<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 35,500
<SECURITIES> 0
<RECEIVABLES> 156,500
<ALLOWANCES> 6,700
<INVENTORY> 174,500
<CURRENT-ASSETS> 400,000
<PP&E> 219,600
<DEPRECIATION> 20,100
<TOTAL-ASSETS> 1,115,800
<CURRENT-LIABILITIES> 302,800
<BONDS> 248,200
<COMMON> 200
0
0
<OTHER-SE> 267,300
<TOTAL-LIABILITY-AND-EQUITY> 1,115,800
<SALES> 284,600
<TOTAL-REVENUES> 284,600
<CGS> 212,900
<TOTAL-COSTS> 212,900
<OTHER-EXPENSES> 49,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,200
<INCOME-PRETAX> 13,700
<INCOME-TAX> 1,400
<INCOME-CONTINUING> 12,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,300
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.60
</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 June 30, 1998.
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 $0.01 par value outstanding at July 31,
1998 was 20,420,000 shares.
Exhibit Index Page 27.
-1-
<PAGE> 2
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 1
FINANCIAL INFORMATION
FINANCIAL STATEMENTS
June 30, 1998
Financial statements required by this form:
Page
----
Condensed Statements of Consolidated Earnings 3
Condensed Statements of Consolidated Financial Position 4
Condensed Statements of Consolidated Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7
-2-
<PAGE> 3
OUTBOARD MARINE CORPORATION
Condensed Statements of Consolidated Earnings
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30 June 30
----------------------------- -----------------------------
Post-Merger | Pre-Merger Post-Merger | Pre-Merger
Company | Company Company | Company
------- | ------- ------- | -------
(Dollars in millions except amounts per share) 1998 | 1997 1998 | 1997
------- | ------- ------- | -------
<S> <C> <C> <C> <C>
Net sales $ 284.6 | $ 275.8 $ 760.1 | $ 709.9
| |
Cost of goods sold 212.9 | 221.0 590.8 | 595.9
------- | ------- ------- | -------
| |
Gross earnings 71.7 | 54.8 169.3 | 114.0
| |
Selling, general and administrative expense 53.5 | 59.8 156.0 | 151.7
------- | ------- ------- | -------
| |
Earnings (loss) from operations 18.2 | (5.0) 13.3 | (37.7)
| |
Non-operating expense (income): | |
Interest expense 8.2 | 4.3 22.6 | 12.7
Other, net (3.7) | (4.6) (8.6) | (25.9)
------- | ------- ------- | -------
| |
4.5 | (0.3) 14.0 | (13.2)
------- | -------- ------- | --------
| |
Earnings (loss) before provision for income | |
taxes 13.7 | (4.7) (0.7) | (24.5)
| |
Provision for income taxes 1.4 | 0.4 3.2 | 2.2
------- | ------- ------- | -------
| |
Net earnings (loss) $ 12.3 | $ (5.1) $ (3.9) | $ (26.7)
======= | ======= ======= | =======
| |
Net earnings (loss) per share of common stock | |
| |
Basic $ 0.60 | $ (0.25) $ (0.19) | $ (1.32)
======= | ======= ======= | =======
| |
Diluted $ 0.60 | $ (0.25) $ (0.19) | $ (1.32)
======= | ======= ======= | =======
| |
Average shares of common stock outstanding 20.4 | 20.2 20.4 | 20.2
The accompanying notes are an integral part of these statements.
</TABLE>
-3-
<PAGE> 4
Outboard Marine Corporation
Condensed Statements of Consolidated Financial Position
<TABLE>
<CAPTION>
(Unaudited)
-----------
Post-Merger Post-Merger
Company Company
------- -------
June 30, September 30,
(Dollars in millions) 1998 1997
--------- ---------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 35.5 $ 54.4
Receivables 149.8 153.2
Inventories
Finished products 64.2 62.1
Raw material, work in process
and service parts 110.3 114.8
--------- ---------
Total inventories 174.5 176.9
Other current assets 40.2 86.5
--------- ---------
Total current assets 400.0 471.0
Restricted cash 28.6 --
Product tooling, net 33.7 34.2
Goodwill 245.5 250.2
Trademarks, patents and other intangibles 81.7 83.9
Other assets 126.8 129.5
Plant and equipment at cost 219.6 210.2
Less accumulated depreciation (20.1) --
--------- ---------
199.5 210.2
--------- ---------
Total assets $ 1,115.8 $ 1,179.0
========= =========
-4-
<PAGE> 5
Liabilities and Shareholders' Investment
Current liabilities:
Short-term debt $ 30.0 $ 96.0
Accounts payable 76.7 142.0
Accrued and other 179.1 182.0
Accrued income taxes 5.8 6.6
Current maturities and sinking fund
requirements of long-term debt 11.2 72.9
--------- ---------
Total current liabilities 302.8 499.5
Long-Term Debt 248.2 103.8
Postretirement benefits other than pensions 95.0 96.0
Other non-current liabilities 202.3 202.7
Shareholders' investment:
Common stock and capital surplus 277.1 277.0
Accumulated earnings employed in the business (3.9) --
Cumulative translation adjustments (5.7) --
--------- ---------
Total shareholders' investment 267.5 277.0
--------- ---------
Total liabilities and shareholders'
Investment $ 1,115.8 $ 1,179.0
========= =========
The accompanying notes are an integral part of these statements.
</TABLE>
-5-
<PAGE> 6
Outboard Marine Corporation
Condensed Statements of Consolidated Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 30
-----------------------------------
Post-Merger | Pre-Merger
Company | Company
---------------------------------
(Dollars in millions) 1998 | 1997
-------- | --------
<S> <C> <C>
Cash Flows from Operating Activities: |
|
Net earnings (loss) $ (3.9) | $ (26.7)
Adjustments to reconcile net earnings (loss) to net |
cash provided by operations: |
Depreciation and amortization 40.4 | 41.2
Changes in current accounts excluding the effects |
of acquisitions and noncash transactions: |
Decrease in receivables 2.2 | 8.3
Decrease in inventories 0.8 | 2.0
Decrease in other current assets 46.2 | 0.7
Decrease in accounts payable and accrued |
liabilities (68.2) | (13.1)
Other, net (4.7) | (0.5)
------- | -------
Net cash provided by operating activities 12.8 | 11.9
|
Cash Flows from Investing Activities: |
|
Expenditures for plant and equipment, and tooling (23.7) | (30.1)
Proceeds from sale of plant and equipment 6.6 | 14.4
Other, net 0.7 | (0.6)
------- | -------
Net cash used for investing activities (16.4) | (16.3)
|
Cash Flows from Financing Activities: |
|
Net decrease in short-term debt (66.0) | --
Proceeds from issuance of long-term debt 155.2 | --
Increase in restricted cash (28.6) | --
Payments of long-term debt, including current maturities (75.2) | --
Cash dividends paid -- | (6.0)
Other, net 0.1 | (0.4)
------- | -------
Net cash used for financing activities (14.5) | (6.4)
|
Exchange rate effect on cash (0.8) | (0.9)
------- | -------
Net decrease in cash and cash equivalent (18.9) | (11.7)
Cash and cash equivalents at beginning of period 54.4 | 95.5
------- | -------
Cash and cash equivalents at end of period $ 35.5 | $ 83.8
======= | =======
|
Supplemental Cash Flow Disclosures: |
Interest paid $ 21.8 | $ 11.7
Income taxes paid $ 4.5 | $ 3.2
======= | =======
The accompanying notes are an integral part of these statements
</TABLE>
-6-
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. MERGER WITH GREENMARINE ACQUISITION CORP.
On September 12, 1997, Greenmarine Acquisition Corp. ("Greenmarine")
acquired control of Outboard Marine Corporation (the "Pre-Merger
Company") when shareholders tendered approximately 90 percent of the
outstanding shares of the Pre-Merger Company's common stock to
Greenmarine for $18 per share in cash. Greenmarine was formed solely
to purchase the shares of the Pre-Merger Company and merged with and
into the Pre-Merger Company in a non-taxable transaction on September
30, 1997. Outboard Marine Corporation was the surviving entity of the
merger with Greenmarine (the "Post-Merger Company") (in either case,
unless specifically referenced, Pre-Merger Company or Post-Merger
Company are also defined as "OMC" or the "Company"). All of the
outstanding Pre-Merger Company common stock was cancelled on September
30, 1997 and 20.4 million shares of new common stock were issued to
Greenmarine Holdings LLC (the "Parent") the parent company of
Greenmarine. Greenmarine's total purchase price of common stock and
related acquisition costs amounted to $373.0 million.
The Post-Merger Company Condensed Statement of Consolidated Financial
Position as of June 30, 1998 and the related Post-Merger Company
Statement of Consolidated Earnings for the three and nine months ended
June 30, 1998 and Consolidated Cash Flow for the nine months ended
June 30, 1998 are not comparable to the prior year because of purchase
accounting adjustments. The acquisition and the merger were accounted
for using the purchase method of accounting. Accordingly, the
purchase price at September 30, 1997 has been allocated to assets
acquired and liabilities assumed based on fair market values at the
date of acquisition. The fair values of tangible assets acquired and
liabilities assumed were $844.9 million and $902.0 million,
respectively. In addition, $83.9 million of the purchase price was
allocated to intangible assets for trademarks, patents and dealer
network. Purchase accounting included liabilities of $136.9 million
for implementation and execution of business reorganizations. The
financial statements reflect the preliminary allocation of purchase
price as the purchase price allocation has not been finalized. The
excess purchase price over fair value of the net assets acquired was
$250.2 million and has been classified as goodwill in the Statement of
Consolidated Financial Position at September 30, 1997. The goodwill
related to the acquisition will be amortized using the straight-line
method over a period of 40 years.
2. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements
present information in accordance with generally accepted accounting
principles for interim financial information and have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all information or
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, the
-7-
<PAGE> 8
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/A for the year ended September 30, 1997. The 1998 interim
results are not necessarily indicative of the results which may be
expected for the remainder of the year.
3. SHORT-TERM AND LONG-TERM BORROWINGS
The Company became obligated under a credit agreement, as amended,
which provided for loans of up to $150 million (the "Acquisition
Debt"). Amounts outstanding under this credit agreement were secured
by 20.4 million shares of common stock of the Post-Merger Company with
interest at 10%. On November 12, 1997, the Company borrowed the
remaining $54.0 million principal amount of Acquisition Debt in
connection with the purchase of all properly tendered 7% convertible
subordinated debentures of Outboard Marine Corporation due 2002. The
full amount of the Acquisition Debt was paid on May 27, 1998 from the
proceeds of newly issued long-term debt.
Effective January 6, 1998, the Company entered into a $150.0 million
Amended and Restated Loan and Security Agreement which expires
December 31, 2000 and at June 30, 1998, $30.0 million was outstanding.
Any loans outstanding under this agreement are secured by the
Company's inventory, receivables, intellectual property and other
current assets and are guaranteed by certain of the Company's
operating subsidiaries.
On May 27, 1998, the Company issued $160.0 million of 10-3/4% Senior
Notes ("Senior Notes") due 2008, with interest payable semiannually on
June 1 and December 1 of each year. The net proceeds from the
issuance totaled $155.2 million and $150.0 million was used to repay
the Acquisition Debt. Concurrently with the issuance of the Senior
Notes, the Company entered into a depositary agreement which provided
for the establishment and maintenance of an interest reserve account
for the benefit of the holders of the Senior Notes and other senior
creditors of the Company in an amount equal to one year's interest due
to these lenders. At June 30, 1998, the interest reserve "Restricted
Cash" was $28.6 million and must be maintained for a minimum of three
years but at least until such time as the Company's fixed coverage
ratio is greater than 2.5 to 1.0 or the Senior Notes are paid in full.
Under the various borrowing agreements, the Company is required to
meet certain financial covenants throughout the year. The Company is
in compliance with terms and conditions of these agreements.
4. CONTINGENT LIABILITIES
As a normal business practice, the Company has made arrangements with
financial institutions by which qualified retail dealers may obtain
inventory financing. Under these arrangements, the Company will
repurchase its products in the event of repossession upon a retail
-8-
<PAGE> 9
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. This obligation
automatically reduces over the 30 month period. 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.
The Company is engaged in a substantial number of legal proceedings
arising in the ordinary course of business. While the result of these
proceedings, as well as those discussed below, cannot be predicted
with any certainty, based upon the information presently available,
management is of the opinion that the final outcome of all such
proceedings should not have a material effect upon the Company's
Consolidated Financial Position or the Consolidated Earnings of the
Company.
Under the requirements of Superfund and certain other laws, the
Company is potentially liable for the cost of clean-up at various
contaminated sites identified by the United States Environmental
Protection Agency and other agencies. The Company has been notified
that it is named a potentially responsible party ("PRP") at various
sites for study and clean-up costs. 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
their ability to pay.
As a general rule, the Company accrues remediation costs for
continuing operations on an undiscounted basis and accrues for normal
operating and maintenance costs for site monitoring and compliance
requirements. The Company also accrues for environmental close-down
costs associated with discontinued operations or facilities, including
the environmental costs of operation and maintenance until
disposition. At June 30, 1998, the Company has accrued approximately
$22 million for costs related to remediation at contaminated sites
including operation and maintenance for continuing and closed-down
operations. The possible recovery of insurance proceeds has not been
-9-
<PAGE> 10
considered in estimating contingent environmental liabilities.
In the nine months ended June 30, 1997, the Company recovered
insurance proceeds of $6.1 million for prior environmental charges
which is included in non-operating expense (income) in the Statement
of Consolidated Earnings.
Each site, whether or not remediation studies have commenced, is
reviewed on a quarterly basis and the aggregate environmental
contingent liability accrual is adjusted accordingly. Because the
sites are reviewed and the accrual adjusted quarterly, the Company is
confident the accrual accurately reflects the Company's liability
based upon the information available at the time.
5. PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (UNAUDITED)
The following unaudited pro forma Condensed Statement of Consolidated Earnings
(the "Pro Forma Statement") was prepared to illustrate the estimated effects of
the merger with Greenmarine Acquisition Corp. as if the transaction had
occurred for statement of consolidated earnings purposes as of the beginning of
fiscal 1997.
The pro forma adjustments are based upon available information and upon certain
assumptions that the Company believes are reasonable. The Pro Forma Statement
does not purport to represent what the Company's results of operations would
actually have been if such transactions in fact had occurred at the beginning
of the period indicated or to project the Company's results of operation for
any future period.
The Pro Forma Statement includes adjustments, with respect to the merger, to
reflect additional interest expense, depreciation expense and amortization of
goodwill.
-10-
<PAGE> 11
Nine Months Ended
June 30, 1997
(Dollars in millions, except per share data)
(Unaudited)
Net sales $ 709.9
Cost of goods sold 594.8
------
Gross earnings 115.1
Selling, general and administrative expense 157.3
------
Earnings (Loss) from operations (42.2)
Interest expense 21.9
Other (income) expense, net (25.9)
------
Loss before provision for income taxes (38.2)
Provision for income taxes 2.2
------
Net loss $ (40.4)
======
Net loss per share of common stock
(basic and diluted) $ (1.98)
======
Shares outstanding 20.4
======
6. STOCK OPTION PLAN
On March 10, 1998, the Company adopted the Outboard Marine Corporation
Personal Rewards and Opportunities Program ("PROP"). PROP was
designed to recognize and reward, through cash bonuses, stock options
and other equity-based awards, the personal contributions and
achievements of employees of the Company. All employees are eligible
to participate in PROP. PROP replaced all long and short-term
incentive plans of the Company. PROP provides for (i) cash and/or
equity annual bonuses based on performance targets, and (ii) grants of
stock options, shares of restricted stock, phantom shares of stock or
stock appreciation rights. The aggregate number of shares of stock
available for equity awards under PROP is 1,500,000 shares of
currently authorized common stock of the Company. Grants under PROP
are discretionary.
Stock option grants under PROP through June 30, 1998 were 587,245, of
which, 96,133 were vested upon grant. The remaining grants vest as
follows: 94,445 in fiscal 1998, 176,667 in fiscal 1999, 121,115 in
fiscal 2000, and 98,885 thereafter. The grants are exercisable at $18
per share and expire ten years after date of grant. The Company
accounts for PROP under APB Opinion No. 25, and has not recorded any
compensation expense for grants through June 30, 1998 as the exercise
price of the stock option approximates the estimated fair market value
of the Company's stock on the date of grant.
-11-
<PAGE> 12
7. RECENTLY ADOPTED ACCOUNTING STANDARDS
In fiscal 1999, the Company will implement three accounting standards
issued by the Financial Accounting Standards Board, SFAS 130,
"Reporting Comprehensive Income," SFAS 131, "Disclosures About
Segments of an Enterprise and Related Information," and SFAS 132,
"Employers' Disclosures about Pensions and Other Postretirement
Benefits." The Company believes that these changes will have no
effect on its financial position or results of operations as they
require only changes in or additions to current disclosures.
In October 1996, the American Institute of Certified Public
Accountants issued Statement of Position 96-1 ("SOP 96-1"),
"Environmental Remediation Liabilities", which provides authoritative
guidance on the recognition, measurement, display and disclosure of
environmental remediation liabilities. The Company adopted SOP 96-1
in the quarter ended September 30, 1997. The change in accounting
estimate required the Company to accrue for future normal operating
and maintenance costs for site monitoring and compliance requirements
at particular sites. The initial expense for implementation of SOP
96-1 was $7.0 million, charged to selling, general and administrative
expense in the quarter ended September 30, 1997.
In June 1998, the Financial Accounting Standards Board issued
Statement 133 ("SFAS 133"), "Accounting for Derivative Instruments and
Hedging Activities." SFAS 133 establishes accounting and reporting
standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured
at its fair value. SFAS 133 requires that changes in the derivative's
fair value be recognized currently in earnings unless specific hedge
accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on
the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of
transactions that receive hedge accounting. SFAS 133 is effective for
fiscal years beginning after June 15, 1999.
The Company has not yet quantified the impacts of adopting SFAS 133 on
its financial statements and has not determined the timing of or
method of its adoption of SFAS 133. However, the Company believes
adoption will have no material effect on its financial position or
results of operations based on current levels of financial
instruments.
8. SUBSEQUENT EVENT
On July 22, 1998, the Board of Directors of the Company resolved to amend
Article X of its Bylaws to reflect a change in its fiscal year from the
twelve month period of October 1 through September 30 of each year to a
twelve month calendar year of January 1 through December 31 of each year.
-12-
<PAGE> 13
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 2
FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
June 30, 1998
GENERAL
Industry Overview. In general, the recreational marine industry
is highly cyclical. Industry sales are impacted by the general state
of the economy, interest rates, consumer spending, technology, dealer
effectiveness, demographics, fuel availability and government
regulations. In addition, the Company's business is impacted by
weather patterns. For example, excessive rain during the Spring and
Summer, the peak retail sales periods, or unseasonably cool weather
and prolonged winter conditions may curtail customer demand for the
Company's products.
New Management Initiatives. On September 12, 1997, Greenmarine
Holdings acquired control of the Company. Since that time the Company
has assembled a new, highly-experienced senior management team led by
David D. Jones. The new senior management team has developed a
turnaround strategy to capitalize on the Company's strong market
position and leading, well-recognized brand names and to take
advantage of anticipated growth in the recreational marine industry.
As part of its strategic business plan, the Company has begun to
implement a series of initiatives to reduce operating costs, improve
the Company's operating practices, and rationalize its facilities,
workforce and product lines.
In January 1998, the Company began the rationalization of its
boat manufacturing operations by closing its Old Hickory, Tennessee
facility and consolidating the freshwater fishing operations at the
Company's Murfreesboro, Tennessee facility. The Company also began,
and has now completed, the consolidation of its saltwater fishing
operations at its Columbia, South Carolina facility. In addition, as
part of the Company's plan to improve operating efficiencies and
reduce costs, the Company reduced its workforce by approximately 540
employees as of March 31, 1998, primarily within the Company's boat
operations. In April 1998, the Company announced that it would close
its research facility in Waukesha, Wisconsin and relocate those
operations to other facilities.
In March 1998, the Company announced a lean manufacturing
initiative for its marine power manufacturing operations. Lean
manufacturing is a disciplined approach for implementing proven
manufacturing methodologies in order to reduce manufacturing costs
through improved employee productivity and reduced inventory. The
first phase of this initiative was introduced at the Company's final
assembly plant in Calhoun, Georgia, and it has now expanded to
additional facilities. This initiative is expected to substantially
reduce costs, shorten production times, lower inventory and
-13-
<PAGE> 14
dramatically improve the Company's responsiveness to dealer and
consumer demand. The Company has also implemented a strategic
purchasing program which was announced in January 1998. This program
is designed to reduce purchasing costs by consolidating purchasing
across vendors, integrating suppliers into the product design process
at an early stage and designing products for lower cost.
In June, 1998, the Company announced the realignment of its
aluminum boat brands. Consolidating the most popular models from the
Grumman, Roughneck and Sea Nymph lines, the Lowe brand will be
positioned to offer a full line of aluminum boats. The consolidation
is another step the Company is taking to reduce the competition among
its own brands in every aluminum market and as a way to help its
dealers offer a complete line of boats to meet customer demand, rather
than having to select from multiple boat company lines.
Also in June, 1998, the Company announced that it had entered
into a long-term strategic business agreement with Johnson Worldwide
Associations, Inc. (JWA) to supply a range of private labeled electric
trolling motors to meet OMC's specifications. This will give OMC a
full line of industry leading, current technology electric trolling
motors to offer its dealers.
In July, 1998, the Company unveiled a new brand strategy for its
Johnson and Evinrude engines. Johnson and Evinrude had become
identical engines that were marketed under different names. Under the
new strategy, they will be readily distinguishable from each other and
will be marketed to different consumers. The Johnson brand will
continue as a full line of carbureted two-strokes and will be marketed
as the reliable engine it always has been. Evinrude will offer a full
line of FICHT fuel injected technology engines and four-stroke engines
and will be marketed as the premium OMC brand. As a result, while OMC
dealers previously sold either Johnson or Evinrude, they will now sell
both engine lines.
Management anticipates that the measures implemented to date will
result in overall cost reductions of approximately $21 million annually,
a portion of which the Company anticipates will be realized in fiscal
1998. The Company believes that these savings represent permanent
reductions in its cost structure and anticipates further savings from
the full implementation of all elements of the Company's strategy.
There can be no assurance, however, that these programs will achieve
the anticipated savings in fiscal 1998 or that additional cost savings
will be achieved.
Expansion of FICHT Technology. All marine engine manufacturers
are facing the challenge of meeting the EPA's emission standards which
require manufacturers to reduce hydrocarbon emissions from outboard
engines, on average, by 8.3% per year through model year 2006
beginning with the 1998 model year, and emissions from personal
watercraft by 9.4% per year through model year 2006 beginning in model
year 1999. Partly in response to these EPA emission standards, the
Company introduced its new Johnson and Evinrude engines with FICHT
fuel-injection technology, which offer an average hydrocarbon emission
reduction of 80% and an approximate 35% increase in fuel economy
depending on the application. The higher manufacturing costs of the
-14-
<PAGE> 15
FICHT fuel injected engines will result initially in a lower margin to
the Company; however, the Company has implemented several initiatives
to reduce the manufacturing costs of its new engines. Because of the
higher retail costs of engines incorporating the FICHT technology,
consumer acceptance of the new engines may be restrained as long as
less expensive engine models, which do not meet the new EPA standards,
continue to be available. To date, the Company estimates that it has
spent approximately $50.0 million on low-emission technology, and by
the Year 2006 the Company is expected to have expended an aggregate of
approximately $90.0 million to meet the EPA's new emission standards.
The Company expenses its research and development costs as they are
incurred.
Industry acceptance of the FICHT technology by manufacturers of
two-stroke engines was reaffirmed in February when Polaris Industries,
Inc. announced that it had become a licensee of FICHT fuel injection
technology for use on its personal watercraft (PWC), snowmobiles and
all terrain vehicles (ATV). In March, Arctic Cat, Inc. announced that
OMC will license the FICHT technology and supply the FICHT fuel
injection components, including hardware and electronic control unit
software, on their two-stroke engines used in PWC's, ATV's and
snowmobiles. Also in March, Kawasaki Heavy Industries of Kobe, Japan
announced their intention to use FICHT technology on their personal
watercraft engines.
Purchase Accounting. On September 12, 1997, Greenmarine Holdings
acquired control of the Company by consummating the Tender Offer. On
September 30, 1997, Greenmarine Holdings' acquisition subsidiary was
merged with and into the Company, with the Company being the surviving
entity of the merger. The Greenmarine Acquisition was completed for
aggregate consideration of approximately $373.0 million and has been
accounted for under the purchase method of accounting. Accordingly,
the purchase price has been allocated to assets acquired and
liabilities assumed based on fair market values at the date of
acquisition (i.e., September 30, 1997). In the opinion of management,
accounting for the purchase as of September 30, 1997 instead of
September 12, 1997 did not materially affect the Company's results of
operations for fiscal 1997. The fair values of tangible assets
acquired and liabilities assumed were $844.9 million and $902.0
million, respectively. In addition, $83.9 million of the purchase
price was allocated to intangible assets for trademarks, patents and
dealer network. As part of the initial purchase price allocation, the
Company accrued an aggregate amount of $136.9 million for
implementation and execution of business reorganizations, including
product line rationalization, implementation of the lean manufacturing
realignment, implementation of the Company's purchasing initiatives,
plant restructuring and reduction of the Company's workforce. The
financial statements reflect the preliminary allocation of purchase
price as the purchase price allocation has not been finalized. The
excess purchase price over fair value of the net assets acquired was
$250.2 million and has been classified as goodwill in the Statement of
Consolidated Financial Position as of September 30, 1997. The goodwill
related to the acquisition will be amortized using the straight-line
method over a period of 40 years. Accordingly, the Company's results
of operations for the nine months ended June 30, 1998 are not
comparable to its results of operations in earlier periods.
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Seasonality. The Company's business is seasonal due to the
impact of the buying patterns of its dealers and consumers. The
Company's peak revenue periods historically have been its third and
fourth fiscal quarters ending June 30 and September 30, respectively.
Accordingly, the Company's business, receivables, inventory and
accompanying short-term borrowing to satisfy working capital
requirements are usually at their highest levels in the Company's
second fiscal quarter and decline thereafter as the Company's products
enter the peak consumer selling seasons. Short-term borrowings
averaged $2.9 million and $5.7 million in 1997 and 1996, respectively,
with month-end peak borrowings of $29.0 million and $15.0 million in
February 1997 and 1996, respectively. To date in fiscal 1998,
month-end peak borrowings were $70.7 million in February and March.
RESULTS OF OPERATIONS
PERIODS ENDED JUNE 30, 1998 COMPARED TO PERIODS ENDED JUNE 30, 1997
Net Sales. Net sales increased to $284.6 million in the three
months ended June 30, 1998 from $275.8 million in the three months
ended June 30, 1997, an increase of 3.2%. Net sales increased to
$760.1 million in the nine months ended June 30, 1998 from $709.9
million in the nine months ended June 30, 1997, an increase of 7.1%.
The Company's sales increase was attributable primarily to higher
volume sales in the United States of marine engines in the current
quarter and fiscal year, which increased over prior periods. Engine
sales were depressed in the first half of fiscal 1997 as a result of
the Company's program to restrain engine production in order to assist
dealers in reducing inventory levels. In the first quarter of fiscal
1997, the Company suspended production of many of its larger engines
for nearly a month in order to make changes to equipment and processes
necessary in order to significantly improve the quality of those
engines. This production suspension adversely affected the Company's
sales and margins in the first half of fiscal 1997. The quarter
increase was not as favorable as the nine month increase because sales
of boats in the three months ended June 30, 1998 were lower than the
previous year as a result of the boat brand strategy which refocused
each brand into its market niche and resulted in the elimination of
many lower end and lower gross margin boat models.
Cost of Goods Sold. Cost of goods sold decreased to $212.9
million in the three months ended June 30, 1998 from $221.0 million in
the three months ended June 30, 1997, a decrease of $8.1 million or
3.7%. Cost of goods sold was 74.8% of net sales in the three months
ended June 30, 1998 as compared with 80.1% of net sales in the three
months ended June 30, 1997. Cost of goods sold decreased to $590.8
million in the nine months ended June 30, 1998 from $595.9 in the nine
months ended in June 30, 1997, a decrease of $5.1 million or 0.9%.
Cost of goods sold was 77.7% of net sales in the nine months ended
June 30, 1998 as compared with 83.9% of net sales in the nine months
ended June 30, 1997. The improvements in the Company's gross margin in
the current quarter and fiscal year reflected increased manufacturing
efficiencies at engine plants and a better absorption of fixed costs,
primarily due to higher sales volume. In addition, in the first
quarter of fiscal 1997, the Company's cost of goods sold was
negatively impacted by the production suspension discussed above in
Net Sales.
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Selling, General and Administrative ("SG&A") Expense. SG&A
expense decreased to $53.5 million in the three months ended June 30,
1998 from $59.8 million in the three months ended June 30, 1997, a
decrease of $6.3 million or 10.5%. SG&A expense as a percentage of
net sales decreased to 18.8% in the three months ended June 30, 1998
from 21.7% in the three months ended June 30, 1997. SG&A expense
increased to $156.0 million in the nine months ended June 30, 1998
from $151.7 million in the nine months ended June 30, 1997, an
increase of $4.3 million or 2.8%. SG&A expense as a percentage of net
sales decreased to 20.5% in the nine months ended June 30, 1998 from
21.4% in the nine months ended June 30, 1997. The three months ended
June 30, 1997 included an adjustment to increase boat warranty
reserves $8.0 million as a result of changes in the method used to
estimate warranty reserves. The SG&A expense in the current quarter
and fiscal year reflected higher amortization of goodwill and
intangibles due to purchase accounting.
Earnings (Loss) from Operations. Earnings from operations was
$18.2 million in the three months ended June 30, 1998 compared with a
loss of $5.0 million in the three months ended June 30, 1997, an
improvement of $23.2 million. Earnings from operations improved to
$13.3 million for the nine months ended June 30, 1998 from a loss of
$37.7 million for the nine months ended June 30, 1997, an improvement
of $51.0 million. The improvements were primarily attributable to
increased sales coupled with better absorption of fixed costs and
higher prior year warranty.
Non-Operating Expense (Income). Interest expense increased to
$8.2 million in the three months ended June 30, 1998 from $4.3 million
in the three months ended June 30, 1997, an increase of $3.9 million.
Interest expense increased to $22.6 million in the nine months ended
June 30, 1998 from $12.7 million in the nine months ended June 30,
1997, an increase of $9.9 million. The increase resulted from the new
debt structure in place after the Greenmarine Acquisition. Other
non-operating income was $3.7 million in the three months ended June 30,
1998 compared to $4.6 million in the three months ended June 30, 1997.
Other non-operating income was $8.6 million in the nine months ended
June 30, 1998 compared to $25.9 million in the nine months ended June
30, 1997. The nine months ended June 30, 1997 amount included
non-recurring income, including insurance recovery and a lawsuit
settlement, as well as gains on disposition of fixed assets.
Provision (Credit) for Income Taxes. The provision for income
taxes was $1.4 million in the three months ended June 30, 1998 and
$0.4 million in the three months ended June 30, 1997. The provision
for income taxes was $3.2 million in the nine months ended June 30,
1998 and $2.2 million in the nine months ended June 30, 1997. The
provision for income taxes for the three and nine months ended June
30, 1998 and 1997 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, at this time, under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes."
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<PAGE> 18
FINANCIAL CONDITION; LIQUIDITY AND CAPITAL RESOURCES
As a result of the Greenmarine Acquisition, the Statement of
Consolidated Financial Position as of September 30, 1997 was prepared
using the purchase method of accounting which reflects the fair values
of assets acquired and liabilities assumed. The excess of the total
acquisition cost over the estimated fair value of assets acquired and
liabilities assumed at the date of acquisition was estimated initially
at $250.2 million. The financial statements reflect the preliminary
allocation of purchase price, as the purchase price allocation has not
been finalized. Accordingly, the Statement of Condensed Consolidated
Financial Position as of June 30, 1998 is not comparable to that as of
June 30, 1997 because of the purchase accounting adjustments.
The Company's business is seasonal in nature with receivable and
inventory levels normally increasing in the first fiscal quarter and
peaking in the second fiscal quarter. Current assets at June 30, 1998
decreased $71.0 million from September 30, 1997. Cash and cash
equivalents at June 30, 1998 decreased $18.9 million from September
30, 1997. Receivables decreased $3.4 million due primarily to lower
European receivables due to a change in European sales channels and
lower miscellaneous receivables offset by higher receivables related
to a significant increased engine sales versus last year. Inventories
at June 30, 1998 decreased $2.4 million from September 30, 1997 due to
better inventory management. Other current assets at June 30, 1998
decreased $46.3 million from September 30, 1997 primarily due to a
reduction in a trust depository that funded the remaining untendered
outstanding shares of the Company's common stock and due to the
redemption of deposits for letters of credit. Accounts payable at June
30, 1998 decreased $65.3 million from September 30, 1997 due to
payments to Company shareholders for untendered outstanding stock and
to other payments relating to the change of control. Cash provided by
operations was $12.8 million for the nine months ended June 30, 1998
compared with $11.9 million for the nine months ended June 30, 1997.
Expenditures for plant, equipment and tooling were $23.7 million
for the nine months ended June 30, 1998, representing a $6.4 million
decrease from the prior year period level of $30.1 million, primarily
as a result of deferred capital expenditures. The low level of
spending to date is related primarily to the Company's capital
appropriation process. Capital spending related to any approved
capital expenditure is realized, on average, approximately nine months
after approval. A lower level of capital spending was appropriated in
fiscal 1997 as compared to prior years due to the Company's pending
sale, which was completed in September 1997. The Company estimates
that total capital expenditures for fiscal 1998 will be approximately
$30 million, which includes capital expenditures and various planned
and potential projects designed to increase efficiencies and enhance
the Company's competitiveness and profitability. Specifically, these
capital expenditures include continued expenditures related to the
introduction of the FICHT technology to the Company's various engine
models, cost reduction programs, product quality improvements,
improvements to and upgrades of the Company's hardware and software,
and other general capital improvements and repairs.
Short-term debt was $30.0 million at June 30, 1998. Current
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<PAGE> 19
maturities and sinking fund requirements of long-term debt decreased
by $61.7 million from September 30, 1997 due primarily to the
redemption of the Company's 7% Convertible Subordinated Debentures due
2002. The Company also borrowed approximately $30.0 million from
certain wholly-owned foreign subsidiaries. Approximately $2.0 million,
net of offsets, is due in fiscal 1998, and approximately $20.2 million
is due at the end of fiscal 1999.
The Company entered into an Amended and Restated Loan and
Security Agreement, effective as of January 6, 1998 (the "Credit
Agreement"), with a syndicate of lenders for which NationsBank of
Texas, N.A. is administrative and collateral agent (the "Agent"). The
Credit Agreement provides a revolving credit facility(the "Revolving
Credit Facility") of up to $150.0 million, subject to borrowing base
limitations, to finance working capital with a $30.0 million sublimit
for letters of credit. The Revolving Credit Facility expires on
December 31, 2000. The Revolving Credit Facility is secured by a first
and only security interest in all of the Company's existing and
hereafter acquired accounts receivable, inventory, chattel paper,
documents, instruments, deposit accounts, contract rights, patents,
trademarks and general intangibles and is guaranteed by the Company's
four principal domestic operating subsidiaries. On June 30, 1998,
outstanding borrowings under the Credit Agreement aggregated $30.0
million and eight letters of credit were outstanding totaling $18.8
million. The level of borrowings as of June 30, 1998 was due primarily
to the seasonality of the Company's business. Although there can be no
assurance, the Company expects to use the cash from the anticipated
sales of products and collection of receivables to repay all amounts
outstanding under the Revolving Credit Facility by the end of fiscal
1998. The Credit Agreement contains a number of financial covenants,
including those requiring the Company to satisfy specific levels of
(i) consolidated tangible net worth, (ii) interest coverage ratios,
and (iii) leverage ratios.
The Company became obligated under a credit agreement, as
amended, which provided for loans of up to $150 million (the
"Acquisition Debt"). Amounts outstanding under this credit agreement
were secured by 20.4 million shares of common stock of the Post-Merger
Company with interest at 10%. On November 12, 1997, the Company
borrowed the remaining $54.0 million principal amount of Acquisition
Debt in connection with the purchase of all properly tendered 7%
convertible subordinated debentures of Outboard Marine Corporation due
2002. The full amount of the Acquisition Debt was paid on May 27,
1998 from the proceeds of newly issued long-term debt.
On May 27, 1998, the Company issued $160.0 million of 10-3/4%
Senior Notes ("Senior Notes") due 2008, with interest payable
semiannually on June 1 and December 1 of each year. The net proceeds
from the issuance totaled $155.2 million and $150.0 million was used
to repay the Acquisition Debt. Concurrently with the issuance of the
Senior Notes, the Company entered into a depositary agreement which
provided for the establishment and maintenance of an interest reserve
account for the benefit of the holders of the Senior Notes and other
senior creditors of the Company in an amount equal to one year's
interest due to these lenders. At June 30, 1998, the interest reserve
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<PAGE> 20
"Restricted Cash" was $28.6 million and must be maintained for a
minimum of three years.
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 $40.0 million per model year
for a period not to exceed 30 months from the date of invoice. The
obligation automatically reduces over the 30 month period. The
Company resells any repurchased products. Losses incurred under this
program have not been material. In fiscal 1997, the Company
repurchased approximately $3.9 million of products, all of which were
resold at a discounted price. The Company accrues for losses that are
anticipated in connection with expected repurchases. The Company does
not expect these repurchases to materially affect its results of
operations.
As of September 30, 1997, the Company reserved a total amount
equal to $136.9 million as accrued liabilities for business
reorganizations. These reserves include accruals for rationalization
of the Company's product lines, workforce reductions, plant
consolidations and closures. A total of approximately $33.2 million of
such accrued liabilities relate to non-cash items. The Company also
has other non-current liabilities of $202.3 million, including
environmental reserves and post-retirement benefits other than pension
of $95.0 million.
The Company has recorded net deferred tax assets of $40.1
million, of which $21.1 million is reflected as a net long-term asset.
The Company believes that these net deferred tax assets will be
realized. A valuation allowance of $131.8 million was recorded at
September 30, 1997 to reduce the deferred tax assets to their
estimated net realizable value. Of this valuation allowance, $20.7
million relates to deferred tax assets established for foreign and
state loss carryforwards. As of September 30, 1997, certain non-U.S.
subsidiaries of the Company had net operating loss carryforwards for
income tax purposes of $34.8 million. Of this amount, $4.0 million
will expire by 2002, with the remaining balance being unlimited. In
addition, the Company has $103.2 million of federal net operating loss
carryforwards expiring between 2009 and 2012, and $133.8 million of
state net operating loss carryforwards expiring between 1998 and 2012.
These carryforwards, however, are entirely offset by the valuation
allowance referred to above. Accordingly, no benefit has been
recognized with respect to these carryforwards in the Consolidated
Financial Statements. Several factors would generally enable the
Company to recognize the deferred tax assets that have been offset by
the valuation allowance. Historical profitability, forecasted
earnings, and management's determination "it is more likely than not"
the deferred tax assets will be realized against forecasted earnings,
all affect whether the remaining U.S. deferred tax assets may be
recognized through a reversal of the valuation allowance. Because the
deferred tax asset realization factors were adversely affected by the
Company's results for fiscal 1997, the Company believes it is unlikely
the reversal of the valuation allowance will occur in fiscal 1998.
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<PAGE> 21
During fiscal 1997 and 1998, the Company assessed the steps
necessary to address issues raised by the coming of Year 2000. The
review included all of the Company's hardware and software
requirements worldwide, including processors embedded in its
manufacturing equipment, as well as vendors of goods and services.
Based on this review, the Company developed a strategy for attaining
Year 2000 compliance that includes modifying and replacing software,
acquiring new hardware, educating its dealers and distributors and
working with vendors of both goods and services. With the assessment
phase of the strategy completed, the Company is in the process of
implementing and testing remedies of issues identified during the
assessment phase. To date, all applications on the Company's
mainframe have been reprogrammed and initial testing will be conducted
through the first quarter of calendar 1999. Issues raised relative to
personal computers and local and wide area networks are in the process
of being remedied through the acquisition of new software and
hardware. The Company has found very few embedded processors
contained in its manufacturing equipment which would be affected by
the Year 2000 and those which were identified are in the process of
being modified. Most of the Company's telecommunications equipment is
currently Year 2000 compliant and in cases where it is not, the
equipment has either been replaced or appropriation requests for the
replacement have been prepared and are being processed. The Company
anticipates completing all implementation and testing of internal
remedies by June 30, 1999.
Also as part of the Company's Year 2000 compliance efforts, it
has substantially reviewed all vendors of goods and is currently
reviewing vendors providing services and prioritized them from
critical (i.e., vendors whose goods or services are necessary for the
Company's continued operation) to non-critical (i.e., suppliers whose
products were either not critical to the continued operation of the
Company or whose goods or services could otherwise be readily obtained
from alternate sources) providers. These vendors range from service
providers, such as banks, utility companies and benefit plan service
providers to suppliers of goods required for the manufacture of the
Company's products. Following this initial vendor review, the Company
established a strategy to determine the readiness of those vendors for
Year 2000. This initially involves sending a letter notifying the
vendor of the potential Year 2000 issues, which was followed by a
questionnaire to be completed by the vendor. In the event a non-critical
supplier either did not respond or responded inadequately, follow-up
questionnaires were sent and calls made in order to further clarify the
vendor situation. In the event that a critical vendor did not respond
or responded inadequately, the Company not only follows up with additional
questionnaires and telephone calls but also scheduled or will schedule
on-site meetings with the vendor in order to satisfy itself that the vendor
is or will be prepared to operate into the Year 2000. The Company believes
that the unresponsive critical vendors create the most uncertainty in the
Company's Year 2000 compliance efforts. In the event that the Company is
not satisfied that a critical vendor will be able to provide its goods or
services into the Year 2000, the Company has begun review alternate
suppliers who are in a position to certify that they are or will be Year
2000 ready.
Finally, in preparing for the advent of the Year 2000, the
Company has taken steps to heighten the awareness among its dealer and
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<PAGE> 22
distributor network of the issues associated with the Year 2000. The
issue is covered in monthly publications which are distributed to the
dealers and also by the sales force that is responsible for the
regular communications with the dealer and distributor network.
To date, the Company has spent a total of approximately $3
million on personal computer and network, mainframe and
telecommunication solutions to issues related with the Year 2000 and
estimates that it will spend up to a total of $10 million, half of
which is associated with personal computers and networks, to remedy
all of the issues associated with ensuring that its hardware and
software worldwide, and the systems associated therewith, are able to
operate into the Year 2000.
The Company believes that its owned or licensed hardware and
software will be able to operate into the Year 2000. However, the
Company relies on the goods and services of other companies in order
to manufacture and deliver its goods to the market. Although the
Company is taking every reasonable step to ensure that these vendors
will be able to continue to provide their goods or services, there can
be no assurance that, even upon certification of their ability to do
so, the Company's vendors will be able to provide their goods and
services to the Company in a manner that satisfactorily addresses the
Year 2000 issues. In the event that the vendor is critical and either
no alternate vendor is available or is able to operate into the Year
2000, this event could have a negative impact on the Company's
business, results of operations, or financial condition.
Based upon the current level of operations and anticipated cost
savings, the Company believes that its cash flow from operations,
together with borrowings under the Credit and its other sources of
liquidity, will be adequate to meet its anticipated requirement for
working capital and accrued liabilities, capital expenditures,
interest payments and scheduled principal payments over the next
several years. There can be no assurance, however, that the Company's
business will continue to generate cash flow at or above current
levels or that anticipated costs savings can be fully achieved. If the
Company is unable to generate sufficient cash flow from operations in
the future to service its debt and accrued liabilities and make
necessary capital expenditures, or if its future earnings growth is
insufficient to amortize all required principal payments out of
internally generated funds, the Company may be required to refinance
all or a portion of its existing debt, sell assets or obtain
additional financing. There can be no assurance that any such
refinancing or asset sales would be possible or that any additional
financing could be obtained on attractive terms, particularly in view
of the Company's high level of debt.
RECENTLY ADOPTED ACCOUNTING STANDARDS
In fiscal 1999, the Company will implement three accounting
standards issued by the Financial Accounting Standards Board, SFAS
130, "Reporting Comprehensive Income," SFAS 131, "Disclosures About
Segments of an Enterprise and Related Information," and SFAS 132,
"Employers' Disclosures about Pensions and Other Postretirement
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<PAGE> 23
Benefits." The Company believes that these changes will have
no effect on its financial position or results of operations as they
require only changes in or additions to current disclosures.
In October 1996, the American Institute of Certified Public
Accountants issued Statement of Position 96-1 ("SOP 96-1"),
"Environmental Remediation Liabilities", which provides authoritative
guidance on the recognition, measurement, display and disclosure of
environmental remediation liabilities. The Company adopted SOP 96-1 in
the quarter ended September 30, 1997. The change in accounting
estimate required the Company to accrue for future normal operating
and maintenance costs for site monitoring and compliance requirements
at particular sites. The initial expense for implementation of SOP
96-1 was $7.0 million, charged to selling, general and administrative
expense in the quarter ended September 30, 1997.
In June 1998, the Financial Accounting Standards Board issued
Statement 133 ("SFAS 133"), "Accounting for Derivative Instruments and
Hedging Activities." SFAS 133 establishes accounting and reporting
standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured
at its fair value. SFAS 133 requires that changes in the derivative's
fair value be recognized currently in earnings unless specific hedge
accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on
the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of
transactions that receive hedge accounting. SFAS 133 is effective for
fiscal years beginning after June 15, 1999.
The Company has not yet quantified the impacts of adopting SFAS
133 on its financial statements and has not determined the timing of
or method of its adoption of SFAS 133. However, the Company believes
adoption will have no material effect on its financial position or
results of operations based on current levels of financial
instruments.
INFLATION
Inflation may cause or may be accompanied by increases in
gasoline prices and interest rates. Such increases may adversely
affect the purchase of the Company's products. Inflation has not had a
significant impact on operating results during the past three fiscal
years.
CHANGE IN FISCAL YEAR
On July 22, 1998, the Board of Directors of the Company resolved
to amend Article X of its Bylaws to reflect a change in its fiscal
year from the twelve month period of October 1 through September 30
of each year to a twelve month calendar year of January 1 through
December 31 of each year.
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FORWARD-LOOKING STATEMENTS
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,
the availability of adequate financing on terms and conditions
acceptable to the Company, general economic conditions including
interest rates and consumer confidence and successful implementation
of strategic initiatives. Investors are also directed to other 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.
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<PAGE> 25
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Pursuant to his employment agreement with the Company, Andrew P. Hines
purchased 20,000 shares of the Company's common stock. None of the
Company's common stock is registered under the Securities Act. Mr.
Hines paid $150,000 in cash for 8,333 of those shares and purchased
the remaining 11,667 shares with $210,000 borrowed from the Company
pursuant to the terms of a Promissory Note between the Company and Mr.
Hines. Mr. Hines has pledged his 20,000 shares to the Company to
secure his obligations under that Promissory Note.
On October 1, 1997, as a result of the change in control which
occurred September 11, 1997 from the purchase by Greenmarine
Acquisition Corp. of in excess of 90% of the Company's outstanding
common stock, the Company offered to purchase for cash, upon the terms
and conditions set forth in the offer to purchase, any and all of the
outstanding 7% Convertible Subordinated Debentures due 2002 of the
Company that were properly tendered on or before November 12, 1997.
The purchase price for each debenture was 100% of the outstanding
principal amount of such debenture plus any accrued and unpaid
interest thereon up to and including the date of purchase.
Section 1209 of the Indenture dated as of June 22, 1992 between the
Company and LaSalle National Bank, as Trustee, provides that each
holder of a debenture, upon the occurrence of an event such as the
merger which took place September 30, 1997 between the Company and
Greenmarine, will have the right at such holder's option to convert
all or any portion of such holder's debentures during the period such
debenture is convertible into the same kind and amount of securities,
cash or other property receivable upon the occurrence of an event such
as the merger by a holder of the number of shares of common stock into
which such debentures might have been converted immediately prior to
the occurrence of such event. Accordingly, as a result of the
consummation of the merger, debentures which were not put to the
Company by the November 12, 1997 purchase date are now convertible at
the conversion price, which was $22.25 per share, into the merger
consideration of $18.00 per share into which the debentures would have
been convertible had the debentures been converted into common stock
immediately prior to the effective date of the merger. All debentures
which remain outstanding after the November 12, 1997 purchase date
continue to be obligations of the Company and will continue to be
convertible at the option of the holder thereof solely into the merger
consideration. Holders of debentures choosing to convert their
debentures into the merger consideration must comply with Section 1202
of the Indenture, including the requirements that they deliver a
Conversion Notice (as defined in the Indenture) to the Company.
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<PAGE> 26
Item 6. Exhibits and Report on Form 8-K.
(a) Exhibits reference is made to the Exhibit Index on Page 27.
(b) Reports on Form 8-K. The Registrant did not file any reports on
Form 8-K for the fiscal quarter ended June 30, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
OUTBOARD MARINE CORPORATION
Signature Title Date
_____________________ _______________________ __________________
By /s/ Andrew P. Hines Executive Vice President & August 14, 1998
Chief Financial Officer
_______________________ _______________________ __________________
ANDREW P. HINES
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<PAGE> 27
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 3(A) to the Registrant's Annual Report on
Form 10-K/A for the fiscal year ended September 30, 1997, which is
incorporated herein by reference.
(B) With respect to the Registrant's By-Laws, as amended and restated
October 1, 1997, reference is made to Exhibit 3(B) to the Registrant's
Annual Report on Form 10-K/A for the fiscal year ended September 30,
1997, which is incorporated herein by reference.
Exhibit 4: Instruments defining the rights of security holders
including indentures:
(A) With respect to the Agreement of Outboard Marine Corporation 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 and with respect to the
Supplemental Indenture dated September 30, 1997 reference is made to
Exhibit 4(C) to the Registrant's Annual Report on Form 10-K/A for the
fiscal year ended September 30, 1997, which is incorporated herein by
reference.
(D)With respect to the Registrant's 10-3/4% Senior Notes due 2008,
reference is made to Exhibit 4(D) attached hereto and incorporated
herewith.
Exhibit 10: Material contracts:
(A) With respect to Severance Agreements between the Registrant and
certain elected and appointed officers and certain other executives of
the Registrant, reference is made to Exhibits 99.3 and 99.4 of the
Registrant's Schedule 14D-9 filed with the Securities and Exchange
Commission on July 15, 1997, which is incorporated herein by
reference.
(B) With respect to the Consulting Agreement for Mr. Bowman dated
September 24, 1997, reference is made to Exhibit 10(I) to the
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Registrant's Annual Report on Form 10-K/A for the fiscal year ended
September 30, 1997, which is incorporated herein by reference.
(C) With respect to the Employment Agreement of Mr. Hines dated
October 6,1997, reference is made to Exhibit 10(J) to the Registrant's
Annual Report on Form 10-K/A for the fiscal year ended September 30,
1997, which is incorporated herein by reference.
(D) With respect to the Credit Agreement between the Registrant and
American Annuity Group and Great American Insurance Company dated
August 13, 1997, reference is made to Exhibit (b)(2) of the Schedule
14D-1, Amendment No. 1, filed by Greenmarine Acquisition Corp. with
the Securities and Exchange Commission September 12, 1997, which is
incorporated hereby reference and with respect to the First Amendment
to Credit Agreement dated September 10, 1997, Second Amendment to
Credit Agreement dated September 12, 1997 and Third Amendment to
Credit Agreement dated November 10, 1997 reference is made to Exhibit
10(L) to the Registrant's Annual Report on Form 10-K/A for the fiscal
year ended September 30, 1997, which is incorporated herein by
reference.
(E) With respect to the Amended and Restated Loan and Security
Agreement between the Registrant and NationsBank of Texas, N.A. dated
January 6, 1998, reference is made to Exhibit 10(E) to the
Registrant's Annual Report on Form 10-Q for the quarterly period ended
December 31, 1997, which is incorporated herein by reference.
(F) With respect to the Employment Agreement of Mr. Jones dated March
10,1998, reference is made to Exhibit 10(F) of the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998,
which is incorporated herein by reference.
(G) With respect to the Personal Rewards and Opportunity Program,
reference is made to Exhibit 10(G) of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998, which is
incorporated herein by reference.
(H) With respect to the form of Employment Agreement between the
Registrant and Kimberly K. Bors, Paul R. Rabe, Robert S. Romano and
certain other executives of the Registrant, reference is made to
Exhibit 10(H) attached hereto.
(I) With respect to the form of Employment Agreement between the
Registrant and certain executives, reference is made to Exhibits
10(I)1 and 2 attached hereto.
(J) With respect to the First Amendment to the Amended and Restated Loan
and Security Agreement between the Registrant and NationsBank of Texas, N.A.
dated May 21, 1998, reference is made to Exhibit 10.5 to the Registrant's
Form S-4 filed with the Securities and Exchange Commission on June 29,
1998 which is incorporated herein.
Exhibit 11: Statements regarding computation of per share earnings.
A statement regarding the computation of per share earnings is
attached hereto as Exhibit 11.
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Exhibit 19: Report furnished to security holders:
Not applicable.
Exhibit 27: Financial data schedule:
This information is filed only in the electronic filing.
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Exhibit 4(D)
EXECUTION COPY
================================================================================
------------------------
OUTBOARD MARINE CORPORATION
AND
SUBSIDIARY GUARANTORS
SERIES A AND SERIES B
10 3/4% SENIOR NOTES DUE 2008
INDENTURE
------------------------
Dated as of May 27, 1998
------------------------
STATE STREET BANK AND TRUST COMPANY
Trustee
------------------------
================================================================================
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CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1).............................................................7.10
(a)(2).............................................................7.10
(a)(3).............................................................N.A.
(a)(4).............................................................N.A.
(a)(5).............................................................7.10
(i)(b).............................................................7.10
(ii)(c)............................................................N.A.
311(a)................................................................7.11
(b)................................................................7.11
(iii)(c)...........................................................N.A.
312(a)................................................................2.05
(b)................................................................12.03
(iv)(c)............................................................12.03
313(a)................................................................7.06
(b)(1).............................................................10.03
(b)(2).............................................................7.07
(v)(c).............................................................7.06;
12.02
(vi)(d)............................................................7.06
314(a)................................................................4.03;
12.02
(A)(b).............................................................10.02.
(c)(1).............................................................12.04
(c)(2).............................................................12.04
(c)(3).............................................................N.A.
(d)................................................................10.03;
10.04;
10.05
(vii)(e)...........................................................12.05
(f)................................................................N.A.
315(a)................................................................7.01
(b)................................................................7.05;
12.02
(A)(c).............................................................7.01
(d)................................................................7.01
(e)................................................................6.11
316(a)(last sentence).................................................2.09
(a)(1)(A)..........................................................6.05
(a)(1)(B)..........................................................6.04
(a)(2).............................................................N.A.
(b)................................................................6.07
(B)(c).............................................................2.12
317(a)(1).............................................................6.08
(a)(2).............................................................6.09
(b)................................................................2.04
318(a)................................................................12.01
(b)................................................................N.A.
(c)................................................................12.01
N.A. means not applicable
*This Cross-Reference Table is not part of the Indenture.
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TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.....................
Section 1.01. Definitions................................................
Section 1.02. Other Definitions..........................................
Section 1.03. Incorporation by Reference of Trust Indenture Act..........
Section 1.04. Rules of Construction......................................
ARTICLE 2. THE NOTES......................................................
Section 2.01. Form and Dating............................................
Section 2.02. Execution and Authentication...............................
Section 2.03. Registrar and Paying Agent.................................
Section 2.04. Paying Agent to Hold Money in Trust........................
Section 2.05. Holder Lists...............................................
Section 2.06. Transfer and Exchange......................................
Section 2.07. Replacement Notes..........................................
Section 2.08. Outstanding Notes..........................................
Section 2.09. Treasury Notes.............................................
Section 2.10. Temporary Notes............................................
Section 2.11. Cancellation...............................................
Section 2.12. Defaulted Interest.........................................
ARTICLE 3. REDEMPTION AND PREPAYMENT......................................
Section 3.01. Notices to Trustee.........................................
Section 3.02. Selection of Notes to Be Redeemed..........................
Section 3.03. Notice of Redemption.......................................
Section 3.04. Effect of Notice of Redemption.............................
Section 3.05. Deposit of Redemption Price................................
Section 3.06. Notes Redeemed in Part.....................................
Section 3.07. Optional Redemption........................................
Section 3.08. Mandatory Redemption.......................................
Section 3.09. Offer to Purchase by Application of Excess Proceeds........
ARTICLE 4. COVENANTS......................................................
Section 4.01. Payment of Notes...........................................
Section 4.02. Maintenance of Office or Agency............................
Section 4.03. Reports....................................................
Section 4.04. Compliance Certificate.....................................
Section 4.05. Taxes......................................................
Section 4.06. Stay, Extension and Usury Laws.............................
Section 4.07. Restricted Payments........................................
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries...............................................
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock......................................................
Section 4.10. Asset Sales................................................
Section 4.11. Transactions with Affiliates...............................
Section 4.12. Liens......................................................
Section 4.13. Business Activities........................................
Section 4.14. Corporate Existence........................................
Section 4.15. Offer to Repurchase Upon Change of Control.................
Section 4.16. Limitation on Sale and Leaseback Transactions..............
Section 4.17. Additional Subsidiary Guarantees...........................
Section 4.18. Use of Proceeds............................................
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ARTICLE 5. SUCCESSORS.....................................................
Section 5.01. Merger, Consolidation, or Sale of Assets...................
Section 5.02. Successor Corporation Substituted..........................
ARTICLE 6. DEFAULTS AND REMEDIES..........................................
Section 6.01. Events of Default..........................................
Section 6.02. Acceleration...............................................
Section 6.03. Other Remedies.............................................
Section 6.04. Waiver of Past Defaults....................................
Section 6.05. Control by Majority........................................
Section 6.06. Limitation on Suits........................................
Section 6.07. Rights of Holders of Notes to Receive Payment..............
Section 6.08. Collection Suit by Trustee.................................
Section 6.09. Trustee May File Proofs of Claim...........................
Section 6.10. Priorities.................................................
Section 6.11. Undertaking for Costs......................................
ARTICLE 7. TRUSTEE........................................................
Section 7.01. Duties of Trustee..........................................
Section 7.02. Rights of Trustee..........................................
Section 7.03. Individual Rights of Trustee...............................
Section 7.04. Trustee's Disclaimer.......................................
Section 7.05. Notice of Defaults.........................................
Section 7.06. Reports by Trustee to Holders of the Notes.................
Section 7.07. Compensation and Indemnity.................................
Section 7.08. Replacement of Trustee.....................................
Section 7.09. Successor Trustee by Merger, etc...........................
Section 7.10. Eligibility; Disqualification..............................
Section 7.11. Preferential Collection of Claims Against Company..........
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.......................
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance...
Section 8.02. Legal Defeasance and Discharge.............................
Section 8.03. Covenant Defeasance........................................
Section 8.04. Conditions to Legal or Covenant Defeasance.................
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions......................
Section 8.06. Repayment to Company.......................................
Section 8.07. Reinstatement..............................................
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER...............................
Section 9.01. Without Consent of Holders of Notes........................
Section 9.02. With Consent of Holders of Notes...........................
Section 9.03. Compliance with Trust Indenture Act........................
Section 9.04. Revocation and Effect of Consents..........................
Section 9.05. Notation on or Exchange of Notes...........................
Section 9.06. Trustee to Sign Amendments, etc............................
ARTICLE 10. COLLATERAL AND SECURITY.......................................
Section 10.01. Depositary Agreement......................................
Section 10.02. Recording and Opinions....................................
Section 10.03. Release of Collateral.....................................
Section 10.04. Certificates of the Company...............................
Section 10.05. Certificates of the Trustee...............................
Section 10.06 Authorization of Actions to be Taken by the Trustee under
the Depositary Agreement..................................
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Section 10.07. Authorization of receipt of funds by the trustee under the
Depositary Agreement......................................
Section 10.08. Termination of security interest..........................
ARTICLE 11 SUBSIDIARY GUARANTEES...........................................
Section 11.01. Subsidiary Guarantees.....................................
Section 11.02. Limitation on subsidiary Guarantor Liability..............
Section 11.03. Execution and Delivery of Subsidiary Guarantees...........
Section 11.04. Subsidiary Guarantors May Consolidate, etc., on Certain
Terms.....................................................
Section 11.05. Releases Following Designation As an Unrestricted
Subsidiary or Sale of Assets..............................
ARTICLE 12. MISCELLANEOUS..................................................
Section 12.01. Trust Indenture Act Controls..............................
Section 12.02. Notices...................................................
Section 12.03. Communication by Holders of Notes with Other Holders of
Notes.....................................................
Section 12.04. Certificate and Opinion as to Conditions Precedent........
Section 12.05. Statements Required in Certificate or Opinion.............
Section 12.06. Rules by Trustee and Agents...............................
Section 12.07. No Personal Liability of Directors, Officers, Employees
and Stockholders..........................................
Section 12.08. Governing Law.............................................
Section 12.09. No Adverse Interpretation of Other Agreements.............
Section 12.10. Successors................................................
Section 12.11. Severability..............................................
Section 12.12. Counterpart Originals.....................................
Section 12.13. Table of Contents, Headings, etc..........................
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EXHIBITS
Exhibit A FORM OF GLOBAL NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
Exhibit E FORM OF NOTATION OF SUBSIDIARY GUARANTEES
Exhibit F FORM OF NOTICE OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY
SUBSEQUENT GUARANTORS
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<PAGE> 36
INDENTURE dated as of May 27, 1998 among Outboard Marine
Corporation, a Delaware corporation (the "Company"), each of OMC Aluminum Boat
Group, Inc., a Delaware corporation, OMC Fishing Boat Group, Inc., a Delaware
corporation, OMC Recreational Boat Group, Inc., a Delaware corporation, OMC
Latin America/Caribbean, Inc. and Recreational Boat Group Limited Partnership, a
Delaware limited partnership, as guarantors (each a "Subsidiary Guarantor") and
State Street Bank and Trust Company, as trustee (the "Trustee").
The Company, the Subsidiary Guarantors and the Trustee agree as
follows for the benefit of one other and for the equal and ratable benefit of
the Holders of the Company's 10 3/4% Series A Senior Notes due 2008 (the "Series
A Notes") and the 10 3/4% Series B Senior Notes due 2008 (the "Series B Notes"
and, together with the Series A Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means a global note in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"Asset Sale" means (i) the sale, lease, conveyance, transfer or
other disposition of any assets or rights (including, without limitation, by way
of a sale and leaseback) of the Company or any of its Restricted Subsidiaries
other than sales (or resales) of inventory in the ordinary course of business
consistent with past practices (provided that the sale, lease, conveyance or
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other disposition of all or substantially all of the assets of the Company and
its Restricted Subsidiaries taken as a whole shall be governed by Sections 4.15
and/or 5.1 hereof and not by Section 4.10 hereof), and (ii) the issue or sale by
the Company or any of its Restricted Subsidiaries of Equity Interests of any of
the Company's Restricted Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a fair market value in excess of $2.0 million or (b) for Net Proceeds in
excess of $2.0 million. Notwithstanding the foregoing, the following items
shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company
to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to
another Restricted Subsidiary; (ii) an issuance of Equity Interests by a
Wholly-Owned Restricted Subsidiary to the Company or to another Wholly-Owned
Restricted Subsidiary; (iii) a Restricted Payment that is permitted by Section
4.07 hereof; (iv) any sale of Equity Interests of the Company; (v) any surrender
or waiver of contract rights or the settlement, release or surrender of
contract, tort or other claims of any kind, in each case in the ordinary course
of business; (vi) any grant of any license of patents, trademarks, trade names,
registrations therefor or similar intellectual property, in the ordinary course
of business; (vii) any sale of the Company's facility in Juarez, Mexico in a
transaction which (a) satisfies the requirements of clauses (i) or (ii) of
Section 4.10 hereof (but substituting "50%" in lieu of "75%" in said clause
(ii)) and (b) is consummated no later than 18 months following the Issue Date
pursuant to a definitive agreement signed no later than one year subsequent to
the Issue Date; provided, that any cash Net Proceeds received therefrom shall be
deemed to be Net Proceeds from an Asset Sale for all purposes under this
Indenture; (viii) the sale and leaseback of any assets within 90 days of the
acquisition of such assets; (ix) any disposition of Cash Equivalents in the
ordinary course of business; (x) sales of accounts receivable, or participation
therein, in connection with any Receivables Facility and (xi) sales of damaged,
fully-depreciated or obsolete equipment or assets that, in the Company's
reasonable judgment, are no longer used or useful in the business of the Company
or its Restricted Subsidiaries.
"Attributable Debt" in respect of a sale and leaseback transaction,
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Borrowing Base" means, as of any date, an amount equal to the sum
of (a) 75% of the face amount of all accounts receivable owned by the Company
and its Restricted Subsidiaries as of such date that are not more than 60 days
past due, and (b) 50% of the book value of all inventory owned by the Company
and its Subsidiaries as of such date, all calculated on a consolidated basis and
in accordance with GAAP. To the extent that information is not available as to
the amount of accounts receivable or inventory as of a specific date, the
Company may utilize the most recent available information for purposes of
calculating the Borrowing Base.
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"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than 12 months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding 12 months and overnight bank deposits, in each case
with any lender party to the Credit Agreement or with any domestic commercial
bank having capital and surplus in excess of $500 million and a Thompson Bank
Watch Rating of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within six months after the date of
acquisition and (vi) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i) through (v) of
this definition.
"Cedel" means Cedel Bank, SA.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole to any "person" (as such is used in Section
13(d)(3) of the Exchange Act) other than a Permitted Holder or a Related Party
of a Permitted Holder; (ii) the adoption of a plan relating to the liquidation
or dissolution of the Company; (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above), other than the Permitted Holders and
their Related Parties, becomes the "beneficial owner" (as such term is defined
in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating
the beneficial ownership of any particular "person," such "person" shall be
deemed to have beneficial ownership of all securities that such person has the
right to acquire, whether such right is currently exercisable or is exercisable
only upon the occurrence of a subsequent condition), directly or indirectly, of
more than 50% of the Voting Stock of the Company or Holdings (measured by voting
power rather than number of shares); (iv) the first day on which a majority of
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<PAGE> 39
the members of the Board of Directors of the Company are not Continuing
Directors or (v) the Company or Holdings consolidates with, or merges into, any
Person, or sells, assigns, conveys, transfers, leases or otherwise disposes of
substantially all of its assets to any Person, or any Person consolidates with,
or merges into, the Company or Holdings, in any such event pursuant to a
transaction in which any of the outstanding Voting Stock of the Company or
Holdings is converted into or exchanged for cash, securities or other property,
other than any such transaction where the Voting Stock of the Company or
Holdings outstanding immediately prior to such transaction is converted into or
exchanged for Voting Stock (other than Disqualified Stock) of the surviving or
transferee Person constituting a majority of the outstanding shares of such
Voting Stock of such surviving or transferee Person (immediately after giving
effect to such issuance).
"Company" has the meaning assigned to it in the preamble to this
Indenture.
"Consolidated Capital Expenditures" means, for any period, an amount
equal to (i) the sum of (a) the aggregate of all expenditures (whether paid in
cash or other consideration or accrued as a liability and including that portion
of Capital Leases which is capitalized on the consolidated balance sheet of the
Company and its Restricted Subsidiaries) by the Company and its Restricted
Subsidiaries during that period that, in conformity with GAAP, are included in
"property, plant or equipment" or comparable items reflected in the consolidated
balance sheets of the Company and its Subsidiaries plus (b) to the extent not
covered by clause (i)(a) of this definition, the aggregate of all expenditures
by the Company and its Restricted Subsidiaries during that period to acquire (by
purchase or otherwise) the business, property or fixed assets (other than
current assets consisting of inventory or accounts receivable) of any Person, or
the stock or other evidence of beneficial ownership of any Person that, as a
result of such acquisition, becomes a Restricted Subsidiary of the Company minus
(ii) the sum of (a) the proceeds of Indebtedness permitted under clause (iv) of
the definition of Permitted Debt, (b) an amount equal to the proceeds received
by the Company or any of its Subsidiaries from a sale and leaseback transaction
permitted under Section 4.16 hereof so long as such transaction occurs within
180 days of the acquisition of the related property or equipment and to the
extent prior expenditures, up to an equivalent amount for the asset so sold and
leased back, constituted Consolidated Capital Expenditures in such period or in
any prior period and (c) expenditures in an amount not to exceed the proceeds of
insurance, condemnation awards (or payments in lieu thereof) or indemnity
payments received from third parties, so long as such expenditures were made for
purposes of replacing or repairing the assets in respect of which such proceeds,
awards or payments were received and so long as such expenditures are made not
later than 12 months after the occurrence of the damage to or loss of the assets
being replaced or repaired.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus, in each
case to the extent deducted in computing Consolidated Net Income (i) an amount
equal to any extraordinary loss recorded in such period, plus (ii) provision for
taxes based on income or profits of such Person and its Subsidiaries for such
period, plus (iii) consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
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<PAGE> 40
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect letter of credit or bankers' acceptance financings, and net payments (if
any) pursuant to Hedging Obligations), plus (iv) depreciation, amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period), plus
(v) any other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid expense that was paid in a prior
period) of such Person and its Subsidiaries for such period, minus, to the
extent included in the computation of Consolidated Net Income, any non-cash
items increasing such Consolidated Net Income for such period in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, the
interest expense of, and the depreciation and amortization and other non-cash
charges of, a Restricted Subsidiary of a Person shall be added to Consolidated
Net Income to compute Consolidated Cash Flow only to the extent (and in the same
proportion) that the Net Income of such Restricted Subsidiary was included in
calculating the Consolidated Net Income of such Person.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly-Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 12.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"Credit Agreement" means that certain Amended and Restated Loan and
Security Agreement, dated as of January 6, 1998, by and among the Company and
NationsBank, N.A., as amended, modified, increased, renewed, refunded, replaced
or refinanced from time to time.
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"Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Default" means any event that is, or with the passage of time or
the giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name
of the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Depositary Agent" means State Street Bank and Trust Company, in its
capacity as depositary agent.
"Depositary Agreement" means that certain Depositary Agreement,
dated as of the Issue Date, among the Company, the Trustee, the Depositary Agent
and NationsBank of Texas, N.A., as administrative agent.
"Designated Obligations" means the obligations of the Company with
respect to certain "Rabbi Trust" arrangements in existence on the Issue Date in
an aggregate amount not to exceed $14 million.
"Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to that date that is 91 days after the
date on which the Notes mature; provided, however, that any Capital Stock that
would constitute Disqualified Stock solely because the holders thereof have the
right to require the Company to repurchase such Capital Stock upon the
occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 4.07 hereof.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means an offering of common stock (other than
Disqualified Stock) of the Company pursuant to an effective registration
statement filed with the SEC pursuant to the Securities Act, other than an
offering pursuant to Form S-8 (or any successor thereto).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Indebtedness" means up to $104.1 million in aggregate
principal amount of Indebtedness of the Company and its Restricted Subsidiaries
(other than letters of credit and Indebtedness under the Credit Agreement) in
existence on the Issue Date, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of (i) consolidated interest expense of such
Person and its Restricted Subsidiaries for such period whether paid or accrued
(including, without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments associated
with Capital Lease Obligations, imputed interest with respect to Attributable
Debt, commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, and net payments (if any)
pursuant to Hedging Obligations) and (ii) the consolidated interest of such
Person and its Restricted Subsidiaries that was capitalized during such period,
(iii) any interest expense on Indebtedness of another Person that is Guaranteed
by such Person or one of its Restricted Subsidiaries or secured by a Lien on
assets of such Person or one of its Restricted Subsidiaries (whether or not such
Guarantee or Lien is called upon) and (iv) the product of (a) all dividend
payments, whether or not in cash, on any series of preferred stock of such
person or any of its Restricted Subsidiaries, other than dividend payments on
Equity Interests payable solely in Equity Interests of the Company (other than
Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company,
multiplied by (b) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means, with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the referent
Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues or
redeems preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but on or prior to the date
on which the event for which the calculation of the Fixed Charge Coverage Ratio
is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred and the proceeds thereof applied at the beginning of
the applicable four-quarter reference period. In addition, for purposes of
making the computation referred to above, (i) acquisitions, that have been made
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by the Company or any of its Restricted Subsidiaries, including through mergers
or consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"Foreign Credit Facilities" means, with respect to the Company's
Foreign Subsidiaries, one or more debt facilities or other debt securities or
commercial paper facilities with banks or other institutional lenders providing
for overdraft, revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit to which one or more Foreign Subsidiaries is a party, in each case, as
amended, restated, modified, increased, renewed, refunded, replaced or
refinanced in whole or in part from time to time.
"Foreign Subsidiary" means any Subsidiary of the Company, more than
80% of the sales, earnings or assets (determined on a consolidated basis) of
which are located or derived from operations outside the United States.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
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"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate or currency swap agreements,
cap agreements and collar agreements and (ii) other agreements or arrangements
(including foreign exchange or commodity hedge, exchange, purchase or similar
agreements) designed to protect such Person against fluctuations in interest
rates, value of assets owned, financed or sold, value of raw materials
purchased, or of liabilities incurred or assumed or of pre-funding arrangements,
or against fluctuations in foreign currency exchange rates or commodity prices,
in any case, in the ordinary course of business of such Person and not for
speculative purposes.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means Greenmarine Holdings, L.L.C., a Delaware limited
liability company.
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or bankers' acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person; provided, however, that
Indebtedness shall not include the obligations of the Company in respect of
"floor plan financing" or similar arrangements entered into in the ordinary
course of business for the benefit of dealers in connection with the sale of the
Company's products. The amount of any Indebtedness outstanding as of any date
shall be (i) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount and (ii) the principal amount thereof, together
with any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the form of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances (excluding commission, travel, relocation and similar advances to
officers and employees made in the ordinary course of business) or capital
contributions, purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together with all other
items that are or would be classified as investments on a balance sheet prepared
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in accordance with GAAP. If the Company or any Subsidiary of the Company sells
or otherwise disposes of any Equity Interests of any direct or indirect
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such Person is no longer a Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of Section 4.07 hereof.
"Issue Date" means the first date on which any Notes are issued
under this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, or the city in which the principal
corporate trust office of the Trustee is located or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gains or losses, together with any related provision for taxes on such gains or
losses, realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary gain (but not loss),
together with any related provision for taxes on such extraordinary gain (but
not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
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<PAGE> 46
repay Indebtedness secured by such assets (other than pursuant to the Credit
Agreement), and any reserve for adjustment in respect of the sale price of, or
warranties and indemnities made with respect to, such asset or assets
established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise) or (c) constitutes the lender; (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity and (iii) as to which the lenders have been notified in
writing (including in any written agreement) that they will not have any
recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Notes Collateral" has the meaning assigned to it in the Depositary
Agreement.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary, the Assistant Secretary or any Vice-President of such
Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Sections 12.04 and 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Sections
12.04 and 12.05 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
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"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Permitted Business" means any of the businesses engaged in by the
Company and its Restricted Subsidiaries on the date of this Indenture, and any
similar, complementary or related business with respect to any such businesses,
including, without limitation, any business related to the development or
application of the Company's FICHT technology as described in the Offering
Memorandum dated May 21, 1998 relating to the Notes.
"Permitted Holders" means, collectively, (i) Holdings and its
Affiliates, and their respective managers, members, employees and directors,
(ii) Greenlake Holdings LLC and its Affiliates, and their respective managers,
members and directors, (iii) Quasar Strategic Partners LDC and its Affiliates,
and their respective managers, members, partners, employees and directors, (iv)
Quantum Industrial Partners LDC and its Affiliates, and their respective
managers, members, partners, employees and directors, (v) Quasar Industrial Fund
N.V. and its Affiliates, and their respective managers, members, partners,
employees and directors, (vi) Quantum Industrial Holdings Ltd. and its
Affiliates, and their respective managers, members, partners, employees and
directors, and (vii) with respect to any natural persons described in the
foregoing clauses (i) through (vi), (A) any spouse, lineal descendent (including
by adoption and stepchildren), or sibling of such natural persons and (B) any
trust, corporation, limited liability company or partnership, the beneficiaries,
stockholders or partners of which consist entirely of natural persons or the
individuals described in subclause (A) above.
"Permitted Investments" means (i) any Investment in the Company or
in a Wholly-Owned Restricted Subsidiary of the Company that is engaged in a
Permitted Business; (ii) any Investment in Cash Equivalents; (iii) any
Investment by the Company or any Restricted Subsidiary of the Company in a
Person, if as a result of such Investment (a) such Person becomes a Wholly-Owned
Restricted Subsidiary of the Company that is engaged in a Permitted Business or
(b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Wholly-Owned Restricted Subsidiary of the Company that is
engaged in a Permitted Business; (iv) any Investment made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with Section 4.10 hereof; (v) any acquisition of assets solely
in exchange for the issuance of Equity Interests (other than Disqualified Stock)
of the Company; (vi) any Investment in residential real estate obtained in
connection with employment or relocation agreements entered into in the ordinary
course of business; provided that the aggregate amount of such Investments does
not exceed $1.5 million at any time outstanding; (vii) stock, obligations or
securities received in settlement of debts created in the ordinary course of
business and owing to the Company or any Subsidiary or in satisfaction of
judgments or pursuant to any plan of reorganization or similar arrangement upon
the bankruptcy or insolvency of the Company's or any of its Subsidiaries' trade
creditors or customers.
"Permitted Liens" means (i) Liens on assets securing Indebtedness
and other Obligations under the Credit Agreement, to the extent that the assets
securing such Indebtedness are of the same general type of assets as those
securing the Indebtedness and other Obligations under the Credit Agreement on
the Issue Date (including any such assets of Foreign Subsidiaries); (ii) Liens
in favor of the Company; (iii) Liens on property of a Person existing at the
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time such Person is merged with or into or consolidated with the Company or any
Restricted Subsidiary of the Company; provided, that such Liens were in
existence prior to the contemplation of such merger or consolidation and do not
extend to any other assets other than those of the Person merged into or
consolidated with the Company; (iv) Liens on property existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary of the Company;
provided that such Liens were not incurred in contemplation of such acquisition;
(v) Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vi) Liens existing on the date of this Indenture;
(vii) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings and which are not being foreclosed, provided that any reserve or
other appropriate provision as shall be required in conformity with GAAP shall
have been made therefor; (viii) Liens to secure Indebtedness (including Capital
Lease Obligations) permitted by clause (iv) of the second paragraph of Section
4.09 hereof, which Liens attach only to the assets acquired with such
Indebtedness; (ix) Liens arising from filing Uniform Commercial Code financing
statements regarding leases; (x) Purchase Money Liens (including extensions and
renewals thereof); (xi) Liens securing Indebtedness under Hedging Obligations;
(xii) Liens securing obligations of the Company or any of its Restricted
Subsidiaries under any "floor-plan" financing arrangement; (xiii) statutory
Liens of landlords and carriers', warehousemen's, mechanics', suppliers',
materialmen's, repairmen's, or other like Liens arising in the ordinary course
of business and with respect to amounts not yet delinquent or being contested in
good faith by appropriate proceedings, if a reserve or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made therefor; and (xiv) Liens incurred in the ordinary course of business of
the Company or any Restricted Subsidiary of the Company and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the Company or
such Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness
(including prepayment fees and premiums) of the Company or any of its Restricted
Subsidiaries issued in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund other Indebtedness of the
Company or any of its Restricted Subsidiaries (other than intercompany
Indebtedness); provided that: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount of (or accreted value, if applicable), plus accrued interest
on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred in connection
therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of the Notes as those contained in
the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded and (iv) such Indebtedness is incurred
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<PAGE> 49
either by the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company, or other business entity or government or agency or
political subdivision thereof (including any subdivision or ongoing business of
any such entity or substantially all of the assets of any such entity,
subdivision or business).
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Purchase Money Obligations" of any Person means any obligations of
such Person to any seller or any other Person incurred or assumed to finance the
purchase, or the cost of construction or improvement, or real or personal
property to be used in the business of such person or any of its Restricted
Subsidiaries in an amount that is not more than 100% of the cost, or fair market
value, as appropriate, of such property, and incurred within 180 days after the
date of such acquisition (excluding amounts payable to trade creditors incurred
in the ordinary course of business).
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Issue Date, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 or Rule 904 of Regulation S.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend and the Global Note Legend.
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"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Receivables Facility" means one or more receivables financing
facilities, as amended from time to time, pursuant to which the Company and/or
any of its Restricted Subsidiaries sells its accounts receivable to a Person
that is not a Restricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation
a majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is, at the date of determination, directly or
indirectly, owned by such Person (a "subsidiary"), by one or more subsidiaries
of such Person or by such Person and one or more subsidiaries of such Person or
(ii) a partnership in which such Person or a subsidiary of such Person is, at
the date of determination, a general partner of such partnership, or (iii) any
partnership, limited liability company or other Person in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination, has (x) at least a
majority ownership interest or (y) the power to elect or appoint or direct the
election or appointment of the managing partner or member of such Person or, if
applicable, a majority of the directors or other governing body of such Person.
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"Subsidiary Guarantee" means the Subsidiary Guarantee by each
Subsidiary Guarantor of the Company's payment obligations under this Indenture
and the Notes, executed pursuant to the provisions of this Indenture.
"Subsidiary Guarantor" means each of (i) the Company's direct or
indirect Restricted Subsidiaries that are Significant Subsidiaries (other than
Foreign Subsidiaries) on the date of this Indenture and (ii) any other
subsidiary that executes a Subsidiary Guarantee in accordance with the
provisions of this Indenture, and their respective successors and assigns.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note in the form
of Exhibit A attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
that is designated by the Board of Directors as an Unrestricted Subsidiary
pursuant to a Board resolution; but only to the extent that such Subsidiary: (a)
has no Indebtedness other than Non-Recourse Debt; (b) is not party to any
agreement, contract, arrangement or understanding with the Company or any
Restricted Subsidiary of the Company unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to the Company or
such Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (c) is a Person with respect to
which neither the Company nor any of its Restricted Subsidiaries has any direct
or indirect obligation (x) to subscribe for additional Equity Interests or (y)
to maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results; (d) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Restricted Subsidiaries; and (e) has
at least one director on its board of directors that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the Board Resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
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incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such covenant). The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma
basis as if such designation had occurred at the beginning of the four-quarter
reference period, and (ii) no Default or Event of Default would be in existence
following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under
the Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly-Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly-Owned
Restricted Subsidiaries of such Person and one or more Wholly-Owned Restricted
Subsidiaries of such Person.
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SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction"..................................4.11
"Asset Sale Offer".......................................3.09
"Authentication Order"...................................2.02
"Change of Control Offer"................................4.15
"Change of Control Payment"..............................4.15
"Change of Control Payment Date" ........................4.15
"Covenant Defeasance"....................................8.03
"DTC"....................................................2.03
"Event of Default".......................................6.01
"Excess Proceeds"........................................4.10
"incur"..................................................4.09
"Legal Defeasance" ......................................8.02
"Offer Amount"...........................................3.09
"Offer Period"...........................................3.09
"Paying Agent"...........................................2.03
"Payment Default"........................................6.01
"Permitted Debt".........................................4.09
"Purchase Date"..........................................3.09
"Registrar"..............................................2.03
"Restricted Payments"....................................4.07
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the Notes and the Subsidiary Guarantees means the
Company and the Subsidiary Guarantors, respectively, and any successor obligor
upon the Notes and the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
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SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and transactions;
and
(6) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement or successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company, the
Subsidiary Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Note conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
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(c) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two duly authorized Officers shall sign the Notes for the Company by
manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global Notes.
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SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b),(c) or (f) hereof.
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(b) Transfer and Exchange of Beneficial Interests in Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period, transfers of
beneficial interests in the Regulation S Global Note may not be made to a
U.S. Person or for the account or benefit of a U.S. Person (other than an
Initial Purchaser). Beneficial interests in any Unrestricted Global Note
may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect
the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above, the
transferor of such beneficial interest must deliver to the Registrar
either (A) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in another Global Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase or (B)
(1) a written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2)
instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Note shall
be registered to effect the transfer or exchange referred to in (1) above.
Upon consummation of an Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall
be deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal delivered by the
Holder of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
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beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted Global
Note. A beneficial interest in any Restricted Global Note may be exchanged
by any holder thereof for a beneficial interest in an Unrestricted Global
Note or transferred to a Person who takes delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and
the holder of the beneficial interest to be transferred, in the case of
an exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a beneficial interest in an Unrestricted Global Note, a certificate
from such holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest to
a Person who shall take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof; and, in each such case set forth in this
subparagraph (D), if the Registrar so requests or if the Applicable
Procedures so require, an Opinion of Counsel in form reasonably
acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the
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Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests in Global Notes for
Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Restricted Definitive
Note, then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Restricted Definitive Note, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed
in subparagraphs (B) through (D) above, a certificate to the effect set
forth in Exhibit B hereto, including the certifications, certificates
and Opinion of Counsel required by item (3) thereof, if applicable;
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(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c) shall be registered in
such name or names and in such authorized denomination or denominations
as the holder of such beneficial interest shall instruct the Registrar
through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes
to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear
the Private Placement Legend and shall be subject to all restrictions
on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and
the holder of such beneficial interest, in the case of an exchange, or
the transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Definitive Note that does not bear the Private Placement Legend,
a certificate from such holder in the form of Exhibit C hereto,
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including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest to
a Person who shall take delivery thereof in the form of a Definitive
Note that does not bear the Private Placement Legend, a certificate
from such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Notes are so registered. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Notes to a Person
who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
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(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities Act other
than those listed in subparagraphs (B) through (D) above, a certificate to
the effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such Restricted Definitive Note is being
transferred to the Company or any of its Subsidiaries, a certificate to
the effect set forth in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note and in the case of clause (C) above, the
Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the case
of a transfer, certifies in the applicable Letter of Transmittal that it
is not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
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(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes
proposes to exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes
proposes to transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Unrestricted Definitive
Note and increase or cause to be increased the aggregate principal amount
of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
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(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and registered
in the name of Persons who take delivery thereof in the form of a
Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A
under the Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act, then
the transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel required
by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person or
Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the case
of a transfer, certifies in the applicable Letter of Transmittal that it
is not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive
Notes proposes to exchange such Notes for an Unrestricted Definitive Note,
a certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive
Notes proposes to transfer such Notes to a Person who shall take delivery
thereof in the form of an Unrestricted Definitive Note, a certificate from
such Holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;
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and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably acceptable
to the Company to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant to
the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in substantially
the following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) (A "QIB"), (B) IT HAS ACQUIRED THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT)
(AN "IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON
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WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE)
AND , IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
(c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) of this Section 2.06
(and all Notes issued in exchange therefor or substitution thereof) shall
not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND
(IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH
THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
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in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive Note
for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05
hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and ending at
the close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in part
or (c) to register the transfer of or to exchange a Note between a record
date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the absolute
owner of such Note for the purpose of receiving payment of principal of
and interest on such Notes and for all other purposes, and none of the
Trustee, any Agent or the Company shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this Section
2.06 to effect a registration of transfer or exchange may be submitted by
facsimile.
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SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
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the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption will be made by the Trustee in compliance with
the requirements of the principal national securities exchange, if any, on which
the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
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that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note. Notes called
for redemption become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on Notes or portions of them called
for redemption.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest and Liquidated Damages, if any, on Notes called for redemption cease to
accrue on and after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
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At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
On or before 10:30am (New York City time) on each redemption date,
the Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of and accrued interest on all Notes to
be redeemed on that date. The Trustee or the Paying Agent shall promptly return
to the Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the amounts necessary to pay the redemption price of, and
accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest and Liquidated Damages, if
any, shall cease to accrue on the Notes or the portions of Notes called for
redemption. If a Note is redeemed on or after an interest record date but on or
prior to the related interest payment date, then any accrued and unpaid interest
shall be paid to the Person in whose name such Note was registered at the close
of business on such record date. If any Note called for redemption shall not be
so paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest shall be paid on the unpaid
principal and Liquidated Damages, if any, from the redemption date until such
principal is paid, and to the extent lawful on any interest not paid on such
unpaid principal, in each case at the rate provided in the Notes and in Section
4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to June 1, 2003. Thereafter, the Company shall have the option at any time
to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the applicable redemption date, if redeemed during the
twelve-month period beginning on June 1 of the years indicated below:
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<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003.............................................105.375%
2004.............................................103.583%
2005.............................................101.792%
2006 and thereafter..............................100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, at
any time prior to June 1, 2001, the Company may redeem up to an aggregate of 35%
of the original aggregate principal amount of the Notes at a redemption price of
110.750% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the redemption date, with the net cash
proceeds of one or more Equity Offerings; provided that at least 65% of the
aggregate principal amount of Notes originally issued remain outstanding
immediately after the occurrence of such redemption; and provided, further that
any such redemption shall occur within 60 days of the date of the closing of any
such offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the Company
shall not be required to make mandatory redemption payments with respect to the
Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company
shall be required to commence an offer to all Holders to purchase Notes (an
"Asset Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders, with
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a copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest and Liquidated Damages, if any, after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
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the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that describes the
financial condition and results of operations of the Company and its
consolidated Subsidiaries (showing in reasonable detail, either on the face of
the financial statements or in the footnotes thereto and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
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the Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants, and (ii) all current reports that would be required to be filed
with the SEC on Form 8-K if the Company were required to file such reports, in
each case within 15 days after the time periods specified for such filings in
the SEC's rules and regulations. In addition, whether or not required by the
rules and regulations of the SEC, the Company will file a copy of all such
information and reports with the SEC for public availability within the time
periods specified in the SEC's rules and regulations (unless the SEC will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. In addition, at all times that the SEC
does not accept the filings provided for in the preceding sentence, the Company
and the Subsidiary Guarantors shall, for so long as any Notes remain
outstanding, furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company and each Subsidiary Guarantor (to the extent that such
Subsidiary Guarantor is so required under the TIA) shall deliver to the Trustee,
within 90 days after the end of each fiscal year, an Officers' Certificate
stating that a review of the activities of the Company and its Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture and the
Depositary Agreement, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and the Depositary Agreement and is not in default in the performance
or observance of any of the terms, provisions and conditions of this Indenture
or the Depositary Agreement (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action the Company is taking or proposes to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Company is taking
or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation. In the
event that such written statement of the Company's independent public
accountants cannot be obtained, the Company shall deliver an Officer's
Certificate certifying that it has used its best efforts to obtain such
statements and was unable to do so.
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(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
and with respect to which appropriate reserves have been taken in accordance
with GAAP.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each of the Subsidiary Guarantors covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Indenture;
and the Company and each of the Subsidiary Guarantors (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company or
any of its Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or to the Company or a
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including, without limitation, in connection with
any merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company; (iii) make any payment
on or with respect to, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness that is subordinated in right of payment to
the Notes, except a payment of interest or principal at Stated Maturity; or (iv)
make any Restricted Investment (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
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the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the Issue Date (excluding Restricted Payments permitted by clauses (ii),
(iii) and (iv) of the next succeeding paragraph), is less
than the sum, without duplication, of (i) 50% of the Consolidated Net Income of
the Company for the period (taken as one accounting period) from the beginning
of the first fiscal quarter commencing after the Issue Date to the end of the
Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds received by the
Company since the Issue Date as a contribution to its common equity capital or
from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale of Disqualified Stock or debt
securities of the Company that have been converted into such Equity Interests
(other than Equity Interests (or Disqualified Stock or convertible debt
securities) sold to a Subsidiary of the Company), plus (iii) to the extent that
any Restricted Investment (including any Investment in an Unrestricted
Subsidiary) that was made after the Issue Date is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of capital with
respect to such Restricted Investment (less the cost of disposition, if any) and
(B) the initial amount of such Restricted Investment, plus (iv) to the extent
that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary
after the Issue Date, the lesser of (A) the fair market value of the Company's
Investment in such Subsidiary as of the date of such redesignation or (B) such
fair market value as of the date on which such Subsidiary was originally
designated as an Unrestricted Subsidiary.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Restricted Subsidiary of the Company) of, other Equity
Interests of the Company (other than any Disqualified Stock); provided that the
amount of any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be excluded from
clause (c)(ii) of the preceding paragraph; (iii) the defeasance, redemption,
repurchase or other acquisition of subordinated Indebtedness with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) the
payment of any dividend by a Restricted Subsidiary of the Company to the holders
of its Equity Interests on a pro rata basis; (v) Investments in any Person
(other than the Company or a Wholly-Owned Restricted Subsidiary or any
Unrestricted Subsidiary) engaged in a Permitted Business having an aggregate
fair market value, taken together with all other Investments made pursuant to
this clause (v) that are at that time outstanding not to exceed $25 million;
(vi) the repurchase of Convertible Debentures in an amount not to exceed $7.1
million, plus any accrued and unpaid interest thereon, in connection with any
offer required to be made to the holders thereof following a Change of Control
or similar event; provided, that the Company has previously paid all amounts
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required to be paid in connection with any Change of Control Offer for the
Notes; (vii) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company held by any management employee of
the Company (or any Restricted Subsidiary) pursuant to any management equity
subscription agreement or stock option, phantom stock or other equity incentive
plan; provided, however, that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed the sum of (a)
$2 million in each fiscal year (provided that any unused amounts may be carried
over to any subsequent fiscal year, subject to a maximum amount of $4 million in
any fiscal year) plus (b) the amount of net cash proceeds received by the
Company from the Sale of Equity Interests (other than Disqualified Stock) to
management employees of the Company or any Restricted Subsidiary; provided that
any such net cash proceeds shall be excluded from any computation under clause
(c)(ii) above; (viii) loans to employees of the Company or any Restricted
Subsidiary to purchase Equity Interests issued by the Company in an amount not
to exceed $2 million at any time outstanding; (ix) Investments in Unrestricted
Subsidiaries having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (ix) that are at that time
outstanding, not to exceed $5 million; (x) the payment of consulting or similar
fees to Holdings in an aggregate amount not to exceed $250,000 in any fiscal
year; provided, that the requirement set forth in clause (b) of the preceding
paragraph is satisfied with respect to any such payment; or (xi) other
Restricted Payments in an aggregate amount not to exceed $5 million; provided,
however, that at the time of, and after giving effect to, any Restricted Payment
permitted under clauses (iii) through (xi) above, no Default or Event of Default
shall have occurred and be continuing or would occur as consequence thereof.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause a Default;
provided that in no event shall the business currently operated by any
Subsidiary Guarantor be transferred to or held by an Unrestricted Subsidiary. In
the event of any such designation, all outstanding Investments owned by the
Company and its Restricted Subsidiaries in the Subsidiary so designated will be
deemed to be an Investment made as of the time of such designation and will
reduce the amount available for Restricted Payments under the first paragraph of
this covenant. All such outstanding Investments will be deemed to constitute
Restricted Investments in an amount equal to the fair market value of such
Investments at the time of such designation. Such designation will only be
permitted if such Restricted Payment would be permitted at such time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary
to be a Restricted Subsidiary if such redesignation would not cause a Default.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
covenant shall be determined by the Board of Directors whose resolution with
respect thereto shall be delivered to the Trustee, such determination to be
based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if such fair market value exceeds
$20 million. Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, together with a copy
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of any fairness opinion or appraisal required by this Indenture.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (a) Existing Indebtedness or
other agreements as in effect on the date of this Indenture, (b) the Credit
Agreement as in effect as of the date of this Indenture and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive, taken as a whole, with
respect to such dividend and other payment restrictions than those contained in
the Credit Agreement as in effect on the date of this Indenture, (c) this
Indenture and the Notes, (d) applicable law, rule, regulation or order, (e) any
agreement or other instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired; provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of this Indenture to be incurred, (f)
customary non-assignment provisions in licenses, leases or other contracts or
agreements entered into in the ordinary course of business and consistent with
past practices, (g) Purchase Money Obligations for property acquired in the
ordinary course of business that impose restrictions of the nature described in
clause (iii) above on the property so acquired, (h) Permitted Refinancing
Indebtedness; provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive, taken
as a whole, than those contained in the agreements governing the Indebtedness
being refinanced, (i) contracts for the sale of assets, including without
limitation, customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary that is
otherwise permitted by this Indenture; (j) Indebtedness secured by Liens
otherwise permitted to be incurred pursuant to the provisions of Section 4.12
hereof that limits the right of the debtor to dispose of the assets securing
such Indebtedness; (k) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course of
business; and (l) agreements relating to the financing of the acquisition of
real or tangible personal property acquired after the date of this Indenture;
provided, that such encumbrance or restriction relates only to the property
which is acquired and in the case of any encumbrance or restriction that
constitutes a Lien, such Lien constitutes a Purchase Money Lien.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
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The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and that the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company or any Subsidiary Guarantor (or, to
the extent specified in clause (viii) of the definition of Permitted Debt, any
Foreign Subsidiary) may incur Indebtedness (including Acquired Debt) or issue
shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least (a) 2.0 to 1.0, if such date is prior to December 31, 1999,
(b) 2.25 to 1.0, if such date is on or after December 31, 1999 and prior to June
30, 2001 and (c) 2.5 to 1.0 thereafter, in each case determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock had
been issued, as the case may be and the proceeds thereof applied, at the
beginning of such four-quarter period.
The provisions of the first paragraph of this Section 4.09 shall not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company of revolving credit Indebtedness and
letters of credit pursuant to the Credit Agreement (including Indebtedness under
any Receivables Facility); provided that the aggregate principal amount of all
such Indebtedness (with letters of credit being deemed to have a principal
amount equal to the maximum potential liability of the Company thereunder)
outstanding under the Credit Agreement after giving effect to such incurrence
does not exceed the greater of (a) $150.0 million or (b) the Borrowing Base
less, in either case, the aggregate amount of all Net Proceeds of Asset Sales
applied by the Company or any of its Subsidiaries to permanently reduce the
commitments for revolving credit Indebtedness under the Credit Agreement
pursuant to Section 4.10 hereof;
(ii) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by the Company and the Subsidiary Guarantors of the
Indebtedness represented by the Notes and the Subsidiary Guarantees;
(iv) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage financings or
Purchase Money Obligations, in each case incurred for the purpose of financing
all or any part of the purchase price or cost of construction or improvement of
property, plant or equipment (including tooling) used in the business of the
Company or such Restricted Subsidiary or other expenditures which would be
included within clause (a) of the definition of "Consolidated Capital
Expenditures" (whether through the direct purchase of assets or the Capital
Stock of any Person owning such Assets), in an aggregate principal (or accreted
value, as applicable) amount at any time outstanding, not to exceed $25 million;
(v) the incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which
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are used to refund, refinance or replace any Indebtedness (other than
Indebtedness incurred pursuant to clauses (i), (vi), (vii), (ix), (x), (xi),
(xii), (xiii), (xiv), (xv) or (xvi) hereof) that was permitted by this Indenture
to be incurred;
(vi) Indebtedness of the Company and its Restricted Subsidiaries in
connection with performance, surety, statutory, appeal or similar bonds in the
ordinary course of business;
(vii) the incurrence of intercompany Indebtedness between or among the
Company and any Wholly-Owned Restricted Subsidiary; provided, however, that (a)
if the Company or a Subsidiary Guarantor is the obligor on such Indebtedness,
such Indebtedness is expressly subordinated to the prior payment in full in cash
of all Obligations with respect to the Notes and the Subsidiary Guarantees, and
(b) (1) any subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than the Company or a
Wholly-Owned Restricted Subsidiary and (2) any sale or other transfer of any
such Indebtedness to a Person that is not either the Company or a Wholly-Owned
Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence
of such Indebtedness by the Company or such Restricted Subsidiary, as the case
may be that was not permitted by this clause;
(viii) the incurrence by any Foreign Subsidiary of Indebtedness under
Foreign Credit Facilities; provided that the aggregate principal amount of all
Indebtedness (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of Foreign Subsidiaries thereunder)
outstanding under all Foreign Credit Facilities after giving effect to such
incurrence does not exceed $5 million or such greater amount, not to exceed $30
million outstanding at any time, as may be incurred by any Foreign Subsidiary
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph above;
(ix) the incurrence by the Company or any of its Restricted Subsidiaries
of Hedging Obligations;
(x) the guarantee by the Company or any of the Subsidiary Guarantors of
Indebtedness of the Company or a Restricted Subsidiary of the Company that was
permitted to be incurred by another provision of this Section 4.09;
(xi) Indebtedness of the Company and its Restricted Subsidiaries from the
honoring by a bank or other financial institution of a check, draft or similar
instrument inadvertently (except in the case of daylight overdrafts, which will
not be, and will not be deemed to be, inadvertent) drawn against any
insufficient funds in the ordinary course of business;
(xii) the incurrence by the Company or any Restricted Subsidiary of
Indebtedness pursuant to the issuance of promissory notes in an amount not to
exceed $2 million at any time outstanding in order to repurchase or otherwise
acquire or retire for value Equity Interests of the Company held by any employee
of the Company as permitted by clause (vii) of the second paragraph of Section
4.07 hereof; provided, however, that any such Indebtedness incurred pursuant to
this clause (xii) shall be expressly subordinated in right of payment to the
Notes;
(xiii) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters of
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credit issued in the ordinary course of business, including without limitation
to letters of credit in respect to workers' compensation claims or
self-insurance (and including letters of credit issued with respect to the
Designated Obligation), or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims; provided, however, that upon
the drawing of such letters of credit or the incurrence of such Indebtedness,
such obligations are reimbursed within 30 days following such drawing or
incurrence;
(xiv) Indebtedness arising from the agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment or purchase
price of similar obligations, in each case, incurred or assumed in connection
with the disposition of any business, assets or a Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any portion
of such business, assets or a Subsidiary for the purpose of financing such
acquisition; provided, that the maximum aggregate liability of all such
Indebtedness shall at no time exceed the gross proceeds actually received by the
Company or a Restricted Subsidiary in connection with such disposition;
(xv) guarantees by the Company or any of its Restricted Subsidiaries of
Indebtedness of Persons who are not Affiliates of the Company incurred in the
ordinary course of business in an aggregate principal amount not to exceed $15
million at any time outstanding; and
(xvi) the incurrence by the Company or any of its Restricted Subsidiaries
of additional Indebtedness, in an aggregate principal amount (or accreted value,
as applicable) at any time outstanding not to exceed $15 million.
The Company shall not incur any Indebtedness (including Permitted
Debt) that is contractually subordinated in right of payment to any other
Indebtedness of the Company unless such Indebtedness is also contractually
subordinated in right of payment to the Notes on substantially identical terms;
provided, however, that no Indebtedness of the Company shall be deemed to be
contractually subordinated in right of payment to any other Indebtedness of the
Company solely by virtue of being unsecured.
For purposes of determining compliance with this Section 4.09, in
the event that an item of proposed Indebtedness meets the criteria of more than
one of the categories of Permitted Debt described in clauses (i) through (xvi)
above as of the date of incurrence thereof, or is entitled to be incurred
pursuant to the first paragraph of this Section 4.09 as of the date of
incurrence thereof, the Company shall, in its sole discretion, classify such
item of Indebtedness on the date of its incurrence in any manner that complies
with this Section 4.09. Accrual of interest, accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Stock for purposes of this Section 4.09; provided, in
each such case, that the amount thereof is included in Fixed Charges of the
Company as accrued.
SECTION 4.10. ASSET SALES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
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Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash or
Cash Equivalents; provided that the amount of (x) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet or in
the notes thereto), of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any guarantee thereof) that are assumed or satisfied by the
transferee of any such assets pursuant to a customary novation or other
agreement that releases the Company or such Restricted Subsidiary from further
liability and (y) any marketable securities, notes or other obligations received
by the Company or any such Restricted Subsidiary from such transferee that are
contemporaneously (subject to ordinary settlement periods) converted by the
Company or such Restricted Subsidiary into cash (to the extent of the cash
received), shall be deemed to be cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds at its option, (a) to purchase,
redeem, repay or prepay Indebtedness under the Credit Agreement or other secured
Indebtedness of the Company or a Restricted Subsidiary (and, in the case of any
such Indebtedness that was borrowed under a revolving credit line, to
correspondingly reduce commitments with respect thereto), (b) to cash
collateralize letters of credit to the extent such letters of credit have not
been drawn upon or returned undrawn; provided, however, that any such cash
collateral released to the Company upon the expiration of such letters of credit
shall again be deemed to be Net Proceeds (and, in the case of any such letters
of credit established under a revolving credit line to correspondingly reduce
commitments with respect thereto), or (c) to the acquisition of a controlling
interest in another business, the making of a capital expenditure or the
acquisition of other long-term assets that are used or useful, in each case, in
a Permitted Business; provided, however, that if the Company or any Restricted
Subsidiary has entered into a definitive agreement with respect to any such
acquisition or capital expenditure within such 365 day period, it may defer the
application of such Net Proceeds to effect such acquisition or capital
expenditure for up to an additional 90 days or the fifth Business Day following
the termination of any such definitive agreement, whichever occurs first.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company
will be required to make an Asset Sale Offer to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, in accordance with the procedures set forth herein. To the extent
that any Excess Proceeds remain after consummation of an Asset Sale Offer, the
Company may use such Excess Proceeds for any general corporate purpose not
otherwise prohibited by this Indenture. If the aggregate principal amount of
Notes tendered into such Asset Sale Offer surrendered by Holders thereof exceeds
the amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. Upon completion of such offer to purchase, the
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amount of Excess Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction") unless (i)
such Affiliate Transaction is on terms that are no less favorable to the Company
or the relevant Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Trustee (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $1.0 million, a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of the
Board of Directors and (b) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing; provided that the following shall
not be deemed to be Affiliate Transactions: (A) any employment agreement entered
into by the Company or any of its Restricted Subsidiaries in the ordinary course
of business and consistent with the past practice of the Company or such
Restricted Subsidiary, including reasonable loans to officers contemplated by
such employment agreements, (B) transactions between or among the Company
and/or its Restricted Subsidiaries, (C) Permitted Investments or Restricted
Payments that are permitted under Section 4.07 hereof, (D) customary
compensation paid to, and indemnity or insurance provided on behalf of,
directors and officers of the Company or any of its Restricted Subsidiaries as
determined in good faith by the Company's Board of Directors, including
customary programs related to the testing and evaluation of the Company's
products; (E) transactions with customers, suppliers, joint venture partners or
purchasers or sellers of goods or services, in each case in the ordinary course
of business (including, without limitation, pursuant to joint venture
agreements) which are at least as favorable as might reasonably have been
obtained at such time from an unaffiliated party; and (F) payments under any
agreement in effect as of the Issue Date or any amendment thereto or any
transaction contemplated thereby (including pursuant to any amendment thereto)
and any replacement agreement thereto so long as any such amendment or
replacement agreement is no less favorable to the Company and its Restricted
Subsidiaries in any material respect than the original agreement as in effect on
the Issue Date.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist
any Lien of any kind upon any of their property or assets, now owned or
hereafter acquired, except Permitted Liens.
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SECTION 4.13. BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than Permitted Businesses, except
to such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Significant Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Significant Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of
any of its Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Company shall mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"), pursuant to the procedures required by this
Indenture and described in such notice. The Company shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
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publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
(c) The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Section 4.15 and Section 3.09 hereof and purchases all Notes
validly tendered and not withdrawn under such Change of Control Offer.
SECTION 4.16. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company may enter into a sale and leaseback transaction if (i) the Company
could have (a) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof and
(b) incurred a Lien to secure such Indebtedness pursuant to the provisions of
Section 4.12 hereof, (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (in the case of
transactions having a fair market value in excess of $5.0 million, as determined
in good faith by the Board of Directors and set forth in an Officers'
Certificate delivered to the Trustee) of the property that is the subject of
such sale and leaseback transaction and (iii) the transfer of assets in such
sale and leaseback transaction is permitted by, and the Company applies the
proceeds of such transaction in compliance with, Section 4.10 hereof.
SECTION 4.17. ADDITIONAL SUBSIDIARY GUARANTEES
If the Company or any of its Restricted Subsidiaries shall after the
date of this Indenture (i) transfer or cause to be transferred in one or a
series of transactions (whether or not related), any assets, business,
divisions, real property or equipment having an aggregate fair market value (as
determined in good faith by the Board of Directors) in excess of $1.0 million to
any Restricted Subsidiary that is a Significant Subsidiary (other than a Foreign
Subsidiary) that is not a Subsidiary Guarantor; (ii) acquire or create another
Restricted Subsidiary that is a Significant Subsidiary (other than a Foreign
Subsidiary); or (iii) cause any Restricted Subsidiary of the Company, that is
not a Subsidiary Guarantor, to guarantee any Indebtedness of the Company other
than the Notes, or pledge any of its assets to secure any Indebtedness of the
Company other than the Notes, then, in each case, the Company will cause such
Restricted Subsidiary to (A) execute and deliver to the Trustee a supplemental
indenture in form and substance reasonably satisfactory to the Trustee pursuant
to which such Restricted Subsidiary shall unconditionally Guarantee all of the
Company's obligations under the Notes on the terms set forth in such
supplemental indenture and (B) deliver to the Trustee an opinion of counsel
reasonably satisfactory to the Trustee that such supplemental indenture has been
duly executed and delivered by such Restricted Subsidiary. Notwithstanding the
foregoing, if such transferee or acquired Subsidiary has been properly
designated as an Unrestricted Subsidiary in accordance with this Indenture, then
for so long as it continues to constitute an Unrestricted Subsidiary, that
transferee or acquired Subsidiary shall not be required to execute a Subsidiary
Guarantee or deliver to the Trustee an opinion of counsel in accordance with the
terms of this Indenture.
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SECTION 4.18. USE OF PROCEEDS
The Company shall use the proceeds from the sale of the Notes in the
manner described in the Offering Memorandum dated May 21, 1998 relating to the
Notes under the caption "Use of Proceeds."
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not, directly or indirectly, consolidate or merge
with or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of the
Company under the Notes and this Indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; (iv) except in the case of a
merger of the Company with or into a Wholly-Owned Restricted Subsidiary of the
Company, the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made will, immediately after such transaction after giving pro forma effect
thereto and any related financing transactions as if the same had occurred at
the beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph Section 4.09 hereof; and (v) each
Subsidiary Guarantor, unless it is the other party to the transaction described
above, shall have by supplemental indenture confirmed that its Subsidiary
Guarantee shall apply to the Company's or the surviving Person's obligations
under this Indenture and the Notes.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
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the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes and such default continues for a
period of 30 days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise;
(c) the Company or any of its Subsidiaries fails to comply with any of the
provisions of Section 4.15 or 5.01 hereof;
(d) the Company or any of its Subsidiaries fails to comply with any of the
provisions of Section 4.07, 4.09 or 4.10 hereof and such failure continues for a
period of 30 days;
(e) the Company or any Subsidiary fails to observe or perform any other
covenant, representation, warranty or other agreement in this Indenture, the
Notes or the Depositary Agreement for 60 days after notice to the Company by the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding voting as a single class;
(f) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Subsidiaries),
whether such Indebtedness or guarantee now exists, or is created after the date
of this Indenture, which default (a) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more;
(g) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Subsidiaries and such judgment or judgments remain undischarged for a
period (during which execution shall not be effectively stayed) of 60 days,
provided that the aggregate of all such undischarged judgments exceeds $5.0
million;
(h) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
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(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary case to
which it or they are the debtor;
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days; or
(j) except as permitted herein, any Subsidiary Guarantee is held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect or any Subsidiary Guarantor, or any Person acting
on behalf of any Subsidiary Guarantor, shall deny or disaffirm its obligations
under such Subsidiary Guarantor's Subsidiary Guarantee.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Significant Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Upon any such declaration, the Notes shall become due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (h) or
(i) of Section 6.01 hereof occurs with respect to the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary, all outstanding Notes shall be due
and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by written
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notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely because of the
acceleration) have been cured or waived.
If an Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium that the Company would have had to pay if the
Company then had elected to redeem the Notes pursuant to Section 3.07 hereof,
then, upon acceleration of the Notes, an equivalent premium shall also become
and be immediately due and payable, to the extent permitted by law, anything in
this Indenture or in the Notes to the contrary notwithstanding. If an Event of
Default occurs prior to June 1, 2003 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding the prohibition on redemption of the Notes prior to such date, then,
upon acceleration of the Notes, an additional premium shall also become and be
immediately due and payable in an amount, for each of the years beginning on
June 1 of the years set forth below, as set forth below (expressed as a
percentage of the principal amount to the date of payment that would otherwise
be due but for the provisions of this sentence):
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1998...............................................114.333%
1999...............................................112.542%
2000...............................................110.750%
2001...............................................108.958%
2002...............................................107.167%
</TABLE>
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
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on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
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If an Event of Default specified in Section 6.01(a) or (b) occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
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The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
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Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), (c), (e) and (f) of this Section 7.01 and Section 7.02.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
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security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
(g) Except with respect to Section 4.01 hereof, the Trustee shall have no
duty to inquire as to the performance of the Company's covenants in Article 4
hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.01(a), 6.01(b) and 4.01 or (ii) any Default or Event of Default of
which the Trustee shall have received written notification or obtained actual
knowledge.
(h) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the Trustee
may, in its discretion, make sure further inquiry or investigation into such
facts or matters as it may see fit and if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company personally or by agent or attorney.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
59
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium, if
any, or interest on any Note, the Trustee may withhold the notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company and the Subsidiary Guarantors shall pay to the Trustee
from time to time reasonable compensation for its acceptance of this Indenture
and services hereunder. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation for
its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
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and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
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continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, elect to have either
Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance
with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and each Subsidiary Guarantor
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be deemed to have been discharged from its obligations with respect to
all outstanding Notes and the Subsidiary Guarantees on the date the conditions
set forth below are satisfied (hereinafter, "Legal Defeasance"). For this
purpose, Legal Defeasance means that the Company and the Subsidiary Guarantors
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Notes and Subsidiary Guarantees, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the
other Sections of this Indenture referred to in (a) and (b) below, and the
Company and each Subsidiary Guarantor shall be deemed to have satisfied all
their respective other obligations under such Notes, Subsidiary Guarantees and
this Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
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following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04 hereof, and as more fully
set forth in such Section, payments in respect of the principal of, premium, if
any, and interest and Liquidated Damages thereon, if any, on such Notes when
such payments are due, (b) the Company's obligations with respect to such Notes
under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and the Company's obligations in
connection therewith and (d) this Article 8. Subject to compliance with this
Article 8, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and each Subsidiary Guarantor
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be released from its obligations under the covenants contained in
Sections 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17 and
4.18 hereof with respect to the outstanding Notes and Subsidiary Guarantees on
and after the date the conditions set forth in Section 8.04 are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes and Subsidiary Guarantees
shall thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes and Subsidiary Guarantees shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes and Subsidiary Guarantees, the Company or any of its
Subsidiaries may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes and
Subsidiary Guarantees shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03, subject to the satisfaction of the conditions set forth in Section
8.04 hereof, Sections 6.01(d) through 6.01(g) hereof shall not constitute Events
of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest and Liquidated Damages, if any, on the outstanding Notes on the stated
date for payment thereof or on the applicable redemption date, as the case may
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be, and the Company must specify whether the Notes are being defeased to
maturity or to a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the incurrence of Indebtedness all or a portion of the proceeds of which
will be used to defease the Notes pursuant to this Article 8 concurrently with
such incurrence) or insofar as Sections 6.01(h) or 6.01(i) hereof is concerned,
at any time in the period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel
(which may be subject to customary exceptions) to the effect that on the 91st
day following the deposit, the trust funds will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
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SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as an
unsecured creditor except to the extent provided in the Depositary Agreement,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
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application, then the obligations of the Company and the Subsidiary Guarantors
under this Indenture, the Notes and the Subsidiary Guarantees shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.02 or
8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 8.02 or 8.03 hereof, as the case may
be; provided, however, that, if the Company makes any payment of principal of,
premium, if any, or interest on any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money held by the Trustee or Paying
Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture,
the Subsidiary Guarantees or the Notes without the consent of any Holder of a
Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Company's or a Subsidiary
Guarantor's obligations to the Holders of the Notes by a successor to the
Company or a Subsidiary Guarantor pursuant to Article 5 or Article 10 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA; or
(f) to allow any Subsidiary Guarantor to execute a supplemental indenture
and/or a Subsidiary Guarantee with respect to the Notes.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Subsidiary
Guarantors in the execution of any amended or supplemental Indenture authorized
or permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into such amended or supplemental Indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and
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4.15 hereof), the Subsidiary Guarantees and the Notes with the consent of the
Holders of at least a majority in principal amount of the Notes then outstanding
(including consents, without limitation, obtained in connection with a tender
offer or exchange offer for, or purchase of, the Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal of, premium,
if any, or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture, the Subsidiary Guarantees or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, the Notes). Section 2.08 hereof shall determine which Notes
are considered to be "outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders as aforesaid, and upon receipt by the
Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company and the Subsidiary Guarantors in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture
directly affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
(other than provisions relating to Sections 3.09, 4.10 and 4.15 hereof);
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the then outstanding Notes and a waiver of the payment default that resulted
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from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Section 4.10 or 4.15 hereof);
(h) release any Subsidiary Guarantor from any of its obligations under its
Subsidiary Guarantee or this Indenture, except in accordance with the terms of
this Indenture; or
(i) make any change in the foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture, the Subsidiary
Guarantees or the Notes shall be set forth in a amended or supplemental
Indenture that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record date
for determining which Holders must consent to such amendment, supplement or
waiver. If the Company fixes a record date, the record date shall be fixed at
(i) the later of 30 days prior to the first solicitation of such consent or the
date of the most recent list of Holders furnished to the Trustee prior to such
solicitation pursuant to Section 2.05 hereof or (ii) such other date as the
Company shall designate.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
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SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 12.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10.
COLLATERAL AND SECURITY
SECTION 10.01. DEPOSITARY AGREEMENT.
The due and punctual payment of the principal of and interest and
Liquidated Damages, if any, on the Notes when and as the same shall be due and
payable, whether on an interest payment date, at maturity, by acceleration,
repurchase, redemption or otherwise, and interest on the overdue principal of
and interest and Liquidated Damages (to the extent permitted by law), if any, on
the Notes and performance of all other obligations of the Company to the Holders
of Notes or the Trustee under this Indenture and the Notes, according to the
terms hereunder or thereunder, shall be secured to the extent provided in the
Depositary Agreement which the Company has entered into simultaneously with the
execution of this Indenture. Each Holder of Notes, by its acceptance thereof,
consents and agrees to the terms of the Depositary Agreement (including, without
limitation, the provisions providing for foreclosure and release of Notes
Collateral) as the same may be in effect or may be amended from time to time in
accordance with its terms and authorizes and directs the Depositary Agent to
enter into the Depositary Agreement and to perform its obligations and exercise
its rights thereunder in accordance therewith. The Company shall deliver or
cause to be delivered to the Trustee copies of all documents delivered to the
Depositary Agent pursuant to the Depositary Agreement, and shall do or cause to
be done all such acts and things as may be necessary or proper, or as may be
required by the provisions of the Depositary Agreement, to assure and confirm to
the Trustee and the Depositary Agent the security interest in the Notes
Collateral contemplated hereby, by the Depositary Agreement or any part thereof,
as from time to time constituted, so as to render the same available for the
security and benefit of this Indenture and of the Notes secured hereby,
according to the intent and purposes herein expressed. The Company shall take,
or shall cause its Subsidiaries to take, upon request of the Trustee, any and
all actions reasonably required to cause the Depositary Agreement to create and
maintain, as security for the Obligations of the Company hereunder, a valid and
enforceable perfected first priority Lien in and on all the Notes Collateral, in
favor of the Trustee for the benefit of the Holders of Notes, superior to and
prior to the rights of all third Persons and subject to no Liens other than
Permitted Liens.
SECTION 10.02. RECORDING AND OPINIONS
(a) The Company shall furnish to the Trustee simultaneously with the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all action has been taken with
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respect to the recording, registering and filing of this Indenture, financing
statements or other instruments necessary to make effective the Lien intended to
be created by the Depositary Agreement, and reciting with respect to the
security interests in the Notes Collateral, the details of such action, or (ii)
stating that, in the opinion of such counsel, no such action is necessary to
make such Lien effective.
(b) The Company shall furnish to the Depositary Agent and the Trustee on
May 27, in each year beginning with May 27, 1999, an Opinion of Counsel, dated
as of such date, either (i)(A) stating that, in the opinion of such counsel,
action has been taken with respect to the recording, registering, filing,
re-recording, re-registering and re-filing of all supplemental indentures,
financing statements, continuation statements or other instruments of further
assurance as is necessary to maintain the Lien of the Depositary Agreement and
reciting with respect to the security interests in the Notes Collateral the
details of such action or referring to prior Opinions of Counsel in which such
details are given, (B) stating that, based on relevant laws as in effect on the
date of such Opinion of Counsel, all financing statements and continuation
statements have been executed and filed that are necessary as of such date and
during the succeeding 12 months fully to preserve and protect, to the extent
such protection and preservation are possible by filing, the rights of the
Holders of Notes and the Depositary Agent and the Trustee hereunder and under
the Depositary Agreement with respect to the security interests in the Notes
Collateral, or (ii) stating that, in the opinion of such counsel, no such action
is necessary to maintain such Lien and assignment.
(c) The Company shall otherwise comply with the provisions of TIA
ss.314(b).
SECTION 10.03. RELEASE OF COLLATERAL
(a) Subject to subsections (b) and (c) of this Section 10.03, Notes
Collateral may be released from the Lien and security interest created by the
Depositary Agreement at any time or from time to time in accordance with the
provisions of the Depositary Agreement or as provided hereby.
(b) At any time when a Default or Event of Default shall have occurred and
be continuing, no release of Notes Collateral pursuant to the provisions of the
Depositary Agreement shall be effective as against the Holders of Notes.
(c) The release of any Notes Collateral from the terms of this Indenture
and the Depositary Agreement shall not be deemed to impair the security under
this Indenture in contravention of the provisions hereof if and to the extent
the Notes Collateral is released pursuant to the terms of the Depositary
Agreement. To the extent applicable, the Company shall cause TIA ss.313(b),
relating to reports, and TIA ss.314(d), relating to the release of property or
securities from the Lien and security interest of the Depositary Agreement and
relating to the substitution therefor of any property or securities to be
subjected to the Lien and security interest of the Depositary Agreement,to be
complied with. Any certificate or opinion required by TIA ss.314(d) may be
made by an Officer of the Company except in cases where TIA ss.314(d) requires
that such certificate or opinion be made by an independent Person, which Person
shall be an independent engineer, appraiser or other expert selected or approved
by the Trustee and the Depositary Agent in the exercise of reasonable care.
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SECTION 10.04. CERTIFICATES OF THE COMPANY.
(a) The Company shall furnish to the Trustee and the Depositary Agent,
prior to each proposed release of Notes Collateral pursuant to the Depositary
Agreement, (i) all documents required by TIA ss.314(d) and (ii) an Opinion of
Counsel, which may be rendered by internal counsel to the Company, to the effect
that such accompanying documents constitute all documents required by TIA
ss.314(d). The Trustee may, to the extent permitted by Sections 7.01 and 7.02
hereof, accept as conclusive evidence of compliance with the foregoing
provisions the appropriate statements contained in such documents and such
Opinion of Counsel.
SECTION 10.05. CERTIFICATES OF THE TRUSTEE.
In the event that the Company wishes to release Notes Collateral in
accordance with the Depositary Agreement and has delivered the certificates and
documents required by the Depositary Agreement and Section 10.04 hereof, the
Trustee shall determine whether it has received all documentation required by
TIA ss.314(d) in connection with such release and, based on such determination
and the Opinion of Counsel delivered pursuant to Section 10.04(b), shall deliver
a certificate to the Depositary Agent setting forth such determination.
SECTION 10.06. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE
DEPOSITARY AGREEMENT.
Subject to the provisions of Section 7.01 and 7.02 hereof, the
Trustee may, in its sole discretion and without the consent of the Holders of
Notes, direct, on behalf of the Holders of Notes, the Depositary Agent to, take
all actions it deems necessary or appropriate in order to (a) enforce any of the
terms of the Depositary Agreement and (b) collect and receive any and all
amounts payable in respect of the Obligations of the Company hereunder. The
Trustee shall have power to institute and maintain such suits and proceedings as
it may deem expedient to prevent any impairment of the Notes Collateral by any
acts that may be unlawful or in violation of the Depositary Agreement or this
Indenture, and such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interests and the interests of the Holders of Notes in
the Notes Collateral (including power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such enactment,
rule or order would impair the security interest hereunder or be prejudicial to
the interests of the Holders of Notes or of the Trustee.
SECTION 10.07. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE
DEPOSITARY AGREEMENT.
The Trustee is authorized to receive any funds for the benefit of
the Holders of Notes distributed under the Depositary Agreement, and to make
further distributions of such funds to the Holders of Notes according to the
provisions of this Indenture.
SECTION 10.08. TERMINATION OF SECURITY INTEREST
Upon the payment in full of all Obligations of the Company under
this Indenture and the Notes, or under Legal Defeasance, the Trustee shall, at
the request of the Company, deliver a certificate to the Depositary Agent
stating that such Obligations have been paid in full, and instruct the
Depositary Agent to release the Liens pursuant to this Indenture and the
Depositary Agreement.
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ARTICLE 11
SUBSIDIARY GUARANTEES
SECTION 11.01. SUBSIDIARY GUARANTEES.
Subject to this Article 11, each of the Subsidiary Guarantors, and
each Subsidiary of the Company that in accordance with Section 4.17 hereof is
required to guarantee the obligations of the Company under the Notes and this
Indenture, hereby, jointly and severally, unconditionally guarantees on a senior
basis to each Holder of a Note authenticated and delivered by the Trustee and to
the Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Notes or the obligations of the Company
hereunder or thereunder, that: (a) the principal of, premium, if any, and
interest on the Notes will be promptly paid in full when due, subject to any
applicable grace period, whether at maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal of and interest on the Notes,
if any, if lawful, and all other obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be promptly paid in full or performed,
all in accordance with the terms hereof and thereof; and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, subject to any applicable
grace period, whether at stated maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed or any performance so guaranteed
for whatever reason, the Subsidiary Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Subsidiary Guarantor agrees that
this is a guarantee of payment and not a guarantee of collection.
The Subsidiary Guarantors hereby agree that their obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a Subsidiary
Guarantor. Each Subsidiary Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that this
Subsidiary Guarantee shall not be discharged except by complete performance of
the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Subsidiary Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Subsidiary Guarantors, any amount paid by such persons to the Trustee or
such Holder, this Subsidiary Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
Each Subsidiary Guarantor agrees that it shall not be entitled to
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between the
Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article 6 hereof for the purposes of this Subsidiary
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Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such obligations as provided in
Article 6 hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Subsidiary Guarantors for the purpose of
this Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to
seek contribution from any non-paying Subsidiary Guarantor so long as the
exercise of such right does not impair the rights of the Holders under the
Subsidiary Guarantee.
SECTION 11.02. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY.
Each Subsidiary Guarantor, and by its acceptance of Notes, each
Holder, hereby confirms that it is the intention of all such parties that the
Subsidiary Guarantee of such Subsidiary Guarantor not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or
state law to the extent applicable to any Subsidiary Guarantee. To effectuate
the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors
hereby irrevocably agree that the obligations of such Subsidiary Guarantor under
its Subsidiary Guarantee and this Article 11 shall be limited to the maximum
amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Subsidiary Guarantor that are relevant
under such laws, and after giving effect to any collections from, rights to
receive contribution from or payments made by or on behalf of any other
Subsidiary Guarantor in respect of the obligations of such other Subsidiary
Guarantor under this Article 11, result in the obligations of such Subsidiary
Guarantor under its Subsidiary Guarantee not constituting a fraudulent transfer
or conveyance or being improper or prohibited under applicable state law.
SECTION 11.03. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES.
To evidence its Subsidiary Guarantee set forth in Section 11.01
hereof, each Subsidiary Guarantor hereby agrees that a notation of such
Subsidiary Guarantee substantially in the form included in Exhibit E shall be
endorsed by an Officer of such Subsidiary Guarantor on each Note authenticated
and delivered by the Trustee and that this Indenture shall be executed on behalf
of such Subsidiary Guarantor by its President or one of its Vice Presidents.
Each Subsidiary Guarantor hereby agrees that its Subsidiary
Guarantee set forth in Section 11.01 hereof shall remain in full force and
effect notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set
forth in this Indenture on behalf of the Subsidiary Guarantors.
In the event that the Company creates or acquires any new
Subsidiaries subsequent to the date of this Indenture, if required by Section
4.17 hereof, the Company shall cause such Subsidiaries to execute supplemental
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indentures to this Indenture and Subsidiary Guarantees in accordance with
Section 4.17 hereof and this Article 11, to the extent applicable.
SECTION 11.04. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Subsidiary Guarantor may consolidate with or merge with or into
(whether or not such Subsidiary Guarantor is the surviving Person) another
Person whether or not affiliated with such Subsidiary Guarantor unless:
(a) subject to Section 11.05 hereof, the Person formed by or surviving any
such consolidation or merger (if other than a Subsidiary Guarantor or the
Company) unconditionally assumes all the obligations of such Subsidiary
Guarantor, pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, under the Notes, the Indenture, the Registration
Rights Agreement and the Subsidiary Guarantees on the terms set forth herein or
therein; and
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Subsidiary Guarantor, such successor Person shall succeed to
and be substituted for the Subsidiary Guarantor with the same effect as if it
had been named herein as a Subsidiary Guarantor. Such successor Person thereupon
may cause to be signed any or all of the Subsidiary Guarantees to be endorsed
upon all of the Notes issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee. All the Subsidiary
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Subsidiary Guarantees theretofore and thereafter
issued in accordance with the terms of this Indenture as though all of such
Subsidiary Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Subsidiary Guarantor with
or into the Company or another Subsidiary Guarantor, or shall prevent any sale
or conveyance of the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety to the Company or another Subsidiary Guarantor.
SECTION 11.05. RELEASES FOLLOWING DESIGNATION AS AN UNRESTRICTED SUBSIDIARY OR
SALE OF ASSETS.
In the event of (i) the designation of any Subsidiary Guarantor as
an Unrestricted Subsidiary or (ii) a sale or other disposition of all or
substantially all of the properties or assets of any Subsidiary Guarantor, by
way of merger, consolidation or otherwise, or a sale or other disposition of all
of the capital stock of any Subsidiary Guarantor to a third party or an
Unrestricted Subsidiary, then such Subsidiary Guarantor (in the event of such
designation or a sale or other disposition, by way of merger, consolidation or
otherwise, of all of the capital stock of such Subsidiary Guarantor) or the
Person acquiring the property (in the event of a sale or other disposition of
all or substantially all of the assets of such Subsidiary Guarantor) will be
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released and relieved of any obligations under its Subsidiary Guarantee;
provided that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of this Indenture, including without
limitation Section 4.10 hereof; and provided, further, however, that any such
termination shall occur only to the extent that all obligations of such
Subsidiary Guarantor under all of its guarantees of, and under all of its
pledges of assets or other security interests that secure, any other
Indebtedness of the Company or its Restricted Subsidiaries, shall also terminate
upon such release, sale or disposition. Upon delivery by the Company to the
Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that
such sale or other disposition was made by the Company in accordance with the
applicable provisions of this Indenture, including without limitation Section
4.10 hereof, the Trustee shall execute any documents reasonably required in
order to evidence the release of any Subsidiary Guarantor from its obligations
under its Subsidiary Guarantee.
Any Subsidiary Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Subsidiary Guarantor
under this Indenture as provided in this Article 11.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, any Subsidiary Guarantor
or the Trustee to the others is duly given if in writing and delivered in Person
or mailed by first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the others' address
If to the Company and/or any Subsidiary Guarantor:
Outboard Marine Corporation
100 Sea Horse Drive
Waukegan, IL 60085
Telecopier No.: (847) 689-5371
Attention: General Counsel
With a copy to:
Outboard Marine Corporation
100 Sea Horse Drive
Waukegan, IL 60085
Telecopier No.: (847) 689-5371
Attention: Treasurer
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If to the Trustee:
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street, 23rd Floor
Hartford, CT 06103
Telecopier No.: (860) 244-1897
Attention: Steven Cimalore
The Company, any Subsidiary Guarantor or the Trustee, by notice to
the others may designate additional or different addresses for subsequent
notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
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SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any Subsidiary Guarantor, as such, shall have
any liability for any obligations of the Company or such Subsidiary Guarantor
under the Notes, the Subsidiary Guarantees, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES WITHOUT
GIVING EFFECT TO THE APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT
THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
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SECTION 12.10. SUCCESSORS.
All agreements of the Company and the Subsidiary Guarantors in this
Indenture and the Notes shall bind their successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
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(Signatures on following page)
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<PAGE> 116
IN WITNESS WHEREOF, the parties hereto have executed this Indenture
as of the date first written above.
OUTBOARD MARINE CORPORATION
By: /s/ Robert S. Romano
----------------------------------
Name: Robert S. Romano
Title: Vice President and Secretary
OMC FISHING BOAT GROUP, INC.
By: /s/ Gordon G. Repp
----------------------------------
Name: Gordon G. Repp
Title: Assistant Secretary and
Treasurer
OMC ALUMINUM BOAT GROUP, INC.
By: /s/ Gordon G. Repp
----------------------------------
Name: Gordon G. Repp
Title: Assistant Secretary and
Treasurer
OMC RECREATIONAL BOAT GROUP, INC.
By: /s/ Gordon G. Repp
----------------------------------
Name: Gordon G. Repp
Title: Assistant Secretary and
Treasurer
RECREATIONAL BOAT GROUP LIMITED
PARTNERSHIP
By: OMC Recreational Boat Group, Inc.
Its: General Partner
By: /s/ Gordon G. Repp
----------------------------------
Name: Gordon G. Repp
Title: Assistant Secretary and
Treasurer
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<PAGE> 117
OMC LATIN AMERICA/CARIBBEAN, INC.
By: /s/ Gordon G. Repp
----------------------------------
Name: Gordon G. Repp
Title: Assistant Secretary
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ Steven Cimalore
------------------------------------
Authorized Signatory
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(Face of Note)
10 3/4% Series A Senior Notes due 2008
CUSIP: 690020-AF-9 $160,000,000
No. 1
OUTBOARD MARINE CORPORATION
promises to pay to Cede & Co.
or registered assigns,
the principal sum of One Hundred Sixty Million
Dollars on June 1, 2008.
Interest Payment Dates: June 1 and December 1
Record Dates: May 15 and November 15
OUTBOARD MARINE CORPORATION
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
Dated: May 27, 1998
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
----------------------------------
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Authorized Signatory
A-2
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<PAGE> 120
(Back of Note)
10 3/4% Series A Senior Notes due 2008
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT HAS ACQUIRED
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN
AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM
THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY)
OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER
A-3
APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND
UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER
THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.
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Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Outboard Marine Corporation, a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at 10 3/4% per annum from May 27, 1998 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company shall pay interest and Liquidated
Damages semi-annually on June 1 and December 1 of each year, or if any such day
is not a Business Day, on the next succeeding Business Day (each an "Interest
Payment Date"). Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that the first Interest Payment Date shall be December 1,
1998. The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the May 15 or November
15 next preceding the Interest Payment Date, even if such Notes are canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Notes will be payable as to principal, premium and Liquidated Damages, if
any, and interest at the office or agency of the Company maintained for such
purpose within or without the City and State of New York, or, at the option of
the Company, payment of interest and Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest, premium and Liquidated
Damages on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
A-4
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of May 27, 1998 ("Indenture") among the Company, the Subsidiary Guarantors
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
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statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling. The Notes are general obligations of the Company
limited to $160.0 million in aggregate principal amount, plus amounts, if any,
issued to pay Liquidated Damages on outstanding Notes as set forth in Paragraph
2 hereof.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to June 1, 2003.
Thereafter, the Company shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on June 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003.......................................... 105.375%
2004.......................................... 103.583%
2005.......................................... 101.792%
2006 and thereafter........................... 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to June 1, 2001, the Company may on one or more
occasions redeem up to an aggregate of 35% of the original aggregate principal
amount of Notes at a redemption price of 110.750% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the redemption date with the net cash proceeds of one or more Equity
Offerings; provided that at least 65% of the aggregate principal amount of the
Notes originally issued remains outstanding immediately after the occurrence of
such redemption and provided, further, that any such redemption shall occur
within 60 days of the date of the closing of any such offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDERS.
(a) If there is a Change of Control, the Company shall be required
to make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to $1,000 or an integral multiple
A-5
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thereof) of each Holder's Notes at a purchase price equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase (the "Change of
Control Payment"). Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder setting forth the procedures governing the
Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $10.0 million, the
Company shall commence an offer to all Holders of Notes (as "Asset Sale Offer")
pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase in accordance with the procedures set forth in the Indenture. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Restricted
Subsidiary) may use such deficiency for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Subsidiary Guarantees or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the then outstanding Notes voting as a single class, and any existing
default or compliance with any provision of the Indenture, the Subsidiary
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A-6
Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes voting as a single
class. Without the consent of any Holder of a Note, the Indenture, the
Subsidiary Guarantees or the Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company's or Subsidiary Guarantor's obligations to Holders of the Notes in
case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act, or to allow
any Subsidiary Guarantor to execute a supplemental indenture to the Indenture
and/or a Subsidiary Guarantee with respect to the Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest or Liquidated Damages on the
Notes; (ii) default in payment when due of principal of or premium, if any, on
the Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company or any of its Subsidiaries to comply with Section 4.15 or 5.01 of
the Indenture; (iv) failure by the Company or any of its Subsidiaries to comply
with Section 4.07, 4.09 or 4.10 of the Indenture and such failure continues for
a period of 30 days; (v) failure by the Company or any Subsidiary for 60 days
after notice to the Company by the Trustee or the Holders of at least 25% in
principal amount of the Notes then outstanding voting as a single class to
comply with certain other agreements in the Indenture, the Notes or the
Depositary Agreement; (vi) default under certain other agreements relating to
Indebtedness of the Company which default (a) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the date of such
default (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity, and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $5.0 million or more; (vii) certain
final judgments for the payment of money that remain undischarged for a period
of 60 days; (viii) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries; and (ix) except as permitted
by the Indenture, any Subsidiary Guarantee shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect or any Subsidiary Guarantor or any Person acting on its
behalf shall deny or disaffirm its obligations under such Subsidiary Guarantor's
Subsidiary Guarantee. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
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(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing
A-7
Default or Event of Default in the payment of interest on, or the principal of,
the Notes. The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company is required
upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any of the Subsidiary Guarantors,
as such, shall not have any liability for any obligations of the Company or any
of the Subsidiary Guarantors under the Notes or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
15. SECURITY. The due and punctual payment of the principal of,
premium and interest and Liquidated Damages, if any, on the Notes when and as
the same shall be due and payable, whether on an Interest Payment Date, at
maturity, by acceleration, repurchase, redemption or otherwise, and interest on
any overdue principal of, premium and interest and Liquidated Damages, if any
(to the extent permitted by law), on the Notes and performance of all other
obligations of the Company to the Holders or the Trustee under this Indenture
and the Notes, according to the terms hereunder or thereunder, shall be secured
to the extent provided in the Depositary Agreement which the Company has entered
into simultaneously with the execution of this Indenture. Each Holder of Notes,
by its acceptance thereof, consents and agrees to the terms of the Depositary
Agreement (including, without limitation, the provisions providing for
foreclosure) as the same may be in effect or may be amended from time to time in
accordance with their terms and authorizes and directs the Trustee or the
Depositary Agent, as the case may be, to enter into the Depositary Agreement and
to perform their respective obligations and exercise their respective rights
thereunder in accordance therewith.
16. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
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18. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the A/B Exchange
Registration Rights Agreement dated as of the Issue Date, between the Company
and the parties named on the signature pages thereof (the "Registration Rights
Agreement").
A-8
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture, the Registration Rights Agreement and
the Depositary Agreement. Requests may be made to:
Outboard Marine Corporation
100 Sea Horse Drive
Waukegan, Illinois 60085
Attention: General Counsel
A-9
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ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date: ________________
Your Signature:_______________________
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee.
Note: Signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Register, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date:________________ Your Signature:_______________________
(Sign exactly as your name appears on
the Note)
Tax Identification No:________________
Signature Guarantee.
Note: Signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Register, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
A-11
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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of increase this Global Note Signature of
decrease in in Principal of following authorized officer
Principal Amount Amount such decrease of Trustee or
Date of Exchange of this Global Note of this Global Note (or increase) Note Custodian
- ---------------- ------------------- ------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
A-12
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EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Outboard Marine Corporation
100 Sea Horse Drive
Waukegan, Illinois 60085
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street
Hartford, CT 06103
Re: 10 3/4% Senior Notes due 2008
Reference is hereby made to the Indenture, dated as of May 27, 1998
(the "Indenture"), between Outboard Marine Corporation, as issuer (the
"Company"), the Subsidiary Guarantors (as defined therein) and State Street Bank
and Trust Company, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. |_| Check if Transferee will take delivery of a beneficial interest in the
144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. |_| Check if Transferee will take delivery of a beneficial interest in the
Regulation S Global Note or a Definitive Note pursuant to Regulation S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any
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<PAGE> 131
Person acting on its behalf reasonably believed and believes that the Transferee
was outside the United States or (y) the transaction was executed in, on or
through the facilities of a designated offshore securities market and neither
such Transferor nor any Person acting on its behalf knows that the transaction
was prearranged with a buyer in the United States, (ii) no directed selling
efforts have been made in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is
not part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on Transfer enumerated in the Private
Placement Legend printed on the Regulation S Global Note and/or the Definitive
Note and in the Indenture and the Securities Act.
3. |_| Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) |_| Check if Transfer is pursuant to Rule 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) |_| Check if Transfer is Pursuant to Regulation S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) |_| Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
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This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
______________________________________
[Insert Name of Transferor]
By:___________________________________
Name:
Title:
Dated:_________, ______
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ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP _____), or
(ii) |_| Regulation S Global Note (CUSIP _____), or
(b) |_| a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP _____), or
(ii) |_| Regulation S Global Note (CUSIP _____), or
(iii) |_| Unrestricted Global Note (CUSIP _____); or
(b) |_| a Restricted Definitive Note; or
(c) |_| an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
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EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Outboard Marine Corporation
100 Sea Horse Drive
Waukegan, Illinois 60085
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street
Hartford, CT 06103
Re: 10 3/4% Senior Notes due 2008
(CUSIP______________)
Reference is hereby made to the Indenture, dated as of May 27, 1998
(the "Indenture"), between Outboard Marine
Corporation, as issuer (the "Company"), the Subsidiary Guarantors (as defined
therein) and State Street Bank and Trust Company, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
____________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a) |_| Check if Exchange is from beneficial interest in a
Restricted Global Note to beneficial interest in an Unrestricted Global Note. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(b) |_| Check if Exchange is from beneficial interest in a
Restricted Global Note to Unrestricted Definitive Note. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes
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<PAGE> 135
and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
(c) |_| Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) |_| Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted
Global Notes for Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes
(a) |_| Check if Exchange is from beneficial interest in a
Restricted Global Note to Restricted Definitive Note. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
(b) |_| Check if Exchange is from Restricted Definitive Note to
beneficial interest in a Restricted Global Note. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] |_| 144A Global Note, |_| Regulation S Global Note with an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer
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<PAGE> 136
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
C-3
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
______________________________________
[Insert Name of Owner]
By:___________________________________
Name:
Title:
Dated: ________________, ____
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EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Outboard Marine Corporation
100 Sea Horse Drive
Waukegan, Illinois 60085
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street
Hartford, CT 06103
Re: 10 3/4% Senior Notes due 2008
Reference is hereby made to the Indenture, dated as of May 27,
1998 (the "Indenture"), between Outboard Marine Corporation, as issuer (the
"Company"), the Subsidiary Guarantors (as defined therein) and State Street Bank
and Trust Company, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________
aggregate principal amount of:
(a) |_| a beneficial interest in a Global Note, or
(b) |_| a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or
any interest therein is subject to certain restrictions and conditions set forth
in the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (c) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and , if such
transfer is in respect of a principal amount of Notes, at the time of
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transfer of less than $250,000, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such transfer is in compliance with
the Securities Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the provisions of Rule
144(k) under the Securities Act or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing the Definitive Note or beneficial interest in a Global Note
from us in a transaction meeting the requirements of clauses (A) through (E) of
this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein acquired
by us must be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
__________________________________________
[Insert Name of Accredited Investor]
By:_______________________________________
Name:
Title:
Dated: __________________, ____
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EXHIBIT E
FORM OF NOTATION OF SUBSIDIARY GUARANTEE
For value received, each Subsidiary Guarantor (which term includes
any successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and subject
to the provisions in the Indenture dated as of May 27, 1998 (the "Indenture")
among Outboard Marine Corporation, the Subsidiary Guarantors listed on Schedule
I thereto and State Street Bank and Trust Company, as trustee (the "Trustee"),
(a) the due and punctual payment of the principal of, premium, if any, and
interest on the Notes (as defined in the Indenture), whether at maturity, by
acceleration, redemption or otherwise, the due and punctual payment of interest
on overdue principal and premium, and, to the extent permitted by law, interest,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee all in accordance with the terms of the Indenture and
(b) in case of any extension of time of payment or renewal of any Notes or any
of such other obligations, that the same will be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise. The obligations of the
Subsidiary Guarantors to the Holders of Notes and to the Trustee pursuant to the
Subsidiary Guarantee and the Indenture are expressly set forth in Article 11 of
the Indenture and reference is hereby made to the Indenture for the precise
terms of the Subsidiary Guarantee.
(Signature Page Follows)
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OMC FISHING BOAT GROUP, INC.
By:__________________________________
Name:
Title:
OMC ALUMINUM BOAT GROUP, INC.
By:__________________________________
Name:
Title:
OMC RECREATIONAL BOAT GROUP, INC.
By:__________________________________
Name:
Title:
RECREATIONAL BOAT GROUP LIMITED
PARTNERSHIP
By: OMC Recreational Boat Group, Inc.
Its: General Partner
By:__________________________________
Name:
Title:
OMC LATIN AMERICA/CARIBBEAN, INC.
By:__________________________________
Name:
Title:
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<PAGE> 141
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of Outboard Marine Corporation (or its permitted successor), a
Delaware corporation (the "Company"), the Company, the other Subsidiary
Guarantors (as defined in the Indenture referred to herein), and State Street
Bank and Trust Company as trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of May 27, 1998 providing for
the issuance of an aggregate principal amount of up to $160.0 million of 10 3/4
Senior Notes due 2008 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Subsidiary Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees
as follows:
(a) Along with all Subsidiary Guarantors named in the Indenture,
to jointly and severally Guarantee to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity
and enforceability of the Indenture, the Notes or the
obligations of the Company hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be
promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on
the overdue principal of and interest on the Notes, if
any, if lawful, and all other obligations of the Company
to the Holders or the Trustee hereunder or thereunder
will be promptly paid in
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full or performed, all in accordance with the terms
hereof and thereof; and
(ii) in case of any extension of time of payment or renewal
of any Notes or any of such other obligations, that same
will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or
otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever
reason, the Subsidiary Guarantors shall be jointly and
severally obligated to pay the same immediately.
(b) The obligations hereunder shall be unconditional, irrespective
of the validity, regularity or enforceability of the Notes or
the Indenture, the absence of any action to enforce the same,
any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any
judgment against the Company, any action to enforce the same
or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence, presentment, demand
of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require
a proceeding first against the Company, protest, notice and
all demands whatsoever.
(d) This Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes
and the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Subsidiary Guarantors,
or any Custodian, Trustee, liquidator or other similar
official acting in relation to either the Company or the
Subsidiary Guarantors, any amount paid by either to the
Trustee or such Holder, this Subsidiary Guarantee, to the
extent theretofore discharged, shall be reinstated in full
force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any right
of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby.
(g) As between the Subsidiary Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity
of the obligations guaranteed hereby may be accelerated as
provided in Article 6 of the Indenture for the purposes of
this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration
in respect of the obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such
obligations as provided in Article 6 of the Indenture, such
obligations (whether
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or not due and payable) shall forthwith become due and payable
by the Subsidiary Guarantors for the purpose of this
Subsidiary Guarantee.
(h) The Subsidiary Guarantors shall have the right to seek
contribution from any non-paying Subsidiary Guarantor so long
as the exercise of such right does not impair the rights of
the Holders under the Subsidiary Guarantee.
(i) Pursuant to Section 11.02 of the Indenture, after giving
effect to any maximum amount and any other contingent and
fixed liabilities that are relevant under any applicable
Bankruptcy or fraudulent conveyance laws, and after giving
effect to any collections from, rights to receive contribution
from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other
Subsidiary Guarantor under Article 11 of the Indenture shall
result in the obligations of such Subsidiary Guarantor under
its Subsidiary Guarantee not constituting a fraudulent
transfer or conveyance.
3 EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that
the Subsidiary Guarantees shall remain in full force and effect notwithstanding
any failure to endorse on each Note a notation of such Subsidiary Guarantee.
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) The Guaranteeing Subsidiary may not consolidate with or merge with
or into (whether or not such Subsidiary Guarantor is the surviving
Person) another corporation, Person or entity whether or not
affiliated with such Subsidiary Guarantor unless:
(i) subject to Section 11.05 of the Indenture, the Person formed
by or surviving any such consolidation or merger (if other
than a Subsidiary Guarantor or the Company) unconditionally
assumes all the obligations of such Subsidiary Guarantor,
pursuant to a supplemental indenture in form and substance
reasonably satisfactory to the Trustee, under the Notes, the
Indenture and the Subsidiary Guarantee on the terms set forth
herein or therein; and
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in
form to the Trustee, of the Subsidiary Guarantee endorsed upon the
Notes and the due and punctual performance of all of the covenants
and conditions of the Indenture to be performed by the Subsidiary
Guarantor, such successor corporation shall succeed to and be
substituted for the Subsidiary Guarantor with the same effect as if
it had been named herein as a Subsidiary Guarantor. Such successor
corporation thereupon may cause to be signed any or all of the
Subsidiary Guarantees to be endorsed upon all of the Notes issuable
hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee. All the Subsidiary Guarantees
so issued shall in all respects have the same legal rank and benefit
under the
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Indenture as the Subsidiary Guarantees theretofore and thereafter
issued in accordance with the terms of the Indenture as though all
of such Subsidiary Guarantees had been issued at the date of the
execution hereof.
(c) Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or
in any of the Notes shall prevent any consolidation or merger of a Subsidiary
Guarantor with or into the Company or another Subsidiary Guarantor, or shall
prevent any sale or conveyance of the property of a Subsidiary Guarantor as an
entirety or substantially as an entirety to the Company or another Subsidiary
Guarantor.
5. RELEASES.
(a) In the event of a sale or other disposition of all of the assets of
any Subsidiary Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all to the capital
stock of any Subsidiary Guarantor, then such Subsidiary Guarantor
(in the event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all of the capital stock of such
Subsidiary Guarantor) or the corporation acquiring the property (in
the event of a sale or other disposition of all or substantially all
of the assets of such Subsidiary Guarantor) will be released and
relieved of any obligations under its Subsidiary Guarantee; provided
that the Net Proceeds of such sale or other disposition are applied
in accordance with the applicable provisions of the Indenture,
including without limitation Section 4.10 of the Indenture. Upon
delivery by the Company to the Trustee of an Officers' Certificate
and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the
provisions of the Indenture, including without limitation Section
4.10 of the Indenture, the Trustee shall execute any documents
reasonably required in order to evidence the release of any
Subsidiary Guarantor from its obligations under its Subsidiary
Guarantee.
(b) Any Subsidiary Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of
principal of and interest on the Notes and for the other obligations
of any Subsidiary Guarantor under the Indenture as provided in
Article 11 of the Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Subsidiary Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may
not be effective to waive liabilities under the federal securities laws and it
is the view of the Commission that such a waiver is against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
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8. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
OUTBOARD MARINE CORPORATION
By:
----------------------------
Name:
Title:
OMC ALUMINUM BOAT GROUP, INC.
By:
----------------------------
Name:
Title
OMC FISHING BOAT GROUP, INC.
By:
----------------------------
Name:
Title
OMC RECREATIONAL BOAT GROUP, INC.
By:
----------------------------
Name:
Title
OMC LATIN AMERICA/CARIBBEAN, INC.
By:
----------------------------
Name:
Title
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RECREATIONAL BOAT GROUP LIMITED
PARTNERSHIP
By: OMC RECREATIONAL BOAT GROUP, INC.,
ITS GENERAL PARTNER
By:
--------------------------------
Name:
Title:
[INSERT NAME OF GUARANTEEING
SUBSIDIARY]
By:
--------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
--------------------------------
Name:
Title:
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SCHEDULE I
SCHEDULE OF SUBSIDIARY GUARANTORS
The following schedule lists each Subsidiary Guarantor under the
Indenture as of the Issue Date:
OMC Aluminum Boat Group, Inc.
OMC Fishing Boat Group, Inc.
OMC Recreational Boat Group, Inc.
OMC Latin America/Caribbean, Inc.
Recreational Boat Group Limited Partnership
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EXHIBIT 10(H)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of the _____ day of April, 1998
("Effective Date"), is made and entered into by OUTBOARD MARINE
CORPORATION, a Delaware corporation (the "Company"), and [employee] (the
"Employee").
WHEREAS, a change of control of the Company occurred on September 12,
1997, and the Company previously entered into an Amended and Restated
Severance Agreement dated as of March 31, 1997 ("Severance Agreement")
pursuant to which Employee was entitled to severance benefits if his
employment with the Company was terminated under certain circumstances
after such a change in control;
WHEREAS, benefits resulting from phantom stock granted under the OMC
1994 Long-Term Incentive Plan ("ERIP") are payable after a change in
control of the Company if such payments are deductible by the Company
and the deductibility of such payments depends upon the clarification or
waiver of Employee's rights under the Severance Agreement and other
arrangements; and
WHEREAS, the Company desires to modify the terms of Employee's continued
employment with the Company and in connection therewith to terminate the
Severance Agreement;
NOW, THEREFORE, Employee and the Company, in consideration of the mutual
covenants contained herein, hereby agree as follows:
1. Employment. During the term of this Agreement, the Company shall
employ Employee as [title] of the Company, and Employee shall
perform services customarily associated with and incident to such
position as may be reasonably determined from time to time by the
President and Chief Executive Officer of the Company (the "CEO").
Employee shall also serve, upon the CEO's request and for no
additional compensation, as an officer and/or director of any
subsidiary of the Company. Employee shall perform his duties
faithfully, diligently and to the best of his ability, subject to
reasonable direction from the CEO. Employee shall devote his full
and undivided business time and attention to his duties and
responsibilities to the Company and its subsidiaries.
2. Term. The term of this Agreement (the "Term") shall commence as
of the Effective Date and shall expire on the earlier of April 1,
2001, or Employee's death, Total Disability (as defined below) or
attainment of age 65.
3. Base Salary. During the Term, the Company agrees to pay Employee
an annual salary of $[salary] ("Base Salary") according to the
Company's standard payroll practices and subject to review
annually for possible increases at the Company's sole discretion.
4. Incentive Compensation. Employee shall be eligible to participate
in the Company's Personal Rewards and Opportunities Program
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("PROP") or other bonus or incentive compensation program
applicable generally to similarly situated employees as a group in
accordance with and subject to the terms thereof. The
Compensation Committee of the Board of Directors of the Company
("Committee") shall determine in its sole discretion the amount of
bonus or other incentive compensation for which Employee shall be
eligible.
5. Long and Short-Term Incentive Plan.
a. The Company shall promptly pay to Employee in cash, the
amount of $_____ (less all deductions required by law) which
has been calculated as follows:
[#] ERIP shares at $18 per share: $
6% Interest from September 12, 1997 to April 1, 1998: ______
Total: $
b. The Company shall make a grant under the PROP to Employee of
[#] phantom stock units. The form of grant agreement for
such units is attached hereto as Appendix A.
The above payment and grant are in full satisfaction of all
Employee's benefits and Company obligations under the ERIP.
c. Employee acknowledges, agrees and consents to the
termination of and his further participation in the
Company's Employee Bonus Plan, Executive Equity Incentive
Plan, and the OMC 1994 Long-Term Incentive Plan, and waives
any and all claims arising from or relating to such plans
and the change in control provisions under the retirement
plans of the company as of September 12, 1997, except for
the payments described expressly provided in this Agreement.
6. Vacation. Employee shall be entitled to [#] weeks of paid
vacation time during each calendar year in accordance with the
Company's vacation policy in effect from time to time.
7. Termination of Severance Agreement. Employee and Company hereby
agree that the Severance Agreement shall be terminated and
rendered null and void effective as of the Effective Date and that
the Company shall not have any obligation and liability thereunder
from and after such date. The Company and Employee agree that the
Company at any time may, in its discretion, declare a bonus, in
addition to Base Salary and payments under the PROP, payable to
Employee by the Legal Expense Trust and credited against and not
exceeding the balance of Employee's account under such Trust.
This Agreement supersedes the Severance Agreement and accordingly
the Company and Employee hereby agree that all of Employee's
reasonable legal expenses (including attorney's fees at standard
hourly rates only) that are incurred by Employee in negotiating,
reviewing, amending and enforcing this Agreement shall be
reimbursable by the Legal Expense Trust established by the Company
in accordance with the terms thereof.
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8. Legal Expense Trust and Attorney's Fees. If Employee commences a
cause of action in accordance with Section 16 hereof to enforce
any provision of or resolve any dispute arising under this
Agreement after the Legal Expense Trust has been liquidated or
Employee's account under such Trust has been exhausted, the
Company shall reimburse Employee for reasonable costs incurred
(including reasonable attorney's fees at standard hourly rates) by
Employee to the extent, but only to the extent, Employee prevails
in any such action.
9. Other Benefits. Employee shall be entitled to participate in the
Company's retirement, group medical, disability, life insurance
and other employee benefit programs generally applicable to
similarly situated employees as a group in accordance with and
subject to the terms thereof.
10. Termination of Employment. Subject to the further provisions of
this Section, (i) the Company may terminate Employee's employment
with the Company or any of its subsidiaries at any time for any or
no reason and (ii) Employee may resign for Good Reason (as
defined below) or for no reason. Upon the termination of
employment with the Company for any reason, Employee shall be
deemed, without the need to take further action, to have resigned
all positions to which he had been appointed by the Company or any
of its subsidiaries, including, but not limited to, his position
as an officer and a director of the Company and any subsidiary
thereof and as a member of any committee established by the
Company or the Board, effective on the date of termination of
employment.
a. With Cause. The Company may terminate Employee's employment
with the Company and its subsidiaries for cause (as defined
below) upon 20 days' prior written notice to Employee;
provided, however, that the Company may relieve Employee of
his duties and responsibilities as of the date of such
notice without such action constituting Good Reason (as
defined below). Unless the notice of termination is
withdrawn, the employment of Employee hereunder shall be
terminated as of the date set forth in such notice and the
Company shall pay Employee his accrued and unpaid Base
Salary through such date of termination and have no further
obligation to Employee hereunder. Employee's rights under
the Company's employee benefit plans shall be determined in
accordance with the terms of such plans.
"Cause" means any act or any failure to act on the part of
Employee during the Term which constitutes:
(1) fraud, theft, embezzlement or similar crime against
the Company or its affiliates,
(2) willful misconduct in the performance of Employee's
duties and responsibilities which results or could
reasonably be expected to result in material damage to the
Company or its assets, or a material liability of the Company,
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(3) conviction of a felony,
(4) willful and material breach of the employment
agreement or other written agreement with the Company,
and
(5) willful failure to follow reasonable and good faith
directions of the Chief Executive Officer or other
manager more senior than Employee which are consistent
with Employee's position, except for reasons beyond
Employee's control.
No act or omission shall be deemed to be "willful" if
Employee reasonably believed such acts or omissions to be in
the best interests of the Company.
b. Without Cause or With Good Reason. The Company may
terminate Employee's employment with the Company and its
subsidiaries without Cause, or Employee may resign from such
employment upon 20 days' prior written notice to the Company
and with Good Reason. Unless the Company corrects or
otherwise remedies the condition constituting Good Reason
within such 20 days following receipt of such notice, upon
any termination of employment of Employee pursuant to this
Section 9b, the Company shall on the date his employment
ends: (i) pay Employee his accrued and unpaid Base Salary as
of the date of his termination of employment; (ii) make a
lump sum payment in cash to Employee of $_____________, plus
one times Base Pay in effect as of September 12, 1997; and
(iii) provide Employee with outplacement services at an
aggregate cost not to exceed 15% of Base Pay, in each case
subject to all applicable tax withholding requirements. In
addition, the Company shall continue for one year Employee's
participation on the same basis as active employees in the
group medical and life insurance plans in which he
participated prior to the termination of his employment in
accordance with the terms (other than eligibility) of such
plans from time to time (but only to the extent that
Employee is not receiving substantially the same benefits
from another employer or such continued participation is
legally permissible or, if such employee benefit involves
insurance coverage, permitted by the insurer). Employee
shall have no obligation to mitigate "damages" by making
efforts to secure other employment, nor will cash payments
described under this Section 9b be offset by amounts earned
through other employment.
"Good Reason" means any of the following events occurring
during the Term without Employee's consent:
(1) a change in Employee's title with the Company,
(2) the assignment to Employee of any duties or
responsibilities which are not commensurate with the
Employee's title and position with the Company or any
of its subsidiaries,
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(3) a reduction in the Employee's salary,
(4) a failure to provide Employee with employee benefits
generally provided to similarly situated employees as
a group,
(5) a reduction in the Employee's annual target bonus
opportunity from the target amount immediately prior
to September 12, 1997, or
(6) a change in Employee's principal location of work by
more than 35 miles from the location thereof on
September 12, 1997;
provided, however, that the Employee must give the Company at
least 20 days prior notice of his intent to resign for Good Reason
and the Company shall have the right during the 20-day period
after receipt of such notice to correct or otherwise remedy any
alleged event constituting Good Reason.
c. Death. This Agreement shall automatically terminate upon
Employee's death; provided, however, that the Company shall
pay to Employee's estate the Base Salary owed through the
date of death and any Bonus for the fiscal year in which his
death occurs, prorated for the number of full months
Employee was employed during such fiscal year and subject to
a determination by the Board, acting in good faith, that the
performance criteria, if any, for such Bonus would be
satisfied for such fiscal year.
d. Disability. This Agreement shall automatically terminate
and Employee's employment with the Company shall end upon
Employee's Total Disability. The Company shall pay to
Employee his Base Salary through the date on which he is
determined to have a Total Disability and any Bonus for the
fiscal year in which his Total Disability occurs, prorated
for the number of full months Employee was employed during
such fiscal year, in same manner and subject to the same
conditions as applicable to employees generally (except
individual performance objectives for Employee shall be
disregarded in favor of the generally applicable
objectives); provided, however, that the Company shall only
be required to pay such amounts to Employee that are not
covered by long-term disability payments, if any, to
Employee pursuant to any long-term disability insurance
policy or benefit plan of the Company.
"Total Disability" shall mean any mental or physical
condition that (i) prevents Employee from reasonably
discharging his services and employment duties hereunder,
(ii) is attested to in writing by a physician mutually
acceptable to Employee and the Company, and (iii) continues,
for any one or related condition, during any period of three
(3) consecutive months or for a period aggregating six (6)
months in any twelve-month period. Total Disability shall
be deemed to have occurred on the last day of such
applicable three- or six-month period.
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11. Confidentiality; Ownership.
(a) Employee agrees that he shall forever keep secret and retain
in strictest confidence and not divulge, disclose, discuss,
copy or otherwise use or suffer to be used in any manner,
except in connection with the business of the Company and
the businesses of any of its subsidiaries or affiliates, any
"Protected Information" in any "Unauthorized" manner or for
any Unauthorized purpose (as such terms are hereinafter
defined).
(i) "Protected Information" means trade secrets,
confidential or proprietary information and all other
knowledge, know-how, information, documents or mater-
ials owned, developed or possessed by the Company or
any of its subsidiaries or affiliates, whether in
tangible or intangible form, pertaining to the
business of the Company or the businesses of any of
its subsidiaries or affiliates, including, but not
limited to, research and development operations,
systems, data bases, computer programs and software,
designs, models, operating procedures, knowledge of
the organization, products (including prices, costs,
sales or content), processes, formulas, techniques,
machinery, contracts, financial information or
measures, business methods, business plans, details of
consultant contracts, new personnel acquisition plans,
business acquisition plans, customer lists, business
relationships and other information owned, developed
or possessed by the Company or its subsidiaries or
affiliates, except as required in the course of
performing duties hereunder; provided that Protected
Information shall not include information that becomes
generally known to the public or the trade without
violation of this Section.
(ii) "Unauthorized" means: (A) in contravention of the
policies or procedures of the Company or any of its
subsidiaries or affiliates; (B) otherwise inconsistent
with the measures taken by the Company or any of its
subsidiaries or affiliates to protect their interests
in any Protected Information; (C) in contravention of
any lawful instruction or directive, either written or
oral, of an employee of the Company or any of its
subsidiaries or affiliates empowered to issue such
instruction or directive; or (D) in contravention of
any duty existing under law or contract.
Notwithstanding anything to the contrary contained in
this Section, Employee may disclose any Protected
Information to the extent required by court order or
decree or by the rules and regulations of a governmen-
tal agency or as otherwise required by law; provided
that Employee shall provide the Company with prompt
notice of such required disclosure in advance thereof
so that the Company may seek an appropriate protective
order in respect of such required disclosure.
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(b) Employee acknowledges that all developments, including,
without limitation, inventions (patentable or otherwise),
discoveries, formulas, improvements, patents, trade secrets,
designs, reports, computer software, flow charts and
diagrams, procedures, data, documentation, ideas and
writings and applications thereof relating to the business
or planned business of the Company or any of its
subsidiaries or affiliates that, alone or jointly with
others, Employee may conceive, create, make, develop, reduce
to practice or acquire during the Term (collectively, the
"Developments") are works made for hire and shall remain the
sole and exclusive property of the Company and Employee
hereby assigns to the Company, in partial consideration of
his Base Salary, all of his right, title and interest in and
to all such Developments. Employee shall promptly and fully
disclose all future material Developments to the Board and,
at any time upon request and at the expense of the Company,
shall execute, acknowledge and deliver to the Company all
instruments that the Company shall prepare, give evidence
and take all other actions that are necessary or desirable
in the reasonable opinion of the Company to enable the
Company to file and prosecute applications for and to
acquire, maintain and enforce all letters, patent and
trademark registrations or copyrights covering the Develop-
ments in all countries in which the same are deemed
necessary by the Company. All memoranda, notes, lists,
drawings, records, files, computer tapes, programs,
software, source and programming narratives and other docu-
mentation (and all copies thereof) made or compiled by
Employee or made available to Employee concerning the
Developments or otherwise concerning the business or planned
business of the Company or any of its subsidiaries or
affiliates shall be the property of the Company or such sub-
sidiaries or affiliates and shall be delivered to the
Company or such subsidiaries or affiliates promptly upon the
expiration or termination of the Term.
(c) The provisions of this Section shall, without any limitation
as to time, survive the expiration or termination of
Employee's employment hereunder, irrespective of the reason
for any termination.
12. Covenant Not to Compete. Employee agrees that during the Term and
for a period of one year commencing upon the expiration or
termination of Employee's employment hereunder (the "Non-Compete
Period"), Employee shall not, directly or indirectly, without the
prior written consent of the Company:
(a) solicit, entice, persuade or induce any employee, consul-
tant, agent or independent contractor of the Company or of
any of its subsidiaries or affiliates to terminate his or
employment with the Company or such subsidiary or affiliate,
to become employed by any person, firm or corporation other
than the Company or such subsidiary or affiliate or approach
any such employee, consultant, agent or independent con-
tractor for any of the foregoing purposes, or authorize or
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assist in the taking of any such actions by any third party
(for purposes of this Section 11(a), the terms "employee,"
"consultant," "agent" and "independent contractor" shall
include any persons with such status at any time during the
six (6) months preceding any solicitation in question); or
(b) directly or indirectly engage, participate, or make any
financial investment in, or become employed by or render
consulting, advisory or other services to or for any person,
firm, corporation or other business enterprise, wherever
located, which is engaged, directly or indirectly, in
competition with the Company's business or the businesses of
its subsidiaries or affiliates as conducted or any business
proposed to be conducted at the time of the expiration or
termination of Employee's employment hereunder; provided,
however, that nothing in this Section 11(b) shall be
construed to preclude Employee from making any investments
in the securities of any business enterprise whether or not
engaged in competition with the Company or any of its
subsidiaries or affiliates, to the extent that such
securities are actively traded on a national securities
exchange or in the over-the-counter market in the United
States or on any foreign securities exchange and represent,
at the time of acquisition, not more than 3% of the aggre-
gate voting power of such business enterprise.
13. Specific Performance. Employee acknowledges that the services to
be rendered by Employee are of a special, unique and extraordinary
character and, in connection with such services, Employee will
have access to confidential information vital to the Company's
business and the businesses of its subsidiaries and affiliates.
By reason of this, Employee consents and agrees that if Employee
violates any of the provisions of Sections 10 or 11 hereof, the
Company and its subsidiaries and affiliates would sustain
irreparable injury and that monetary damages would not provide
adequate remedy to the Company and that the Company shall be
entitled to have Section 10 or 11 hereof specifically enforced by
any court having equity jurisdiction. Nothing contained herein
shall be construed as prohibiting the Company or any of its
subsidiaries or affiliates from pursuing any other remedies
available to it for such breach or threatened breach, including
the recovery of damages from Employee.
14. Assignment. The obligations of Employee may not be delegated and,
except with respect to the designation of beneficiaries in
connection with any of the benefits payable to Employee hereunder,
Employee may not assign, transfer, convey, pledge, encumber,
hypothecate or otherwise dispose of this Agreement or any interest
herein. Any such attempted delegation or disposition shall be
null and void and without effect. The Company and Employee agree
that this Agreement and all of the Company's rights and
obligations hereunder may be assigned or transferred by the
Company to and shall be assumed by and be binding upon any
successor to the Company. The term "successor" means, with
respect to the Company or any of its subsidiaries, any corporation
or other business entity which, by merger, consolidation, purchase
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of the assets or otherwise acquires all or a material part of the
assets of the Company.
15. Amendment. This Agreement may not be altered, modified or amended
except by written instrument signed by each of the Company and
Employee.
16. Governing Law; Arbitration.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to
the principles of conflict of laws of such State. Any action to
compel arbitration hereunder shall be brought in the State Court
of Illinois sitting in Cook County, Illinois.
In the event of disputes between the parties with respect to the
terms and conditions of this Agreement, such disputes shall be
resolved by and through an arbitration proceeding to be conducted
under the auspices of the American Arbitration Association (or any
like organization successor thereto) in Chicago, Illinois. Such
arbitration proceeding shall be conducted pursuant to the commer-
cial arbitration rules (formal or informal) of the American
Arbitration Association in as expedited a manner as is then
permitted by such rules (the "Arbitration"). Both the foregoing
agreement of the parties to arbitrate any and all such claims, and
the results, determination, finding, judgment and/or award
rendered through such Arbitration, shall be final and binding on
the parties hereto and may be specifically enforced by legal
proceedings.
Such Arbitration may be initiated by written notice from either
party to the other which shall be a compulsory and binding
proceeding on each party. The Arbitration shall be conducted by
an arbitrator selected in accordance with the procedures of the
American Arbitration Association. Time is of the essence of this
arbitration procedure, and the arbitrator shall be instructed and
required to render his or her decision within thirty (30) days
following completion of the Arbitration.
17. Deductions. The Company shall deduct from any compensation
payable to Employee the sums which it is required by applicable
law to deduct, including, but not limited to, federal and, if
applicable, state withholding taxes, social security taxes and
state disability insurance.
18. Entire Agreement. This Agreement (together with the agreements
and instruments to be executed as contemplated hereby, the form of
which are attached hereto as appendices) constitutes the entire
agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements, understandings
and arrangements, both oral and written, between the parties
hereto with respect to such subject matter.
19. No Conflict. Employee represents and warrants that the execution,
delivery and performance of this Agreement by Employee will not
violate any agreement, undertaking or covenant to which Employee
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is party or is otherwise bound. Employee represents and warrants
that he does not possess any confidential or proprietary documents
or other written materials from his current or any former
employer.
20. Notices. Any notice to be given hereunder by either party to the
other shall be sufficiently given if in writing and delivered in
person, transmitted by telecopier or sent by registered or
certified mail (postage prepaid and return receipt requested) or
recognized overnight delivery service (postage prepaid) addressed
as follows, or to such other address or telecopier number as
either party may notify to the other in accordance with this
paragraph:
(i) if to the Company:
Outboard Marine Corporation
100 Sea Horse Drive
Waukegan, Illinois 60085
Telecopier No: (847) 689-6006
Attn: President and Chief Executive Officer
With a copy to:
Greenmarine Holdings LLC
277 Park Avenue
27th Floor
New York, NY 10172
Telecopier No.: (212) 350-5253
Attn: Gary K. Duberstein
(ii) if to Employee:
Outboard Marine Corporation
100 Sea Horse Drive
Waukegan, Illinois 60085
Telecopier No: (847) 689-5371
Attn: [employee]
A notice will be effective (i) if delivered in person or by
overnight courier, on the business day it is delivered, (ii) if
transmitted by telecopier, on the business day of actual confirmed
receipt by the addressee thereof, and (iii) if sent by registered
or certified mail, three (3) business days after dispatch.
21. Section Headings. The section headings contained in this
Agreement are for reference purpose only and shall not affect in
any way the meaning or interpretation of this Agreement.
22. Survival of Provisions. The provisions of Sections 5, 7, 8, 10,
11 and 12 shall survive the termination or expiration of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Employment Agreement as of the day and year first above written.
OUTBOARD MARINE CORPORATION EMPLOYEE
By:____________________________________ ___________________________________
David D. Jones, Jr. [employee]
President and Chief Executive Officer
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EXHIBIT 10(I)1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of the _____ day of April, 1998
("Effective Date"), is made and entered into by OUTBOARD MARINE
CORPORATION, a Delaware corporation (the "Company"), and [employee] (the
"Employee").
WHEREAS, a change of control of the Company occurred on September 12,
1997, and the Company previously entered into an Amended and Restated
Severance Agreement dated as of March 31, 1997 ("Severance Agreement")
pursuant to which Employee was entitled to severance benefits if his
employment with the Company was terminated under certain circumstances
after such a change in control;
WHEREAS, benefits resulting from phantom stock granted under the OMC
1994 Long-Term Incentive Plan ("ERIP") are payable after a change in
control of the Company if such payments are deductible by the Company,
and the deductibility of such payments depends upon the clarification or
waiver of Employee's rights under the Severance Agreement and other
arrangements; and
WHEREAS, the Company desires to modify the terms of Employee's continued
employment with the Company and in connection therewith to terminate the
Severance Agreement;
NOW, THEREFORE, Employee and the Company, in consideration of the mutual
covenants contained herein, hereby agree as follows:
1. Employment. During the term of this Agreement, the Company shall
employ Employee as [title] of the Company, and Employee shall
perform services customarily associated with and incident to such
position as may be reasonably determined from time to time by the
President and Chief Executive Officer of the Company (the "CEO").
Employee shall also serve, upon the CEO's request and for no
additional compensation, as an officer and/or director of any
subsidiary of the Company. Employee shall perform his duties
faithfully, diligently and to the best of his ability, subject to
reasonable direction from the CEO. Employee shall devote his full
and undivided business time and attention to his duties and
responsibilities to the Company and its subsidiaries.
2. Term. The term of this Agreement (the "Term") shall commence as
of the Effective Date and shall expire on the earlier of April 1,
2001, or Employee's death, Total Disability (as defined below) or
attainment of age 65.
3. Base Salary. During the Term, the Company agrees to pay Employee
an annual salary of $[salary] ("Base Salary") according to the
Company's standard payroll practices and subject to review
annually for possible increases at the Company's sole discretion.
4. Incentive Compensation. Employee shall be eligible to participate
in the Company's Personal Rewards and Opportunities Program
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("PROP") or other bonus or incentive compensation program
applicable generally to similarly situated employees as a group in
accordance with and subject to the terms thereof. The
Compensation Committee of the Board of Directors of the Company
("Committee") shall determine in its sole discretion the amount of
bonus or other incentive compensation for which Employee shall be
eligible.
5. Long and Short-Term Incentive Plan.
a. The Company shall promptly pay to Employee in cash, the
amount of $ (less all deductions required by law)
which has been calculated as follows:
[#] ERIP shares at $18 per share: $
6% Interest from September 12, 1997 to April 1, 1998: ______
Total: $
Payment of the above amount is in full satisfaction of all
Employee's benefits and Company obligations under the ERIP.
b. Employee acknowledges, agrees and consents to the
termination of and his further participation in the
Company's Employee Bonus Plan, Executive Equity Incentive
Plan, and the OMC 1994 Long-Term Incentive Plan, and waives
any and all claims arising from or relating to such plans
and the change in control provisions under the retirement
plans of the Company as of September 12, 1997, except for
the payments described expressly provided in this Agreement.
6. Vacation. Employee shall be entitled to [#] weeks of paid
vacation time during each calendar year in accordance with the
Company's vacation policy in effect from time to time.
7. Termination of Severance Agreement. Employee and Company hereby
agree that the Severance Agreement shall be terminated and
rendered null and void effective as of the Effective Date and that
the Company shall not have any obligation and liability thereunder
from and after such date. The Company and Employee agree that the
Company at any time may, in its discretion, declare a bonus, in
addition to Base Salary and payments under the PROP, payable to
Employee by the Legal Expense Trust and credited against and not
exceeding the balance of Employee's account under such Trust.
This Agreement supersedes the Severance Agreement and accordingly
the Company and Employee hereby agree that all of Employee's
reasonable legal expenses (including attorney's fees at standard
hourly rates only) that are incurred by Employee in negotiating,
reviewing, amending and enforcing this Agreement shall be
reimbursable by the Legal Expense Trust established by the Company
in accordance with the terms thereof.
8. Legal Expense Trust and Attorney's Fees. If Employee commences a
cause of action in accordance with Section 16 hereof to enforce
any provision of or resolve any dispute arising under this
Agreement after the Legal Expense Trust has been liquidated or
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Employee's account under such Trust has been exhausted, the
Company shall reimburse Employee for reasonable costs incurred
(including reasonable attorney's fees at standard hourly rates) by
Employee to the extent, but only to the extent, Employee prevails
in any such action.
9. Other Benefits. Employee shall be entitled to participate in the
Company's retirement, group medical, disability, life insurance
and other employee benefit programs generally applicable to
similarly situated employees as a group in accordance with and
subject to the terms thereof.
10. Termination of Employment. Subject to the further provisions of
this Section, (i) the Company may terminate Employee's employment
with the Company or any of its subsidiaries at any time for any or
no reason and (ii) Employee may resign for Good Reason (as
defined below) or for no reason. Upon the termination of
employment with the Company for any reason, Employee shall be
deemed, without the need to take further action, to have resigned
all positions to which he had been appointed by the Company or any
of its subsidiaries, including, but not limited to, his position
as an officer and a director of the Company and any subsidiary
thereof and as a member of any committee established by the
Company or the Board, effective on the date of termination of
employment.
a. With Cause. The Company may terminate Employee's employment
with the Company and its subsidiaries for cause (as defined
below) upon 20 days' prior written notice to Employee;
provided, however, that the Company may relieve Employee of
his duties and responsibilities as of the date of such
notice without such action constituting Good Reason (as
defined below). Unless the notice of termination is
withdrawn, the employment of Employee hereunder shall be
terminated as of the date set forth in such notice and the
Company shall pay Employee his accrued and unpaid Base
Salary through such date of termination and have no further
obligation to Employee hereunder. Employee's rights under
the Company's employee benefit plans shall be determined in
accordance with the terms of such plans.
"Cause" means any act or any failure to act on the part of
Employee during the Term which constitutes:
(1) fraud, theft, embezzlement or similar crime against
the Company or its affiliates,
(2) willful misconduct in the performance of Employee's
duties and responsibilities which results or could
reasonably be expected to result in material damage to
the Company or its assets, or a material liability of
the Company,
(3) conviction of a felony,
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(4) willful and material breach of the employment
agreement or other written agreement with the Company,
and
(5) willful failure to follow reasonable and good faith
directions of the Chief Executive Officer or other
manager more senior than Employee which are consistent
with Employee's position, except for reasons beyond
Employee's control.
No act or omission shall be deemed to be "willful" if
Employee reasonably believed such acts or omissions to be in
the best interests of the Company.
b. Without Cause or With Good Reason. The Company may
terminate Employee's employment with the Company and its
subsidiaries without Cause, or Employee may resign from such
employment upon 20 days' prior written notice to the Company
and with Good Reason. Unless the Company corrects or
otherwise remedies the condition constituting Good Reason
within such 20 days following receipt of such notice, upon
any termination of employment of Employee pursuant to this
Section 9b, the Company shall on the date his employment
ends: (i) pay Employee his accrued and unpaid Base Salary as
of the date of his termination of employment; (ii) make a
lump sum payment in cash to Employee of $ , plus
one times Base Pay in effect as of September 12, 1997; and
(iii) provide Employee with outplacement services at an
aggregate cost not to exceed 15% of Base Pay, in each case
subject to all applicable tax withholding requirements. In
addition, the Company shall continue for one year Employee's
participation on the same basis as active employees in the
group medical and life insurance plans in which he
participated prior to the termination of his employment in
accordance with the terms (other than eligibility) of such
plans from time to time (but only to the extent that
Employee is not receiving substantially the same benefits
from another employer or such continued participation is
legally permissible or, if such employee benefit involves
insurance coverage, permitted by the insurer). Employee
shall have no obligation to mitigate "damages" by making
efforts to secure other employment, nor will cash payments
described under this Section 9b be offset by amounts earned
through other employment.
"Good Reason" means any of the following events occurring
during the Term without Employee's consent:
(1) a change in Employee's title with the Company,
(2) the assignment to Employee of any duties or
responsibilities which are not commensurate with the
Employee's title and position with the Company or any
of its subsidiaries,
(3) a reduction in the Employee's salary,
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(4) a failure to provide Employee with employee benefits
generally provided to similarly situated employees as
a group,
(5) a reduction in the Employee's annual target bonus
opportunity from the target amount immediately prior
to September 12, 1997, or
(6) a change in Employee's principal location of work by
more than 35 miles from the location thereof on
September 12, 1997;
provided, however, that the Employee must give the Company at
least 20 days prior notice of his intent to resign for Good Reason
and the Company shall have the right during the 20-day period
after receipt of such notice to correct or otherwise remedy any
alleged event constituting Good Reason.
c. Death. This Agreement shall automatically terminate upon
Employee's death; provided, however, that the Company shall
pay to Employee's estate the Base Salary owed through the
date of death and any Bonus for the fiscal year in which his
death occurs, prorated for the number of full months
Employee was employed during such fiscal year and subject to
a determination by the Board, acting in good faith, that the
performance criteria, if any, for such Bonus would be
satisfied for such fiscal year.
d. Disability. This Agreement shall automatically terminate
and Employee's employment with the Company shall end upon
Employee's Total Disability. The Company shall pay to
Employee his Base Salary through the date on which he is
determined to have a Total Disability and any Bonus for the
fiscal year in which his Total Disability occurs, prorated
for the number of full months Employee was employed during
such fiscal year, in same manner and subject to the same
conditions as applicable to employees generally (except
individual performance objectives for Employee shall be
disregarded in favor of the generally applicable
objectives); provided, however, that the Company shall only
be required to pay such amounts to Employee that are not
covered by long-term disability payments, if any, to
Employee pursuant to any long-term disability insurance
policy or benefit plan of the Company.
"Total Disability" shall mean any mental or physical
condition that (i) prevents Employee from reasonably
discharging his services and employment duties hereunder,
(ii) is attested to in writing by a physician mutually
acceptable to Employee and the Company, and (iii) continues,
for any one or related condition, during any period of three
(3) consecutive months or for a period aggregating six (6)
months in any twelve-month period. Total Disability shall
be deemed to have occurred on the last day of such
applicable three- or six-month period.
11. Confidentiality; Ownership.
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(a) Employee agrees that he shall forever keep secret and retain
in strictest confidence and not divulge, disclose, discuss,
copy or otherwise use or suffer to be used in any manner,
except in connection with the business of the Company and
the businesses of any of its subsidiaries or affiliates, any
"Protected Information" in any "Unauthorized" manner or for
any Unauthorized purpose (as such terms are hereinafter
defined).
(i) "Protected Information" means trade secrets,
confidential or proprietary information and all other
knowledge, know-how, information, documents or mater-
ials owned, developed or possessed by the Company or
any of its subsidiaries or affiliates, whether in
tangible or intangible form, pertaining to the
business of the Company or the businesses of any of
its subsidiaries or affiliates, including, but not
limited to, research and development operations,
systems, data bases, computer programs and software,
designs, models, operating procedures, knowledge of
the organization, products (including prices, costs,
sales or content), processes, formulas, techniques,
machinery, contracts, financial information or
measures, business methods, business plans, details of
consultant contracts, new personnel acquisition plans,
business acquisition plans, customer lists, business
relationships and other information owned, developed
or possessed by the Company or its subsidiaries or
affiliates, except as required in the course of
performing duties hereunder; provided that Protected
Information shall not include information that becomes
generally known to the public or the trade without
violation of this Section.
(ii) "Unauthorized" means: (A) in contravention of the
policies or procedures of the Company or any of its
subsidiaries or affiliates; (B) otherwise inconsistent
with the measures taken by the Company or any of its
subsidiaries or affiliates to protect their interests
in any Protected Information; (C) in contravention of
any lawful instruction or directive, either written or
oral, of an employee of the Company or any of its
subsidiaries or affiliates empowered to issue such
instruction or directive; or (D) in contravention of
any duty existing under law or contract.
Notwithstanding anything to the contrary contained in
this Section, Employee may disclose any Protected
Information to the extent required by court order or
decree or by the rules and regulations of a governmen-
tal agency or as otherwise required by law; provided
that Employee shall provide the Company with prompt
notice of such required disclosure in advance thereof
so that the Company may seek an appropriate protective
order in respect of such required disclosure.
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(b) Employee acknowledges that all developments, including,
without limitation, inventions (patentable or otherwise),
discoveries, formulas, improvements, patents, trade secrets,
designs, reports, computer software, flow charts and
diagrams, procedures, data, documentation, ideas and
writings and applications thereof relating to the business
or planned business of the Company or any of its
subsidiaries or affiliates that, alone or jointly with
others, Employee may conceive, create, make, develop, reduce
to practice or acquire during the Term (collectively, the
"Developments") are works made for hire and shall remain the
sole and exclusive property of the Company and Employee
hereby assigns to the Company, in partial consideration of
his Base Salary, all of his right, title and interest in and
to all such Developments. Employee shall promptly and fully
disclose all future material Developments to the Board and,
at any time upon request and at the expense of the Company,
shall execute, acknowledge and deliver to the Company all
instruments that the Company shall prepare, give evidence
and take all other actions that are necessary or desirable
in the reasonable opinion of the Company to enable the
Company to file and prosecute applications for and to
acquire, maintain and enforce all letters, patent and
trademark registrations or copyrights covering the Develop-
ments in all countries in which the same are deemed
necessary by the Company. All memoranda, notes, lists,
drawings, records, files, computer tapes, programs,
software, source and programming narratives and other docu-
mentation (and all copies thereof) made or compiled by
Employee or made available to Employee concerning the
Developments or otherwise concerning the business or planned
business of the Company or any of its subsidiaries or
affiliates shall be the property of the Company or such sub-
sidiaries or affiliates and shall be delivered to the
Company or such subsidiaries or affiliates promptly upon the
expiration or termination of the Term.
(c) The provisions of this Section shall, without any limitation
as to time, survive the expiration or termination of
Employee's employment hereunder, irrespective of the reason
for any termination.
12. Covenant Not to Compete. Employee agrees that during the Term and
for a period of one year commencing upon the expiration or
termination of Employee's employment hereunder (the "Non-Compete
Period"), Employee shall not, directly or indirectly, without the
prior written consent of the Company:
(a) solicit, entice, persuade or induce any employee, consul-
tant, agent or independent contractor of the Company or of
any of its subsidiaries or affiliates to terminate his or
employment with the Company or such subsidiary or affiliate,
to become employed by any person, firm or corporation other
than the Company or such subsidiary or affiliate or approach
any such employee, consultant, agent or independent con-
tractor for any of the foregoing purposes, or authorize or
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assist in the taking of any such actions by any third party
(for purposes of this Section 11(a), the terms "employee,"
"consultant," "agent" and "independent contractor" shall
include any persons with such status at any time during the
six (6) months preceding any solicitation in question); or
(b) directly or indirectly engage, participate, or make any
financial investment in, or become employed by or render
consulting, advisory or other services to or for any person,
firm, corporation or other business enterprise, wherever
located, which is engaged, directly or indirectly, in
competition with the Company's business or the businesses of
its subsidiaries or affiliates as conducted or any business
proposed to be conducted at the time of the expiration or
termination of Employee's employment hereunder; provided,
however, that nothing in this Section 11(b) shall be
construed to preclude Employee from making any investments
in the securities of any business enterprise whether or not
engaged in competition with the Company or any of its
subsidiaries or affiliates, to the extent that such
securities are actively traded on a national securities
exchange or in the over-the-counter market in the United
States or on any foreign securities exchange and represent,
at the time of acquisition, not more than 3% of the aggre-
gate voting power of such business enterprise.
13. Specific Performance. Employee acknowledges that the services to
be rendered by Employee are of a special, unique and extraordinary
character and, in connection with such services, Employee will
have access to confidential information vital to the Company's
business and the businesses of its subsidiaries and affiliates.
By reason of this, Employee consents and agrees that if Employee
violates any of the provisions of Sections 10 or 11 hereof, the
Company and its subsidiaries and affiliates would sustain
irreparable injury and that monetary damages would not provide
adequate remedy to the Company and that the Company shall be
entitled to have Section 10 or 11 hereof specifically enforced by
any court having equity jurisdiction. Nothing contained herein
shall be construed as prohibiting the Company or any of its
subsidiaries or affiliates from pursuing any other remedies
available to it for such breach or threatened breach, including
the recovery of damages from Employee.
14. Assignment. The obligations of Employee may not be delegated and,
except with respect to the designation of beneficiaries in
connection with any of the benefits payable to Employee hereunder,
Employee may not assign, transfer, convey, pledge, encumber,
hypothecate or otherwise dispose of this Agreement or any interest
herein. Any such attempted delegation or disposition shall be
null and void and without effect. The Company and Employee agree
that this Agreement and all of the Company's rights and
obligations hereunder may be assigned or transferred by the
Company to and shall be assumed by and be binding upon any
successor to the Company. The term "successor" means, with
respect to the Company or any of its subsidiaries, any corporation
or other business entity which, by merger, consolidation, purchase
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of the assets or otherwise acquires all or a material part of the
assets of the Company.
15. Amendment. This Agreement may not be altered, modified or amended
except by written instrument signed by each of the Company and
Employee.
16. Governing Law; Arbitration.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to
the principles of conflict of laws of such State. Any action to
compel arbitration hereunder shall be brought in the State Court
of Illinois sitting in Cook County, Illinois.
In the event of disputes between the parties with respect to the
terms and conditions of this Agreement, such disputes shall be
resolved by and through an arbitration proceeding to be conducted
under the auspices of the American Arbitration Association (or any
like organization successor thereto) in Chicago, Illinois. Such
arbitration proceeding shall be conducted pursuant to the commer-
cial arbitration rules (formal or informal) of the American
Arbitration Association in as expedited a manner as is then
permitted by such rules (the "Arbitration"). Both the foregoing
agreement of the parties to arbitrate any and all such claims, and
the results, determination, finding, judgment and/or award
rendered through such Arbitration, shall be final and binding on
the parties hereto and may be specifically enforced by legal
proceedings.
Such Arbitration may be initiated by written notice from either
party to the other which shall be a compulsory and binding
proceeding on each party. The Arbitration shall be conducted by
an arbitrator selected in accordance with the procedures of the
American Arbitration Association. Time is of the essence of this
arbitration procedure, and the arbitrator shall be instructed and
required to render his or her decision within thirty (30) days
following completion of the Arbitration.
17. Deductions. The Company shall deduct from any compensation
payable to Employee the sums which it is required by applicable
law to deduct, including, but not limited to, federal and, if
applicable, state withholding taxes, social security taxes and
state disability insurance.
18. Entire Agreement. This Agreement (together with the agreements
and instruments to be executed as contemplated hereby, the form of
which are attached hereto as appendices) constitutes the entire
agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements, understandings
and arrangements, both oral and written, between the parties
hereto with respect to such subject matter.
19. No Conflict. Employee represents and warrants that the execution,
delivery and performance of this Agreement by Employee will not
violate any agreement, undertaking or covenant to which Employee
is party or is otherwise bound. Employee represents and warrants
that he does not possess any confidential or proprietary documents
or other written materials from his current or any former
employer.
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20. Notices. Any notice to be given hereunder by either party to the
other shall be sufficiently given if in writing and delivered in
person, transmitted by telecopier or sent by registered or
certified mail (postage prepaid and return receipt requested) or
recognized overnight delivery service (postage prepaid) addressed
as follows, or to such other address or telecopier number as
either party may notify to the other in accordance with this
paragraph:
(i) if to the Company:
Outboard Marine Corporation
100 Sea Horse Drive
Waukegan, Illinois 60085
Telecopier No: (847) 689-6006
Attn: Chief Executive Officer
With a copy to:
Greenmarine Holdings LLC
277 Park Avenue
27th Floor
New York, NY 10172
Telecopier No.: (212) 350-5253
Attn: Gary K. Duberstein
(ii) if to Employee:
Outboard Marine Corporation
300 Sea Horse Drive
Waukegan, IL 60085
Attn: [employee]
A notice will be effective (i) if delivered in person or by
overnight courier, on the business day it is delivered, (ii) if
transmitted by telecopier, on the business day of actual confirmed
receipt by the addressee thereof, and (iii) if sent by registered
or certified mail, three (3) business days after dispatch.
21. Section Headings. The section headings contained in this
Agreement are for reference purpose only and shall not affect in
any way the meaning or interpretation of this Agreement.
22. Survival of Provisions. The provisions of Sections 5, 7, 8, 10,
11 and 12 shall survive the termination or expiration of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Employment Agreement as of the day and year first above written.
OUTBOARD MARINE CORPORATION EMPLOYEE
By:___________________________________ ___________________________
David D. Jones, Jr. [employee]
President and Chief Executive Officer
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EXHIBIT 10(I)2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of the _____ day of April, 1998
("Effective Date"), is made and entered into by OUTBOARD MARINE
CORPORATION, a Delaware corporation (the "Company"), and [employee] (the
"Employee").
WHEREAS, a change of control of the Company occurred on September 12,
1997, and the Company previously entered into an Amended and Restated
Severance Agreement dated as of March 31, 1997 ("Severance Agreement")
pursuant to which Employee was entitled to severance benefits if his
employment with the Company was terminated under certain circumstances
after such a change in control;
WHEREAS, the Company desires to modify the terms of Employee's continued
employment with the Company and in connection therewith to terminate the
Severance Agreement;
NOW, THEREFORE, Employee and the Company, in consideration of the mutual
covenants contained herein, hereby agree as follows:
1. Employment. During the term of this Agreement, the Company shall
employ Employee as [title] of the Company, and Employee shall
perform services customarily associated with and incident to such
position as may be reasonably determined from time to time by the
Chief Executive Officer of the Company (the "CEO"). Employee
shall also serve, upon the CEO's request and for no additional
compensation, as an officer and/or director of any subsidiary of
the Company. Employee shall perform his duties faithfully,
diligently and to the best of his ability, subject to reasonable
direction from the CEO. Employee shall devote his full and
undivided business time and attention to his duties and
responsibilities to the Company and its subsidiaries.
2. Term. The term of this Agreement (the "Term") shall commence as
of the Effective Date and shall expire on the earlier of April 1,
2001, or Employee's death, Total Disability (as defined below) or
attainment of age 65.
3. Base Salary. During the Term, the Company agrees to pay Employee
an annual salary of $[salary] ("Base Salary") according to the
Company's standard payroll practices and subject to review
annually for possible increases at the Company's sole discretion.
4. Incentive Compensation. Employee shall be eligible to participate
in the Company's Personal Rewards and Opportunities Program
("PROP") or other bonus or incentive compensation program
applicable generally to similarly situated employees as a group in
accordance with and subject to the terms thereof. The
Compensation Committee of the Board of Directors of the Company
("Committee") shall determine in its sole discretion the amount of
bonus or other incentive compensation for which Employee shall be
eligible.
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5. Long and Short-Term Incentive Plan.
a. The Company shall make a grant under the PROP to Employee of
[#] phantom stock units. The form of grant agreement for
such units is attached hereto as Appendix A.
b. Employee acknowledges, agrees and consents to the
termination of and his further participation in the
Company's Employee Bonus Plan, Executive Equity Incentive
Plan, and the OMC 1994 Long-Term Incentive Plan, and waives
any and all claims arising from or relating to such plans
and the change in control provisions under the retirement
plans of the company as of September 12, 1997, except for
the payments described expressly provided in this Agreement.
6. Vacation. Employee shall be entitled to [#] weeks of paid
vacation time during each calendar year in accordance with the
Company's vacation policy in effect from time to time.
7. Termination of Severance Agreement. Employee and Company hereby
agree that the Severance Agreement shall be terminated and
rendered null and void effective as of the Effective Date and that
the Company shall not have any obligation and liability thereunder
from and after such date. The Company and Employee agree that the
Company at any time may, in its discretion, declare a bonus, in
addition to Base Salary and payments under the PROP, payable to
Employee by the Legal Expense Trust and credited against and not
exceeding the balance of Employee's account under such Trust.
This Agreement supersedes the Severance Agreement and accordingly
the Company and Employee hereby agree that all of Employee's
reasonable legal expenses (including attorney's fees at standard
hourly rates only) that are incurred by Employee in negotiating,
reviewing, amending and enforcing this Agreement shall be
reimbursable by the Legal Expense Trust established by the Company
in accordance with the terms thereof.
8. Legal Expense Trust and Attorney's Fees. If Employee commences a
cause of action in accordance with Section 16 hereof to enforce
any provision of or resolve any dispute arising under this
Agreement after the Legal Expense Trust has been liquidated or
Employee's account under such Trust has been exhausted, the
Company shall reimburse Employee for reasonable costs incurred
(including reasonable attorney's fees at standard hourly rates) by
Employee to the extent, but only to the extent, Employee prevails
in any such action.
9. Other Benefits. Employee shall be entitled to participate in the
Company's retirement, group medical, disability, life insurance
and other employee benefit programs generally applicable to
similarly situated employees as a group in accordance with and
subject to the terms thereof.
10. Termination of Employment. Subject to the further provisions of
this Section, (i) the Company may terminate Employee's employment
with the Company or any of its subsidiaries at any time for any or
no reason and (ii) Employee may resign for Good Reason (as
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defined below) or for no reason. Upon the termination of
employment with the Company for any reason, Employee shall be
deemed, without the need to take further action, to have resigned
all positions to which he had been appointed by the Company or any
of its subsidiaries, including, but not limited to, his position
as an officer and a director of the Company and any subsidiary
thereof and as a member of any committee established by the
Company or the Board, effective on the date of termination of
employment.
a. With Cause. The Company may terminate Employee's employment
with the Company and its subsidiaries for cause (as defined
below) upon 20 days' prior written notice to Employee;
provided, however, that the Company may relieve Employee of
his duties and responsibilities as of the date of such
notice without such action constituting Good Reason (as
defined below). Unless the notice of termination is
withdrawn, the employment of Employee hereunder shall be
terminated as of the date set forth in such notice and the
Company shall pay Employee his accrued and unpaid Base
Salary through such date of termination and have no further
obligation to Employee hereunder. Employee's rights under
the Company's employee benefit plans shall be determined in
accordance with the terms of such plans.
"Cause" means any act or any failure to act on the part of
Employee during the Term which constitutes:
(1) fraud, theft, embezzlement or similar crime against
the Company or its affiliates,
(2) willful misconduct in the performance of Employee's
duties and responsibilities which results or could
reasonably be expected to result in material damage to
the Company or its assets, or a material liability of
the Company,
(3) conviction of a felony,
(4) willful and material breach of the employment
agreement or other written agreement with the Company,
and
(5) willful failure to follow reasonable and good faith
directions of the Chief Executive Officer or other
manager more senior than Employee which are consistent
with Employee's position, except for reasons beyond
Employee's control.
No act or omission shall be deemed to be "willful" if
Employee reasonably believed such acts or omissions to be in
the best interests of the Company.
b. Without Cause or With Good Reason. The Company may
terminate Employee's employment with the Company and its
subsidiaries without Cause, or Employee may resign from such
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employment upon 20 days' prior written notice to the Company
and with Good Reason. Unless the Company corrects or
otherwise remedies the condition constituting Good Reason
within such 20 days following receipt of such notice, upon
any termination of employment of Employee pursuant to this
Section 9b, the Company shall on the date his employment
ends: (i) pay Employee his accrued and unpaid Base Salary as
of the date of his termination of employment; (ii) make a
lump sum payment in cash to Employee of $ , plus
one times Base Pay in effect as of September 12, 1997; and
(iii) provide Employee with outplacement services at an
aggregate cost not to exceed 15% of Base Pay, in each case
subject to all applicable tax withholding requirements. In
addition, the Company shall continue for one year Employee's
participation on the same basis as active employees in the
group medical and life insurance plans in which he
participated prior to the termination of his employment in
accordance with the terms (other than eligibility) of such
plans from time to time (but only to the extent that
Employee is not receiving substantially the same benefits
from another employer or such continued participation is
legally permissible or, if such employee benefit involves
insurance coverage, permitted by the insurer). Employee
shall have no obligation to mitigate "damages" by making
efforts to secure other employment, nor will cash payments
described under this Section 9b be offset by amounts earned
through other employment.
"Good Reason" means any of the following events occurring during
the Term without Employee's consent:
(1) a change in Employee's title with the Company,
(2) the assignment to Employee of any duties or
responsibilities which are not commensurate with the
Employee's title and position with the Company or any
of its subsidiaries,
(3) a reduction in the Employee's salary,
(4) a failure to provide Employee with employee benefits
generally provided to similarly situated employees as
a group,
(5) a reduction in the Employee's annual target bonus
opportunity from the target amount immediately prior
to September 12, 1997, or
(6) a change in Employee's principal location of work by
more than 35 miles from the location thereof on
September 12, 1997;
provided, however, that the Employee must give the Company at
least 20 days prior notice of his intent to resign for Good Reason
and the Company shall have the right during the 20-day period
after receipt of such notice to correct or otherwise remedy any
alleged event constituting Good Reason.
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c. Death. This Agreement shall automatically terminate upon
Employee's death; provided, however, that the Company shall
pay to Employee's estate the Base Salary owed through the
date of death and any Bonus for the fiscal year in which his
death occurs, prorated for the number of full months
Employee was employed during such fiscal year and subject to
a determination by the Board, acting in good faith, that the
performance criteria, if any, for such Bonus would be
satisfied for such fiscal year.
d. Disability. This Agreement shall automatically terminate
and Employee's employment with the Company shall end upon
Employee's Total Disability. The Company shall pay to
Employee his Base Salary through the date on which he is
determined to have a Total Disability and any Bonus for the
fiscal year in which his Total Disability occurs, prorated
for the number of full months Employee was employed during
such fiscal year, in same manner and subject to the same
conditions as applicable to employees generally (except
individual performance objectives for Employee shall be
disregarded in favor of the generally applicable
objectives); provided, however, that the Company shall only
be required to pay such amounts to Employee that are not
covered by long-term disability payments, if any, to
Employee pursuant to any long-term disability insurance
policy or benefit plan of the Company.
"Total Disability" shall mean any mental or physical
condition that (i) prevents Employee from reasonably
discharging his services and employment duties hereunder,
(ii) is attested to in writing by a physician mutually
acceptable to Employee and the Company, and (iii) continues,
for any one or related condition, during any period of three
(3) consecutive months or for a period aggregating six (6)
months in any twelve-month period. Total Disability shall
be deemed to have occurred on the last day of such
applicable three- or six-month period.
11. Confidentiality; Ownership.
(a) Employee agrees that he shall forever keep secret and retain
in strictest confidence and not divulge, disclose, discuss,
copy or otherwise use or suffer to be used in any manner,
except in connection with the business of the Company and
the businesses of any of its subsidiaries or affiliates, any
"Protected Information" in any "Unauthorized" manner or for
any Unauthorized purpose (as such terms are hereinafter defined).
(i) "Protected Information" means trade secrets,
confidential or proprietary information and all other
knowledge, know-how, information, documents or mater-
ials owned, developed or possessed by the Company or
any of its subsidiaries or affiliates, whether in
tangible or intangible form, pertaining to the
business of the Company or the businesses of any of
its subsidiaries or affiliates, including, but not
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limited to, research and development operations,
systems, data bases, computer programs and software,
designs, models, operating procedures, knowledge of
the organization, products (including prices, costs,
sales or content), processes, formulas, techniques,
machinery, contracts, financial information or
measures, business methods, business plans, details of
consultant contracts, new personnel acquisition plans,
business acquisition plans, customer lists, business
relationships and other information owned, developed
or possessed by the Company or its subsidiaries or
affiliates, except as required in the course of
performing duties hereunder; provided that Protected
Information shall not include information that becomes
generally known to the public or the trade without
violation of this Section.
(ii) "Unauthorized" means: (A) in contravention of the
policies or procedures of the Company or any of its
subsidiaries or affiliates; (B) otherwise inconsistent
with the measures taken by the Company or any of its
subsidiaries or affiliates to protect their interests
in any Protected Information; (C) in contravention of
any lawful instruction or directive, either written or
oral, of an employee of the Company or any of its
subsidiaries or affiliates empowered to issue such
instruction or directive; or (D) in contravention of
any duty existing under law or contract.
Notwithstanding anything to the contrary contained in
this Section, Employee may disclose any Protected
Information to the extent required by court order or
decree or by the rules and regulations of a governmen-
tal agency or as otherwise required by law; provided
that Employee shall provide the Company with prompt
notice of such required disclosure in advance thereof
so that the Company may seek an appropriate protective
order in respect of such required disclosure.
(b) Employee acknowledges that all developments, including,
without limitation, inventions (patentable or otherwise),
discoveries, formulas, improvements, patents, trade secrets,
designs, reports, computer software, flow charts and
diagrams, procedures, data, documentation, ideas and
writings and applications thereof relating to the business
or planned business of the Company or any of its
subsidiaries or affiliates that, alone or jointly with
others, Employee may conceive, create, make, develop, reduce
to practice or acquire during the Term (collectively, the
"Developments") are works made for hire and shall remain the
sole and exclusive property of the Company and Employee
hereby assigns to the Company, in partial consideration of
his Base Salary, all of his right, title and interest in and
to all such Developments. Employee shall promptly and fully
disclose all future material Developments to the Board and,
at any time upon request and at the expense of the Company,
shall execute, acknowledge and deliver to the Company all
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instruments that the Company shall prepare, give evidence
and take all other actions that are necessary or desirable
in the reasonable opinion of the Company to enable the
Company to file and prosecute applications for and to
acquire, maintain and enforce all letters, patent and
trademark registrations or copyrights covering the Develop-
ments in all countries in which the same are deemed
necessary by the Company. All memoranda, notes, lists,
drawings, records, files, computer tapes, programs,
software, source and programming narratives and other docu-
mentation (and all copies thereof) made or compiled by
Employee or made available to Employee concerning the
Developments or otherwise concerning the business or planned
business of the Company or any of its subsidiaries or
affiliates shall be the property of the Company or such sub-
sidiaries or affiliates and shall be delivered to the
Company or such subsidiaries or affiliates promptly upon the
expiration or termination of the Term.
(c) The provisions of this Section shall, without any limitation
as to time, survive the expiration or termination of
Employee's employment hereunder, irrespective of the reason
for any termination.
12. Covenant Not to Compete. Employee agrees that during the Term and
for a period of one year commencing upon the expiration or
termination of Employee's employment hereunder (the "Non-Compete
Period"), Employee shall not, directly or indirectly, without the
prior written consent of the Company:
(a) solicit, entice, persuade or induce any employee, consul-
tant, agent or independent contractor of the Company or of
any of its subsidiaries or affiliates to terminate his or
employment with the Company or such subsidiary or affiliate,
to become employed by any person, firm or corporation other
than the Company or such subsidiary or affiliate or approach
any such employee, consultant, agent or independent con-
tractor for any of the foregoing purposes, or authorize or
assist in the taking of any such actions by any third party
(for purposes of this Section 11(a), the terms "employee,"
"consultant," "agent" and "independent contractor" shall
include any persons with such status at any time during the
six (6) months preceding any solicitation in question); or
(b) directly or indirectly engage, participate, or make any
financial investment in, or become employed by or render
consulting, advisory or other services to or for any person,
firm, corporation or other business enterprise, wherever
located, which is engaged, directly or indirectly, in
competition with the Company's business or the businesses of
its subsidiaries or affiliates as conducted or any business
proposed to be conducted at the time of the expiration or
termination of Employee's employment hereunder; provided,
however, that nothing in this Section 11(b) shall be
construed to preclude Employee from making any investments
in the securities of any business enterprise whether or not
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engaged in competition with the Company or any of its
subsidiaries or affiliates, to the extent that such
securities are actively traded on a national securities
exchange or in the over-the-counter market in the United
States or on any foreign securities exchange and represent,
at the time of acquisition, not more than 3% of the aggre-
gate voting power of such business enterprise.
13. Specific Performance. Employee acknowledges that the services to
be rendered by Employee are of a special, unique and extraordinary
character and, in connection with such services, Employee will
have access to confidential information vital to the Company's
business and the businesses of its subsidiaries and affiliates.
By reason of this, Employee consents and agrees that if Employee
violates any of the provisions of Sections 10 or 11 hereof, the
Company and its subsidiaries and affiliates would sustain
irreparable injury and that monetary damages would not provide
adequate remedy to the Company and that the Company shall be
entitled to have Section 10 or 11 hereof specifically enforced by
any court having equity jurisdiction. Nothing contained herein
shall be construed as prohibiting the Company or any of its
subsidiaries or affiliates from pursuing any other remedies
available to it for such breach or threatened breach, including
the recovery of damages from Employee.
14. Assignment. The obligations of Employee may not be delegated and,
except with respect to the designation of beneficiaries in
connection with any of the benefits payable to Employee hereunder,
Employee may not assign, transfer, convey, pledge, encumber,
hypothecate or otherwise dispose of this Agreement or any interest
herein. Any such attempted delegation or disposition shall be
null and void and without effect. The Company and Employee agree
that this Agreement and all of the Company's rights and
obligations hereunder may be assigned or transferred by the
Company to and shall be assumed by and be binding upon any
successor to the Company. The term "successor" means, with
respect to the Company or any of its subsidiaries, any corporation
or other business entity which, by merger, consolidation, purchase
of the assets or otherwise acquires all or a material part of the
assets of the Company.
15. Amendment. This Agreement may not be altered, modified or amended
except by written instrument signed by each of the Company and
Employee.
16. Governing Law; Arbitration.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to
the principles of conflict of laws of such State. Any action to
compel arbitration hereunder shall be brought in the State Court
of Illinois sitting in Cook County, Illinois.
In the event of disputes between the parties with respect to the
terms and conditions of this Agreement, such disputes shall be
resolved by and through an arbitration proceeding to be conducted
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under the auspices of the American Arbitration Association (or any
like organization successor thereto) in Chicago, Illinois. Such
arbitration proceeding shall be conducted pursuant to the commer-
cial arbitration rules (formal or informal) of the American
Arbitration Association in as expedited a manner as is then
permitted by such rules (the "Arbitration"). Both the foregoing
agreement of the parties to arbitrate any and all such claims, and
the results, determination, finding, judgment and/or award
rendered through such Arbitration, shall be final and binding on
the parties hereto and may be specifically enforced by legal
proceedings.
Such Arbitration may be initiated by written notice from either
party to the other which shall be a compulsory and binding
proceeding on each party. The Arbitration shall be conducted by
an arbitrator selected in accordance with the procedures of the
American Arbitration Association. Time is of the essence of this
arbitration procedure, and the arbitrator shall be instructed and
required to render his or her decision within thirty (30) days
following completion of the Arbitration.
17. Deductions. The Company shall deduct from any compensation
payable to Employee the sums which it is required by applicable
law to deduct, including, but not limited to, federal and, if
applicable, state withholding taxes, social security taxes and
state disability insurance.
18. Entire Agreement. This Agreement (together with the agreements
and instruments to be executed as contemplated hereby, the form of
which are attached hereto as appendices) constitutes the entire
agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements, understandings
and arrangements, both oral and written, between the parties
hereto with respect to such subject matter.
19. No Conflict. Employee represents and warrants that the execution,
delivery and performance of this Agreement by Employee will not
violate any agreement, undertaking or covenant to which Employee
is party or is otherwise bound. Employee represents and warrants
that he does not possess any confidential or proprietary documents
or other written materials from his current or any former
employer.
20. Notices. Any notice to be given hereunder by either party to the
other shall be sufficiently given if in writing and delivered in
person, transmitted by telecopier or sent by registered or
certified mail (postage prepaid and return receipt requested) or
recognized overnight delivery service (postage prepaid) addressed
as follows, or to such other address or telecopier number as
either party may notify to the other in accordance with this
paragraph:
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(i) if to the Company:
Outboard Marine Corporation
100 Sea Horse Drive
Waukegan, Illinois 60085
Telecopier No: (847) 689-6006
Attn: Chief Executive Officer
With a copy to:
Greenmarine Holdings LLC
277 Park Avenue
27th Floor
New York, NY 10172
Telecopier No.: (212) 350-5253
Attn: Gary K. Duberstein
(ii) if to Employee:
Outboard Marine Corporation
300 Sea Horse Drive
Waukegan, IL 60085
Attn: [employee]
A notice will be effective (i) if delivered in person or by
overnight courier, on the business day it is delivered, (ii) if
transmitted by telecopier, on the business day of actual confirmed
receipt by the addressee thereof, and (iii) if sent by registered
or certified mail, three (3) business days after dispatch.
21. Section Headings. The section headings contained in this
Agreement are for reference purpose only and shall not affect in
any way the meaning or interpretation of this Agreement.
22. Survival of Provisions. The provisions of Sections 5, 7, 8, 10,
11 and 12 shall survive the termination or expiration of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Employment Agreement as of the day and year first above written.
OUTBOARD MARINE CORPORATION EMPLOYEE
By:
____________________________________ ______________________________
David D. Jones, Jr. [employee]
Chief Executive Officer and President
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EXHIBIT 11
OUTBOARD MARINE CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Post-Merger Pre-Merger Post-Merger Pre-Merger
Company Company Company Company
----------- ---------- ----------- ----------
Three Months Ended Nine Months Ended
June 30 June 30
(In millions except amounts per share) 1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Basic Earnings Per Share:
Net Earnings (Loss) $ 12.3 $ (5.1) $ (3.9) $ (26.7)
====== ====== ====== ======
Weighted Average Number of Shares 20.4 20.2 20.4 20.2
====== ====== ====== ======
Basic Earnings (Loss) Per Share $ 0.60 $ (0.25) $ (0.19) $ (1.32)
====== ====== ====== ======
Diluted Earnings Per Share:
Net Earnings (Loss) $ 12.3 $ (5.1) $ (3.9) $ (26.7)
Add: After-Tax Interest and
Related Expense Amortization
on 7% Convertible
Subordinated Debentures -- 0.8 -- 2.5
------ ------ ------ ------
Net Earnings (Loss) Adjusted $ 12.3 $ (4.3) $ (3.9) $ (24.2)
====== ====== ====== ======
Weighted Average Number of Shares 20.4 20.2 20.4 20.2
Weighted Average Common Shares
Assuming Conversion of 7%
Convertible Subordinated
Debentures -- 3.4 -- 3.4
------ ------ ------ ------
Average Shares Outstanding 20.4 23.6 20.4 23.6
====== ====== ====== ======
Diluted Earnings (Loss) Per Share $ 0.60 $ * $ (0.19) $ *
====== ====== ====== ======
</TABLE>
* The computation of diluted earnings per share of common stock is
antidilutive; therefore, the amount reported for basic and diluted
earnings per share is the same.
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