered by such officer, agent or employees of the
Company, or any one of them, and in such manner, as from time to time
may be determined by the Board of Directors.
Section 2. Certificates of the Company
---------------------------------------
Notwithstanding anything herein to the contrary, all certificates made
on behalf of the Company shall be made by the Secretary or an Assistant
Secretary or such other officer or officers or person as the Board of
Directors may from time to time designate.
-25-
<PAGE> 26
ARTICLE VII
-----------
Indemnification
Section 1. Proper Parties
--------------------------
Each person who was or is made a party or is threatened to be made a
party to or is involved in or called as a witness in any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, and any appeal therefrom
(hereinafter, collectively a "proceeding"), by reason of the fact
that he or she, or a person of whom he or she is the legal
representative, is, was or had agreed to become a director the Company
or was or had agreed to become an officer (an "officer" for purposes
herein shall be defined to mean any person elected or appointed by the
Board of Directors or the Chief Executive Officer, in accordance with
Article IV, Section 1 of these Bylaws, and any attorney who is acting
as an officer or employee of the Company or any of its subsidiaries
when acting as an attorney for the Company or any of its subsidiaries)
of the Company (but with respect to such officers and persons agreeing
to become an officer only as to proceedings occurring after a Change in
Control, as defined herein, arising out of acts, events or omissions
occurring prior to such Change in Control) or is a Delegate of the
Company (a "Delegate" for purposes herein shall be defined to mean any
person serving at the request of the Company as a director, officer,
trustee, fiduciary, partner, manager, member, employee or agent of an
entity, partnership, joint venture, trust or other enterprise other
than the Company, including service with respect to employee benefit
plans), shall be indemnified and held harmless by the Company to the
fullest extent permitted under DGCL, as the same now exists or may
hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Company to provide broader
indemnification rights than the DGCL permitted the Company to provide
prior to such amendment), against all expenses, liabilities and losses
(including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith; provided,
that except as explicitly provided herein, the Company shall indemnify
any such person seeking indemnity in connection with a proceeding (or
part thereof) initiated by such person only if authorization for such
proceeding (or part thereof) was not denied by the Board of Directors
of the Company prior to the earlier of (1) 30 days after receipt of
notice thereof from such person or (2) a Change in Control, as defined
herein. For purposes of this Article, a "Change in Control of the
Company" shall be deemed to have occurred if (1) any "Person" (as is
used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended) is or becomes (except in a transaction approved in advance
by the Board of Directors of the Company) the beneficial owner (as
defined in Rule 13d-3 under such Act), directly or indirectly, of
securities of the Company representing 15% or more of the combined
voting power of the Company's then outstanding securities, or (2)
during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the
Company cease for any reason to constitute at least a majority thereof
unless the election of each director who was not a director at the
beginning of the period was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the
beginning of the period.
Unless a court interpreting Delaware law shall rule otherwise, this
paragraph shall be deemed to entitle all persons described herein
requesting indemnification covered hereby to such indemnification
without the determination provided for below, provided that if such a
-26-
<PAGE> 27
determination is required, such a determination shall be deemed to have
occurred unless within 60 days of a request for indemnification by the
Company a determination is made as provided below that such
indemnification is not proper in the circumstances because such person
has not met the necessary standard of conduct. If a determination is
required and one of the three parties listed below shall make a
determination that a person is entitled to indemnification under these
by-laws, then a later decision by another party of the parties listed
below that such person is not so entitled shall be of no effect and
shall not work to deny such person indemnification. A determination
shall be made, if required hereunder or by law, (1) by the Board of
Directors by a majority vote of a quorum consisting of directors who
were not parties to such proceeding, or (2) if such quorum is not
obtainable, or even if obtainable a quorum of disinterested directors
so directs, by independent legal counsel (who) may be the regular
counsel of the Company) in a written opinion or (3) by the
stockholders. If there is a Change in Control of the Company (as defined
above), then with respect to all matters thereafter arising out of acts,
omissions or events prior to the Change in Control of the Company
concerning the rights of any director or officer seeking
indemnification under this Article whose request for indemnification
has been denied by one of the parties listed above, such person shall
be entitled to have such decision redetermined as provided below if such
person so requests within 120 days of his or her being informed of the
initial denial of indemnification by the Company (unless the initial
determination had been by the procedure outlined below), and the
Company shall have the issue redetermined by special, independent
counsel selected by such person and approved by the Company (which
approval shall not be unreasonably withheld), which counsel has not
otherwise performed services (other than in connection with similar
matters) within the five years preceding its engagement to render such
opinion for such person or for the Company or any affiliates (as such
term is defined in Rule 405 under the Securities Act of 1933, as
amended) of the Company (whether or not they were affiliates when
services were so performed) ("Independent Counsel"). Unless such person
has theretofore selected Independent Counsel pursuant to this Section 1
and such Independent Counsel has been approved by the Company, the
firms approved by a resolution or resolutions of the Board of Directors
prior to a Change in Control of the Company shall be deemed to have
been approved by the Company as required. Such Independent Counsel
shall determine within 60 days whether and to what extent such person
would be permitted to be indemnified under applicable law and shall
render its written opinion to the Company and such person to such
effect. If such Independent Counsel is engaged by the Company, the
Company agrees to pay the reasonable fees of the Independent Counsel
referred to above and to fully indemnify such Independent Counsel
against any and all expenses, claims, liabilities and damages arising
out of or relating to this Article or its engagement pursuant hereto.
Section 2. Expenses
--------------------
Expenses, including attorneys' fees, incurred by a person referred
to in Section 1 of this Article in defending or otherwise being
involved in a proceeding shall be paid by the Company in advance of
the final disposition of such proceeding, including any appeal
therefrom, upon receipt of an undertaking (the "Undertaking") by or on
behalf of such person to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the
Company. Such undertaking shall provide in that if the person to whom
the expenses were advanced has commenced proceedings in a court of
competent jurisdiction to secure a determination that he or she should
-27-
<PAGE> 28
be indemnified by the Company, such person shall not be obligated to
repay the Company during the pendency of such proceeding.
Section 3. Right of Claimant to Bring Suit
-------------------------------------------
If a claim under Section 1 hereof is not paid in full by the Company
within 60 days after a written claim has been received by the Company
or if expenses pursuant to Section 2 hereof have not been advanced
within 10 days after a written request for such advancement accompanied
by the Undertaking has been received by the Company, the claimant may
at any time thereafter bring suit against the Company to recover the
unpaid amount of the claim or the advancement of expenses. (If the
claimant is successful in such suit or any other suit to enforce a
right for expenses or indemnification against the Company or any other
party under any other agreements, in whole or in part, such claimant
shall also be entitled to be paid the reasonable expense of prosecuting
such claim.) It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending
any proceeding in advance of its final disposition where the required
Undertaking has been tendered to the Company) that the claimant has not
met the standards of conduct which make it permissible under the DGCL
for the Company to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Company. Neither the
failure of the Company (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination, if
required, prior to the commencement of such action that indemnification
of the claimant is proper in the circumstances because he or she has
met the applicable standard of conduct required under the DGCL, nor an
actual determination by the Company (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant had
not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that claimant had not met the applicable
standard of conduct.
Section 4. Non-Exclusivity of Rights
-------------------------------------
The rights conferred on any person by this Article shall not be
exclusive of any other right which such person may have or hereafter
acquire under any statue, provision of the Certificate of
Incorporation, Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise. The Board of Directors shall have the
authority, by resolution, to provide for such other indemnification of
directors, officers, employees or agents as it shall deem appropriate.
Section 5. Insurance
---------------------
The Company may maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of the Company or another
company, partnership, joint venture, trust or other enterprise against
any expenses, liabilities or losses, whether or not the Company would
have the power to indemnify such person against such expenses,
liabilities or losses under the DGCL.
-28-
<PAGE> 29
Section 6. Contractual Nature
------------------------------
The provisions of this Article shall be applicable to all proceedings
commenced after its adoption, whether such arise out of events, acts
or omissions which occurred prior or subsequent to such adoption, and
shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of such person. The Company hereby agrees that, for
a period of six years after any Change in Control, it shall cause to be
maintained policies of directors' and officers' liability insurance
providing coverage at least comparable to and in the same amounts as
that provided by any such policies in effect immediately prior to such
Change in Control. The Company may enter into contracts with any
Director, officer, Delegate or employee of the Company in furtherance
of the provisions of this Article VII and may create a trust fund,
grant a security interest or use other means (including a letter of
credit) to ensure the payment of such amounts as may be necessary to
affect the advancing of expenses and indemnification as provided in
this Article VII. This Article shall be deemed to be a contract between
the Company and each person who, at any time that this Article is in
effect, serves or agrees to serve in any capacity which entitles him to
indemnification hereunder and any repeal or other modification of this
Article or any repeal of modification of the DGCL or any other
applicable law shall not limit any rights of indemnification then
existing or arising out of events, acts or omissions occurring prior to
such repeal or modification, including, without limitation, the right
to indemnification for proceedings commenced after such repeal or
modification to enforce this Article with regard to acts, omissions or
events arising prior to such repeal or modification.
Section 7. Severability
------------------------
If this Article or any portion hereof shall be invalidated or held to
be unenforceable on any ground by any court of competent jurisdiction,
then the Company shall nevertheless indemnify each director and officer
of the Company as to costs, charges and expenses (including attorney's
fees), judgments, fines and amounts paid in settlement with respect to
any proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the Company, to the full
extent permitted by any applicable portion of this Article that shall
not have been invalidated and to the full extent permitted by
applicable law.
ARTICLE VIII
------------
Amendments
Section 1. Power to Amend Bylaws
---------------------------------
The power to adopt, make, amend, alter, change or repeal the Bylaws of
the Company, including the power to increase or decrease the number of
directors, may, except as otherwise provided by these Bylaws, the
Certificate of Incorporation or by law, be exercised by a majority of
stockholders or by a majority of the Board of Directors, and the
stockholders shall have the right to amend, alter, change or repeal
any Bylaw which may be adopted by the Board of Directors.
-29-
<PAGE> 30
Section 2. Exceptions to the Power to Amend Bylaws
---------------------------------------------------
The power to amend, alter, change or repeal Article II, Sections 4 and
9, Article III, Sections 3, 7 and 9, Article VII and this Article VIII
may be exercised only by two-thirds of the stockholders or by two-thirds
of the then current Board of Directors.
ARTICLE IX
----------
Miscellaneous
Section 1. Corporate Seal
--------------------------
The corporate seal of this Company shall be in such form as may be
designated by the Board of Directors.
Section 2. Fiscal year
-----------------------
The fiscal year of the Company shall begin on the first day of October
of each year.
-30-
<PAGE> 31
EXHIBIT 10(I)
THIRD 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 April 30, 1997
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. . . . . . .
-31-
<PAGE> 32
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. Status of NBD Bank. . . . . . . . . . .
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 . . . . . . . . .
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 . . . . . . . . . . .
7.11. Revocation of Guaranties. . . . . . . .
-32-
<PAGE> 33
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. . . . .
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 TRIAL. . . . . . . . . .
EXHIBIT A-1 COMMITTED NOTE
EXHIBIT A-2 COMPETITIVE BID NOTE
EXHIBIT B OPINION OF COUNSEL
EXHIBIT C FORM OF BORROWING BASE CERTIFICATE
EXHIBIT D FORM OF GUARANTY
SCHEDULE 1 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
-33-
<PAGE> 34
SCHEDULE 10 SCHEDULE OF LETTERS OF CREDIT
SCHEDULE 11 INVESTMENT POLICY
SCHEDULE 12 INVESTMENTS
-34-
<PAGE> 35
THIRD AMENDED AND RESTATED
OUTBOARD MARINE CORPORATION
REVOLVING CREDIT AGREEMENT
This Agreement (the "Credit Agreement") is entered into as of April 30,
1997, 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 a Second Amended and Restated Revolving Credit Agreement dated as of March
29, 1996, 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, reduce the Commitments (as hereinafter defined) of the
Banks pro rata;
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 Credit Agreement, the following terms have the meanings indicated for
purposes of this Credit 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.
"Account Debtor" means the account debtor or obligor with respect to any
of the Receivables and/or the prospective purchaser with respect to any
contract right, and/or any party who enters into or proposes to enter into any
contract or other arrangement with the Company, where the Company is acting as
creditor and the other party as debtor.
"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.
-35-
<PAGE> 36
"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.
"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 $150,000,000 as of the Closing Date of this Credit Agreement.
"Applicable Margin" means the percentage in excess of the Base Rate
payable by the Company as set forth in Section 2.04.
"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.
"Boat Group" means the Guarantors that manufacture, assemble and sell
boats.
"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.
"Borrowing Base" means, as of any date of calculation, an amount, as set
forth on the most current Borrowing Base Certificate delivered to the Agent,
equal to: (i) eighty percent (80%) (or, with respect to the Eligible
Receivables of the Company's Engine Group which are dated, seventy percent
(70%)) of the Gross Amount of Eligible Receivables; plus (ii) fifty percent
(50%) of the Gross Amount of Eligible Inventory consisting of finished goods,
thirty percent (30%) of the Gross Amount of Eligible Inventory consisting of
raw materials and work-in-process and forty percent (40%) of the Gross Amount
of Eligible Inventory consisting of spare parts and accessories plus (iii)
between January 1 and April 30 of each year, $25,000,000.
-36-
<PAGE> 37
"Borrowing Base Certificate" means a certificate, in substantially the
form of Exhibit C attached hereto and made a part hereof, setting forth the
Borrowing Base and the component calculations thereof.
"Business Activity Report" means (A) a Notice of Business Activities
Report from the State of Minnesota, Department of Revenue or (B) any similar
report required by any other State relating to the ability of the Company or
any of the Guarantors to enforce their accounts receivable claims against
account debtors located in any such state.
"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 (i) Tangible Net Worth, plus (ii) Indebtedness for
Borrowed Money, minus (iii) 25% of cash and Cash Equivalents of the Company
and its Consolidated Subsidiaries, calculated on a consolidated basis.
"Cash Equivalents" means marketable securities as listed on the Company's
balance sheet in accordance with GAAP.
"Closing Date" means April 30, 1997.
"Code" means the Internal Revenue Code of 1986, as amended.
-37-
<PAGE> 38
"Collateral" shall mean all property and rights in property now owned or
hereafter at any time acquired by the Company or one of its Subsidiaries in or
upon which a Lien is granted in favor of the Agent.
"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.
"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.
"EBITA" 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 (excluding the effect of increases in the warranty reserve
but only to the extent such increases are equal to or less than $8,200,000),
(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. All calculations
of EBITA shall exclude the effect of up to $34,400,000 in restructuring
charges taken subsequent to September 30, 1996.
-38-
<PAGE> 39
"Eligible Inventory" means Inventory of the Company or the Guarantors
which is held, by the Company or one of the Guarantors or any party
contractually obligated to store or handle the inventory, for sale or lease in
the ordinary course of business or furnished under any contract of service by
the Company which continues to meet standards of eligibility from time to time
established in accordance with this Credit Agreement. In general, without
limiting the foregoing, the following inventory is not Eligible Inventory:
(i) Inventory which is obsolete, not in good condition, not either currently
usable or currently saleable in the ordinary course of the Company's or the
Guarantors' business or does not meet all material standards imposed by any
governmental authority having regulatory authority over such item of
Inventory, its use or its sale; (ii) Inventory consisting of packaging
material, supplies, clothing or upholstery; (iii) Inventory which (a) is
consigned to a third party for sale or (b) is on consignment from a third
party to the Company or one of the Guarantors for sale; (iv) Inventory which
consists of goods in transit which has been sold to a dealer or distributor of
the Company or one of the Guarantors and is in the process of being delivered
to that dealer or distributor; (v) Inventory which is subject to a Lien in
favor of any Person other than the Agent; (vi) Inventory with respect to which
the Agent does not have a first and valid fully-perfected security interest;
(vii) Inventory which is not located either (a) on the Company's owned
premises in the United States listed on Schedule 2 to the Security Agreement
or (b) in other owned or leased premises, warehouses or with bailees in the
United States not listed on Schedule 2 to the Security Agreement permitted to
be established under the Security Agreement, in each case in connection with
which the Agent shall have received landlord, mortgagee, bailee and/or
warehousemen's access and lien waiver agreements, as applicable, in each case
in form and substance acceptable to the Agent; (viii) Inventory which is
evidenced by a Receivable; (ix) Inventory which has been returned to the
Company or one of the Guarantors to be reworked; and (x) Inventory which is
not in full conformity with the representations and warranties made by the
Company to the Agent with respect thereto whether contained in this Credit
Agreement or the Security Agreement.
"Eligible Receivables" means Receivables created by the Company or any of
the Guarantors in the ordinary course of its business arising out of the sale
of goods or rendition of services by the Company or any of the Guarantors,
which Receivables are and at all times shall continue to meet standards of
eligibility from time to time established in accordance with this Credit
Agreement. In general, without limiting the foregoing, the following
Receivables are not Eligible Receivables:
(i) Receivables of the Company's Engine Group due from Account Debtors
which remain unpaid sixty (60) days after the due date and Receivables of the
Company's Boat Group due from Account Debtors which remain unpaid ninety (90)
days after the date of the original applicable invoice or sixty (60) days
after the due date, whichever is earlier;
(ii) all Receivables of the Company's Boat Group owing by a single Account
Debtor if twenty-five percent (25%) of the balance owing by such Account
Debtor, calculated without taking into account any credit balances of such
Account Debtor, remains unpaid ninety (90) days after the date of the original
applicable invoice or sixty (60) days after the due date, whichever is
earlier;
(iii) Receivables with respect to which the Account Debtor is a director,
officer, employee, Subsidiary or Affiliate of the Company;
-39-
<PAGE> 40
(iv) Receivables with respect to which the Account Debtor is any federal
governmental authority, the United States of America, or, in each case, any
department, agency or instrumentality thereof, unless with respect to any such
Receivable, the Company has complied to the Agent's satisfaction with the
provisions of the Federal Assignment of Claims Act or other applicable
statutes, including, without limitation, executing and delivering to Agent all
statements of assignment and/or notification which are in form and substance
acceptable to Agent and which are deemed necessary by Agent to effectuate the
assignment to the Agent of such Receivables.
(v) Receivables not denominated in U.S. Dollars;
(vi) Receivables with respect to which the Account Debtor is (a) not a
resident of the United States, Canada or Latin America unless the Account
Debtor has supplied the Company with an irrevocable letter of credit, issued
by a financial institution reasonably satisfactory to the Agent, sufficient to
cover such Receivable in form and substance satisfactory to the Agent or (b) a
resident of any country in Latin America to the extent such Receivable is not
covered by EXIM Bank insurance;
(vii) Receivables with respect to which the Account Debtor has (a)
asserted a counterclaim, (b) a right of setoff, (c) a right with respect to an
accrued rebate, or (d) a receivable owing from the Company or one of the
Guarantors but only to the extent of such counterclaim, setoff, rebate or
receivable;
(viii) Receivables with respect to which the Agent does not have a first
and valid fully perfected and enforceable security interest for which notice
has been provided to the Company;
(ix) Receivables with respect to which the Account Debtor is the subject
of bankruptcy or a similar insolvency proceeding or has made an assignment for
the benefit of creditors or whose assets have been conveyed to a receiver,
trustee or assignee for the benefit of creditors;
(x) Receivables with respect to which the Account Debtor's obligation to
pay the Receivable is conditional upon the Account Debtor's approval or is
otherwise subject to any contractual repurchase obligation or return right, as
with sales made on a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval (except with respect to Receivables in connection with which Account
Debtors are entitled to return Inventory on the basis of the quality of such
Inventory) or consignment basis, including, without limitation, all
Receivables from financial institutions that provide floor plan financing for
the Company's dealers;
(xi) Receivables with respect to which the Account Debtor is located in
Minnesota (or any other jurisdiction which adopts a statute or other
requirement with respect to which any Person that obtains business from within
such jurisdiction or is otherwise subject to such jurisdiction's tax law
requiring such Person to file a Business Activity Report or make any other
required filings in a timely manner in order to enforce its claims in such
jurisdiction's courts or arising under such jurisdiction's laws); provided,
however, such Receivables shall nonetheless be eligible if the Company has
filed a Business Activity Report (or other applicable report or filing) with
the applicable state office by the time required or is qualified to do
business in such jurisdiction and, at the time the Receivable was created, was
qualified to do business in such jurisdiction or had on file with the
applicable state office a current Business Activity Report (or other
applicable report or filing);
-40-
<PAGE> 41
(xii) Receivables with respect to which the Account Debtor's obligation
does not constitute its legal, valid and binding obligation, enforceable
against it in accordance with its terms;
(xiii) Receivables with respect to which the Company or, as applicable,
one of the Guarantors has not yet shipped the applicable goods, performed the
applicable service or issued the applicable invoice;
(xiv ) any Receivable which is not in conformity with the representations
and warranties made by the Company or, as applicable, one of the Guarantors to
the Agent with respect thereto whether contained in this Credit Agreement or
the relevant Security Agreement; and
(xv) Receivables in connection with which the Company or any other party
to such Receivable is in default in the performance or observance of any of
the terms thereof in any material respect.
"Engine Group" means the Company's divisions and other units that
manufacture, assemble and sell engines, motors and other power accessories.
"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.
"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.
-41-
<PAGE> 42
"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.
"EXIM Bank" means the Export Import Bank of the United States.
"Existing Agreement" means the Second Amended and Restated Credit
Agreement dated as of March 29, 1996 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.
"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.
-42-
<PAGE> 43
"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.
"Gross Amount of Eligible Inventory" means Eligible Inventory valued at
cost determined on a first-in-first-out basis (determined in accordance with
GAAP, consistently applied) minus the value of reserves which have been
recorded by the Company or the Guarantors with respect to obsolete,
slow-moving or excess Inventory adjusted to reflect any reconciliation between
the general ledger and the perpetual inventory of the Company or the
Guarantors.
"Gross Amount of Eligible Receivables" means the outstanding face amount
of Eligible Receivables, determined in accordance with GAAP, consistently
applied, less (i) all finance charges, late fees and other fees that are
unearned and interest and finance charges with respect to Receivables financed
by the Company and (ii) the value of any accrual which has been recorded by
the Company with respect to downward price adjustments.
"Guaranties" means those Guaranties dated as of the date hereof executed
by the Guarantors in the form of Exhibit D to this Credit Agreement.
"Guarantors" means each of the Company's domestic Subsidiaries which has
guarantied the indebtedness and obligations of the Company under this Credit
Agreement.
"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.
"Holders of Secured Obligations" shall mean the Banks or their affiliates
with respect to all indebtedness and obligations of the Company pursuant to
this Credit Agreement and any other agreements or understandings whether
written or otherwise pursuant to which the Company or one of its Subsidiaries
has, now or hereafter, any obligations to any of the Banks, including, without
limitation, obligations in connection with letters of credit issued by any of
the Banks or overdraft facilities provided by any of the Banks and interest
rate hedging or currency exchange agreements entered into with any of the
Banks.
"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 recorded as capitalized leases in accordance with GAAP, (iv)
obligations to purchase or repurchase property or obligations with respect to
boats, motors or boat/motor/trailer, or any combination thereof (including,
without limitation, the repurchase obligations as prescribed in the floor plan
financing arrangements in effect on the Closing Date or as thereafter
increased), (v) all Facility Letters of Credit, other letters of credit,
guaranties and other obligations (contingent or otherwise) of such Person to
assure a creditor against loss, including, without limitation, comfort
letters, obligations to pay for property, goods or services whether or not
-43-
<PAGE> 44
delivered or rendered, obligations to maintain working capital, equity capital
or other financial statement condition of, or lend or contribute to or invest
in, any such Person (excluding those obligations described in clause (iv)
above) which are in effect as of April 9, 1997 in an aggregate amount of up to
$17,984,775, (vi) all obligations of the type described in clause (v) either
(a) incurred prior to April 10, 1997 to the extent they exceed $17,984,775 or
(b) incurred subsequent to April 9, 1997, to the extent such obligations in
(a) and (b) exceed $27,000,000, (vii) all endorsements of such Person (other
than, in the case of instruments, for deposit or collection in the ordinary
course of business), and (viii) 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.
"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 one (1), two (2), three (3) or six (6) months thereafter; and
(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.
"Inventory" shall mean any and all goods, including, without limitation,
goods in transit, wheresoever located, whether now owned or hereafter acquired
by the Company or any of its domestic Subsidiaries, which are held for sale or
lease, furnished under any contract of service or held as raw materials, work
in process or supplies, and all materials used or consumed in the business of
-44-
<PAGE> 45
Company or any of its domestic Subsidiaries, and shall include all right,
title and interest of the Company or any of its domestic Subsidiaries in any
property the sale or other disposition of which has given rise to Receivables
and which has been returned to or repossessed or stopped in transit by the
Company or any of its domestic Subsidiaries.
"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.
"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" is defined in Section 2.20(g).
"Letter of Credit Request" is defined in Section 2.20(c).
"Level 1" means any date as of which the aggregate amount of the
outstanding Advances for all Banks (after determining the Equivalent Amount of
all Optional Currency Advances) plus Bid Loans for all Banks outstanding under
this Credit Agreement plus Facility Letter of Credit Obligations for all Banks
is less than one-half (1/2) of the Aggregate Commitment then in effect.
"Level 2" means any date as of which the aggregate amount of the
outstanding Advances for all Banks (after determining the Equivalent Amount of
all Optional Currency Advances) plus Bid Loans for all Banks outstanding under
this Credit Agreement plus Facility Letter of Credit Obligations for all Banks
is equal to or greater than one-half (1/2) of the Aggregate Commitment then in
effect.
"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, then
-45-
<PAGE> 46
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 Optional
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.
"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.
"Maximum Revolving Credit Commitment" means, at any particular time, the
lesser of (i) the Aggregate Available Commitment, as such amount may be
reduced from time to time pursuant to Section 2.13 and (ii) (a) the Borrowing
Base minus (b) the Facility Letter of Credit Obligations then outstanding
minus (c) the principal amount of all then outstanding Advances minus (d) the
principal amount of all outstanding Bid Loans at such time.
"Minimum Amount" initially means $8,200,000, 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, 1996 (at the dividend rate in effect on October 1, 1996), 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)."
-46-
<PAGE> 47
"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 Deutschemarks, 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 a
percentage.
"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
-47-
<PAGE> 48
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; and
(h) other Liens provided that such Liens do not encumber the Collateral
(or if they do, the Person holding such Lien has entered into a
subordination and standstill agreement acceptable in form and substance to
the Majority Banks) and 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.
"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.
"Receivables" means all present and future rights of the Company or any of
its U.S. Subsidiaries to payment for goods sold or leased or for services
rendered, which are not evidenced by instruments or chattel paper, and whether
or not they have been earned by performance.
"Receivables Purchase Agreements" means the Receivables Purchase Agreement
dated as of December 22, 1995 between the Company and Outboard Marine
Receivables Corp., the Receivables Purchase Agreement dated as of December 22,
1995 among Outboard Marine Receivables Corp., Preferred Receivables Funding
Corporation and certain financial institutions, the Receivables Purchase
Agreement dated November 20, 1996 among the Company, certain of its
Subsidiaries and The First National Bank of Chicago and the Master Receivables
Purchase Agreement dated as of December 16, 1996, among the Company, certain
of its Subsidiaries and ABN Amro Bank N.V.
-48-
<PAGE> 49
"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.
"Revolving Credit Facility" means the credit facility provided in Section
2.01(a).
"Secured Obligations" shall mean all indebtedness and obligations of the
Company or any of its Subsidiaries to any or all of the Banks or their
affiliates under this Credit Agreement or otherwise.
"Security Agreements" means the Security Agreements, Patent Security
Agreements, and Trademark Security Agreements dated as of the date hereof
executed by the Company and the Guarantors to grant Liens to secure the
Company's indebtedness and obligations under this Credit Agreement.
"Shareholder Rights Plan" means the Company's Amended and Restated Rights
Plan dated as of April 24, 1996.
"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
-49-
<PAGE> 50
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 Services, 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 Credit Agreement, and that portion of any redeemable preferred stock
which has a mandatory redemption date prior to the Termination Date of this
Credit 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 $107,450,000 at any time, equal to the amount of non-cash
charges, net of any tax benefits taken, related to retiree medical benefits
plus (d) from and after the date such adjustment is reported in the Company's
financial statements, an amount not to exceed $8,200,000 equal to the amount
of any adjustment to warranty reserves subsequent to April 10, 1997, net of
any tax benefits taken with respect to such reserves, plus (e) from and after
the date such charges are reported in the Company's financial statements, an
amount not to exceed $34,400,000 equal to the amount of any restructuring
charges taken subsequent to September 30, 1996, net of any tax benefits taken
with respect to such charges.
"Termination Date" means the earliest to occur of
(a) December 31, 1999,
(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.
1.02. Financial Standards. All financial computations required under this
Credit Agreement shall be made, and all financial information required under
this Credit 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.
-50-
<PAGE> 51
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 Maximum Revolving
Credit 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 Credit
Agreement plus Facility Letter of Credit Obligations for all Banks exceed
at any time the then effective Maximum Revolving Credit 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 Credit 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 Deutschemarks, 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.
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
-51-
<PAGE> 52
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.
(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
-52-
<PAGE> 53
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
Credit 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 Credit
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 Credit 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 Credit 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.
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
whichever of Level 1 or Level 2 is applicable to each day on which such
interest accrues:
-53-
<PAGE> 54
Reference Rate LIBOR CD Rate
Level 1 0.25% 1.00% 1.125%
Level 2 0.75% 1.50% 1.625%
(b) 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.
2.07. Facility Fee. For the period from April 30, 1997 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 0.50% of each Bank's prorata
share of the Aggregate Commitment. 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.
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 Credit
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.
-54-
<PAGE> 55
(b) All computation of fees under this Credit 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
(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
Credit 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 Credit 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
-55-
<PAGE> 56
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 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.
-56-
<PAGE> 57
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 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 Credit 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) or a Bank is unable to deliver the certificate required in
Section 2.14(b), then payments due to any such Bank under this Credit
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 Credit 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:
-57-
<PAGE> 58
(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.
(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 Credit 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 Credit
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
-58-
<PAGE> 59
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.
(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 Credit 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 Credit 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 Credit 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
-59-
<PAGE> 60
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 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 Credit Agreement.
2.18. The Bid Facility.
(a) Bid Loans. From time to time, beginning on the date subsequent to
the Closing Date on which all of the Lenders agree in writing to reinstate
the Bid Facility, which has been suspended as of the date hereof, 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 Credit 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.
-60-
<PAGE> 61
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 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:
-61-
<PAGE> 62
(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 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.
-62-
<PAGE> 63
(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 obligations of the retiring Bid Agent, and the retiring Bid
Agent shall be discharged from its obligations under this Credit Agreement
except with respect to any liability with respect to a breach of any
obligation hereunder prior to such resignation. The provisions of this
Credit 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 Credit 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 Credit 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
Credit 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;
-63-
<PAGE> 64
(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 Maximum Revolving Credit 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 $25,000,000.
(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
-64-
<PAGE> 65
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.
(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 Credit 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
-65-
<PAGE> 66
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 with the provisions of this Credit 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 Credit 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 Credit
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 Credit Agreement, any Facility Letter of Credit, the
transactions contemplated herein or any unrelated transactions (including
-66-
<PAGE> 67
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 (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 Credit 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
("Letter of Credit Fee") in respect of the Facility Letter of Credit then
being issued equal, on each day, to the Applicable Margin for LIBOR on
such day times the maximum face amount of such Facility Letter of Credit
from the date of issuance until such Facility Letter of Credit expires or
is terminated. For Existing Letters of Credit, the Letter of Credit Fee
will commence on the Closing Date and be payable in accordance with the
following schedule. 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.
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.
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:
-67-
<PAGE> 68
(a) Confirmation Certificates. Certificates, 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 this Credit
Agreement have not been amended and are still in full force and effect on
the Closing Date:
(i) The certificate of incorporation of the Company and each of the
Guarantors.
(ii) The by-laws of the Company and each of the Guarantors.
(iii) The resolutions passed by the Boards of Directors of the Company
and each of the Guarantors authorizing the Borrowings provided for herein
and the execution, delivery and performance of this Credit Agreement, the
Notes, the Security Agreements, the Guaranties and any other instrument or
agreement required hereunder.
(b) Incumbency Certificates. Certificates, signed by the Secretary or an
Assistant Secretary of the Company and each of the Guarantors 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 Credit Agreement, the Notes, the Security Agreements, the Guaranties
and any other instrument or agreement required hereunder.
(c) Agreements. A copy of this Credit Agreement, each of the Security
Agreements and Guaranties, duly executed by an authorized officer of the
Company and each of the Guarantors, as applicable.
(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.
(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 Credit Agreement are
true and correct and that no Default or Event of Default has occurred and
is continuing.
(f) Borrowing Base Certificate. The initial Borrowing Base Certificate,
signed by the Treasurer or Chief Financial Officer of the Company.
(g) Fees. Payment of the fees prescribed in the Term Sheet dated April
10, 1997 and the letters referred to in Section 2.08.
(h) Opinion. Opinion of counsel to the Company in the form of Exhibit B
hereto.
(i) Termination of Receivables Purchase Agreements. Evidence
satisfactory to the Agent that all receivables sold pursuant to the
Receivables Purchase Agreements have been repurchased by the Company and
all such agreements have been terminated.
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
-68-
<PAGE> 69
warranties contained in Article IV (other than Section 4.09 and 4.13(b))
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 Credit Agreement
simultaneously with and subject to the effectiveness of this Credit 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 Bank. Upon and as of the effectiveness of this Credit
Agreement, NBD Bank (formerly known as NBD Bank, N.A.) shall cease to be a
"Bank" under this Credit Agreement. Notwithstanding the foregoing, NBD Bank
shall continue to be an Issuer entitled to the benefit of this Credit
Agreement with respect to the Existing Letter of Credit issued by NBD Bank.
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
-69-
<PAGE> 70
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
Credit 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
Credit 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 Credit 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 Credit
Agreement, the Notes or any other instrument or agreement required hereunder.
4.07. Enforceability of Agreement. This Credit Agreement is the legal, valid
and binding agreement of the Company, and the Notes, the Guaranties and the
Security Agreements when executed and delivered will be the legal, valid and
binding agreements of the Company and its U.S. Subsidiaries which are parties
to such agreements, enforceable against the Company and its U.S. Subsidiaries
which are parties to such agreements in accordance with their respective
terms, and any other instrument or agreement required hereunder, when executed
and delivered, will be similarly legal, valid, binding and enforceable against
the Company and its U.S. Subsidiaries which are parties to such agreements.
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 Credit 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
-70-
<PAGE> 71
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 Credit 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, 1996 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.
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
-71-
<PAGE> 72
(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 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
-72-
<PAGE> 73
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) for Facility Letters of Credit used in the ordinary
course of business of the Company and its Subsidiaries, (d) to repurchase
receivables sold pursuant to the Receivables Purchase Agreements, and (e) 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 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;
(d) any excess in the outstanding Advances, Bid Loans and Facility Letter
of Credit Obligations over the Maximum Revolving Credit Commitment; and
-73-
<PAGE> 74
(e) 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(c), 6.06, 6.07, 6.08 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 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(c), 6.06, 6.07,
6.08 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
-74-
<PAGE> 75
amount thereof and explaining the reason therefor, together with the
calculations showing how such non-compliance was determined;
(c) As soon as practicable, and in any event within thirty (30) days
after the close of each calendar month, a Borrowing Base Certificate,
together with such supporting documents as the Agent deems desirable, all
certified as being true and correct by the Chief Financial Officer or
Treasurer of the Company. The Company may update the Borrowing Base
Certificate and supporting documents more frequently than monthly and the
most recently delivered Borrowing Base Certificate shall be the applicable
Borrowing Base Certificate for purposes of determining the Borrowing Base
at any time;
(d) 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;
(e) 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;
(f) 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;
(g) 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;
(h) 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
(i) such other statements or reports as the Majority Banks may reasonably
request in form and detail satisfactory to the Agent and the Majority
Banks.
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
-75-
<PAGE> 76
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) EBITA 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 (i) 1.00 to 1.00 as of the end
of the calendar quarter ending March 31, 1998, (ii) 1.75 to 1.00 as of the end
of the calendar quarter ending June 30, 1998 and (iii) 2.00 to 1.00 as of the
end of each calendar quarter ending thereafter. 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 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
minus an amount equal to 25% of cash and Cash Equivalents held by 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:
-76-
<PAGE> 77
Quarter Capitalization
Ending: Ratio
March 31, 1997 .55 to 1.0
June 30, 1997 .47 to 1.0
September 30, 1997 .45 to 1.0
December 31, 1997 .45 to 1.0
March 31, 1998 .55 to 1.0
June 30, 1998 .50 to 1.0
September 30, 1998 .45 to 1.0
December 31, 1998 .45 to 1.0
March 31, 1999 .55 to 1.0
June 30, 1999 .50 to 1.0
September 30, 1999 .45 to 1.0
December 31, 1999 .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, or Liens created pursuant to the Security Agreements, or
enter into or suffer to exist any agreement which would restrict the ability
of the Company or any of its Consolidated Subsidiaries to grant Liens to the
Banks pursuant to the Security Agreements or otherwise.
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, including
any stock or other equity interests owned by the Company or any Consolidated
Subsidiary of the Company, 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 provided that, at the time of any such sale,
neither (i) the aggregate Net Proceeds thereof plus any other non-cash
property received therefor nor (ii) the aggregate book value of all such
Fixed Assets during the term of this Credit Agreement commencing on March
29, 1996 exceeds at any time an amount equal to five percent (5%) of the
-77-
<PAGE> 78
Tangible Net Worth of the Company and its Subsidiaries on a consolidated
basis;
(d) the merger, consolidation or transfer of the business or assets of
any Guarantor with or to the Company or with or to any other Guarantor;
(e) the merger or consolidation or transfer of the business or assets of
any Subsidiary that is not a Guarantor with or to any other Subsidiary
that is not a Guarantor; and
(f) as permitted in Section 6.05.
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 is
attached hereto as Schedule 11;
(b) Investments (other than in Subsidiaries) in existence on the date
hereof and described in Schedule 12 hereto;
(c) loans by the Company to Subsidiaries that are Guarantors in the
ordinary course of their respective businesses;
(d) loans by the Company to non-U.S. Subsidiaries in the ordinary course
of their respective businesses and consistent with past practices;
(e) 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;
(f) capitalization of existing intercompany debt of any foreign
Subsidiary; and
(g) as permitted by Section 6.04.
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 other than payments with respect to obligations described in clauses
(iv), (v) and (vi) of the definition of Indebtedness for Borrowed Money and
payments to repurchase receivables sold pursuant to the Receivables Purchase
Agreements..
6.08. Repurchase Arrangements. Repurchase, during any fiscal year, from
dealers or financial institutions with which the Company or any of its
Subsidiaries has floor plan financing arrangements, boats, motors or
boat/motor/trailer (or any combination thereof) packages for an aggregate
amount in excess of Forty Million Dollars ($40,000,000).
-78-
<PAGE> 79
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, 1996, if, after giving effect to such Restricted
Payment, the aggregate amount of Restricted Payments during such fiscal year
would not exceed the Minimum Amount, 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
Credit 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 Credit Agreement. After all such Facility Letters of
Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations of the Company
to the Banks under this Credit 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 Credit Agreement in accordance with the terms hereof or of
any Note or Facility Letter of Credit issued under this Credit 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.
-79-
<PAGE> 80
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, 6.04, 6.05,
6.06, 6.07, 6.08 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
Credit 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 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
-80-
<PAGE> 81
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 and such circumstance shall continue for thirty (30) days;
or (b) 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 fifty percent (50%)
or more of the outstanding shares of voting stock of the Company; or (c)
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 (d) 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.
7.11. Revocation of Guaranties. Any Guarantor seeks to, or indicates in
writing an intention to, terminate or revoke any of its liabilities and
obligations under any of the Guaranties.
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 Credit 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 Credit 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 Credit Agreement by or through
agents or their respective directors, officers or employees. In performing
their respective functions and duties under this Credit 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 or any affiliate of 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 Credit Agreement shall purchase immediately prior to such
payment participations 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
-81-
<PAGE> 82
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 Credit Agreement or any other loan document related
hereto 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 Credit 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 Credit 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,
(f) changes the provisions of this Section 8.05,
(g) waives any condition specified in Article III,
-82-
<PAGE> 83
(h) amends the definition of Majority Banks,
(i) releases all or substantially all of the Collateral or the Guaranties,
(j) affects the rights, duties or obligations of the Agent, unless all
Banks agree in writing thereto, or
(k) 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 Credit
Agreement or any instrument or agreement required hereunder, including
responsibility in respect to the execution, construction or enforcement of
this Credit 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 Credit 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 Credit 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 Credit 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 Credit 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.
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
-83-
<PAGE> 84
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 Credit 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 Credit 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 Credit 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 Credit 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 Credit
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.
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
-84-
<PAGE> 85
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 Credit 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 Credit
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
Credit 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 Credit 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 Credit Agreement, shall not
relieve any other Bank from the performance of its obligations under this
Credit 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 Credit 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 Credit 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 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 Credit 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.
-85-
<PAGE> 86
(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 or its affiliate 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 or any of its
Subsidiaries which may at the time of such Event of Default be in the
hands of such Bank or any such Bank affiliate 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 Credit 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 Credit Agreement shall be deemed a waiver of any
other breach or default. Any waiver, modification, amendment, consent or
approval relating to this Credit 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 Credit
Agreement or any instrument or agreement required hereunder or in connection
with any proposed refinancing or restructuring of the credit provided in this
Credit Agreement in the nature of a "work-out" and (b) for all stamp,
registration and other duties and imposts to which this Credit 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 costs of staff counsel) and other expenses incurred
in connection with the negotiation, preparation and execution of this Credit
Agreement and any amendments, consents, or waivers of, or relating to, this
Credit Agreement.
9.07. Entire Agreement. This Credit 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
-86-
<PAGE> 87
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 Credit Agreement and any such prior agreement, document
or instrument, the terms, conditions and provisions of this Credit Agreement
shall prevail.
9.08. Governing Law. This Credit 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 Credit Agreement.
9.10. Severability. The illegality or unenforceability of any provision of
this Credit 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 Credit Agreement or any instrument or agreement
required hereunder.
9.11. Counterparts. This Credit 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 Credit 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 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
-87-
<PAGE> 88
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 Credit 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 Credit 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 Credit 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 Credit
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 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.
-88-
<PAGE> 89
9.14. WAIVER OF JURY TRIAL. THE COMPANY, THE AGENT AND EACH BANK 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 Credit Agreement by
their duly authorized officers as of the day and year first above written.
OUTBOARD MARINE CORPORATION
By: GEORGE F. SCHUEPPERT
--------------------
George F. Schueppert, Executive Vice
President and Chief Financial Officer
By: THOMAS G. GOODMAN
-----------------
Thomas G. Goodman, Treasurer
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: $33,000,000
By: Deborah Stevens
---------------
DEBORAH STEVENS
Title: Authorized Agent
Address for Notices:
One First National Plaza
Chicago, Illinois 60670
Attention: April Yebd
Telephone: (312) 732-4823
Answerback: FNBCUI
Telex: 4330253
Rapifax: (312) 732-2715
With a copy to:
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670-0088
Attention: Deborah E. Stevens
Vice President
Telephone: (312) 732-2532
Telex: 4330253
Answerback: FNBCUI
Rapifax: (312) 732-1117
-89-
<PAGE> 90
BANK OF AMERICA ILLINOIS Commitment: $28,500,000
By: Mike Healy
----------
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: $27,000,000
By: Karen Hull
----------
KAREN 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: Linda Smith
Telephone: (212) 428-6323
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: $15,750,000
By: William O'Daly
--------------
WILLIAM O'DALY
Title: Assistant Vice President
Address for notices:
One Wall Street - 19th Floor
New York, NY 10286
Attention: Mark R. Fawcett
Assistant Vice President
Telephone: (212) 635-8448
Rapifax: (212) 635-1208
-90-
<PAGE> 91
ABN AMRO BANK, N.V. Commitment: $12,750,000
By: Laurie D. Flom
--------------
LAURIE D. FLOM
Title: Vice President
By: Ronald R. Richter
-----------------
RONALD R. RICHTER
Title: Group Vice President
Address for notices:
135 S. LaSalle Street, Suite 625
Chicago, Illinois 60603
Attention: Ron Richter
Telephone: (312) 904-4372
Rapifax: (312) 606-8425
THE BANK OF NOVA SCOTIA Commitment: $12,750,000
By: J. H. Youssef
-------------
J. H. YOUSSEF
Title: Senior Manager Finance & Administration
Address for Notices:
The Bank of Nova Scotia
600 Peachtree Street N.E.
Suite 2700
Atlanta, GA 30308
Attention: Jeffrey Jones
Loan Administration 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
Relationship Manager
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: Pierre Lok
Assistant General Manager
-91-
<PAGE> 92
FIRSTAR BANK MILWAUKEE, N.A. Commitment: $12,750,000
By: R. Bruce Anthony
----------------
R. BRUCE ANTHONY
Title: Assistant Vice President
Address for Notices:
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Bruce Anthony
Assistant Vice President
Telephone: (414) 765-4724
Telex: TRT 191178
Answerback: FIRWIS MIL
Rapifax: (414) 765-5062
THE NORTHERN TRUST COMPANY Commitment: $7,500,000
By: Michelle Teteak
---------------
MICHELLE TETEAK
Title: Vice President
Address for Notices:
50 South LaSalle Street
Chicago, Illinois 60675
Attention: Michelle Teteak
Chicago Division
Telephone: (312) 444-3506
Telex:
Answerback:
Rapifax: (312) 444-5055
NBD BANK Commitment: $0
By: Deborah Stevens
---------------
DEBORAH STEVENS
Title: Authorized Agent
Address for notices:
611 Woodward Avenue
Detroit, MI 48226
Attention: Mr. Chris Chevannes
Detroit Capital Markets -- Revenue Bonds
Telephone: (313) 225-3104
Rapifax: (313) 225-4533
With a copy to:
The First National Bank of Chicago
One First National Plaza
Chicago, IL 60670-0088
Attention: Deborah E. Stevens
Telephone: (312) 732-2532
Telex: 4330253
Answerback: FNBCUI
Rapifax: (312) 732-1117
------------
$150,000,000
============
-92-
<PAGE> 93
EXHIBIT 11
OUTBOARD MARINE CORPORATION AND SUBSIDIARIES
Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
(In millions except amounts per share) 1997 1996 1997 1996
----------------------- ----------------------
<S> <C> <C> <C> <C>
Primary Earnings Per Share:
Net Earnings (Loss) $ (7.3) $ 1.1 $ (21.6) $ (11.3)
======================= ======================
Weighted Average Number of Shares 20.2 20.1 20.2 20.1
Common Stock Equivalents (Stock Options) * 0.1 * *
----------------------- ----------------------
Average Shares Outstanding 20.2 20.2 20.2 20.1
======================= ======================
Primary Earnings (Loss) Per Share $(0.36) $ 0.05 $ (1.07) $ (0.56)
======================= ======================
Fully Diluted Earnings Per Share:
Net Earnings (Loss) $ (7.3) $ 1.1 $ (21.6) $ (11.3)
Add: After-Tax Interest and Related
Expense Amortization on 7%
Convertible Subordinated Debentures 0.8 0.8 1.6 1.6
----------------------- ----------------------
Net Earnings (Loss) Adjusted $ (6.5) $ 1.9 $ (20.0) $ (9.7)
======================= ======================
Weighted Average Number of Shares 20.1 20.1 20.1 20.1
Common Stock Equivalents (Stock Options) 0.1 0.1 0.1 0.1
Weighted Average Common Shares Assuming
Conversion of 7% Convertible
Subordinated Debentures 3.4 3.4 3.4 3.4
----------------------- ----------------------
Average Shares Outstanding 23.6 23.6 23.6 23.6
======================= ======================
Fully Diluted Earnings (Loss) Per Share $ ** $ ** $ ** $ **
======================= ======================
</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.
-93-
<PAGE> 94
EXHIBIT 19
April 25, 1997
To Our Shareholders:
For our second quarter of fiscal 1997 we reported a net loss of
$7.3 million, or 36 cents per share (primary and fully diluted), on
sales of $237.0 million. During the second quarter of 1996, the company
reported net earnings of $1.1 million, or five cents per share (primary
and fully diluted), on sales of $285.5 million. The sales decline for
the quarter of $48.5 million represented a 17.0% decrease.
For the first six months of the current fiscal year, the company
reported sales of $434.1 million compared to $517.6 million in the
similar period in its fiscal 1996 year, a decrease of $83.5 million or
16.1%. A net loss of $21.6 million for the six months ended March 31,
1997, compares to a net loss of $11.3 million in the comparable period
in 1996, and resulted in a net loss per share of $1.07 for the first six
months of 1997 compared to a net loss per share of $0.56 in the
comparable period of 1996. As a result of the losses experienced in the
first half of this year, the Board of Directors elected not to declare a
dividend for the second quarter.
OMC's sales decrease was due primarily to reduced market demand,
both domestically and internationally, coupled with a managed effort to
assist dealers in reducing field inventories. The company estimates
that, on a year-to-year basis, dealer inventories of OMC outboard
engines have been reduced approximately 16% while dealer inventories of
boats are down about 1%. The company's retail consumer programs were
very successful in helping the dealer inventory reduction effort,
although they resulted in higher sales discounts for the quarter.
The earnings decrease, both for the quarter and year-to-date, was
principally a function of the sales decrease, but was also affected by
unabsorbed manufacturing expenses arising from reduced production
schedules as well as costs associated with the company's earnings
improvement programs. As a result of the lower sales and production
schedules, the company was able to reduce working capital in the quarter
by $42.5 million compared to the second quarter of 1996. Earnings were
also impacted by increased marketing expenses related to the
introduction of the company's new FICHT TM fuel injection engines. These
150 horsepower engines have been in the market since early January and
are performing extremely well and are receiving excellent reviews from
customers, dealers, the media and fishing professionals. Other
operating expenses were down, both for the quarter and year-to-date.
Non-recurring income of $8.8 million partially offset the operating
decline in the second quarter. This, coupled with similar gains of $7.7
million in the first quarter, resulted in $16.5 million of non-recurring
income in the first six months of 1997.
Our Board of Directors has also directed management to engage the
services of the investment banking firm of Salomon Brothers Inc. as its
financial advisor to explore strategic alternatives as a means of
maximizing shareholder value. The company's Board of Directors believes
the capital base of the company must be strengthened in order to allow
it to accelerate the operational and strategic changes underway at OMC,
and to fund a more rapid development of the company's FICHT TM fuel
injection technology and other product development initiatives.
Please visit our internet site at www.omc-online.com for product
information and news on Outboard Marine
HARRY W. BOWMAN
---------------
H. W. Bowman
Chairman, President and
Chief Executive Officer
-94-
<PAGE> 95
OUTBOARD MARINE CORPORATION
Statements of Consolidated Earnings
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
(In millions except amounts per share) 1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 237.0 $ 285.5 $ 434.1 $ 517.6
Cost of Goods Sold 200.5 224.2 374.9 416.9
--------------------- ---------------------
Gross earnings 36.5 61.3 59.2 100.7
Selling, General and Administrative Expenses 49.5 54.5 91.9 100.2
--------------------- ---------------------
Earnings (Loss) from operations (13.0) 6.8 (32.7) 0.5
Non-Operating Expense (Income)
Interest expense 4.0 4.1 8.4 9.5
Other, net (10.7) (0.2) (21.3) (0.5)
--------------------- ---------------------
(6.7) 3.9 (12.9) 9.0
--------------------- ---------------------
Earnings (Loss) before provision for income
taxes (6.3) 2.9 (19.8) (8.5)
Provision for Income Taxes 1.0 1.8 1.8 2.8
--------------------- ---------------------
Net earnings (loss) $ (7.3) $ 1.1 $ (21.6) $ (11.3)
===================== =====================
Net Earnings (Loss) Per Share of Common Stock
Primary $ (0.36) $ 0.05 $ (1.07) $ (0.56)
===================== =====================
Fully diluted $ (0.36) $ 0.05 $ (1.07) $ (0.56)
===================== =====================
Dividends Declared Per Share $ 0.10 $ 0.10 $ 0.20 $ 0.20
===================== =====================
Average Shares of Common Stock and Common
Stock Equivalents Outstanding (if applicable) 20.2 20.2 20.2 20.1
</TABLE>
-95-
<PAGE> 96
OUTBOARD MARINE CORPORATION
Condensed Statements of Consolidated Financial Position
<TABLE>
<CAPTION>
(Unaudited)
-------------------
March 31 March 31 September 30
(In Millions) 1997 1996 1996
---- ---- ----
<S> <C> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 69.5 $ 35.1 $ 95.5
Receivables 161.7 168.1 167.6
Inventories
Finished products 64.5 92.1 62.6
Raw material, work in
process and service parts 108.9 125.5 102.5
------------------------------------
Total inventories 173.4 217.6 165.1
Other current assets 38.2 49.6 39.3
------------------------------------
Total current assets 442.8 470.4 467.5
Product Tooling, net 49.4 53.0 51.6
Intangibles 36.7 39.4 38.3
Other Assets 97.8 90.7 97.4
Plant & Equipment, at cost 552.2 567.2 565.1
Less-Accumulated depreciation (343.5) (343.4) (346.2)
------------------------------------
208.7 223.8 218.9
------------------------------------
Total assets $ 835.4 $ 877.3 $ 873.7
====================================
-96-
<PAGE> 97
Liabilities and Shareholders' Investment
Current Liabilities
Accounts payable $ 83.3 $ 86.7 $ 90.0
Accrued and other 162.3 144.0 163.3
------------------------------------
Total current liabilities 245.6 230.7 253.3
Long-Term Debt 172.6 177.5 177.6
Postretirement Benefits Other
Than Pensions 100.3 101.0 100.7
Other Non-Current Liabilities 106.7 126.6 104.5
Shareholders' Investment
Common stock & capital surplus 115.2 113.8 114.8
Retained earnings 105.7 134.4 131.3
Cumulative translation
adjustments (10.7) (6.7) (8.5)
------------------------------------
Total shareholders'
investment 210.2 241.5 237.6
------------------------------------
Total liabilities
and shareholders'
investment $ 835.4 $ 877.3 $ 873.7
====================================
</TABLE>
-97-
